DOWNTOWN — The new contract between the Chicago Public Schools and the Chicago Teachers Union will help end the district's financial crisis even as it adds $55 million in costs next year, CEO Forrest Claypool said Wednesday.
The four-year deal — reached minutes before teachers were set to strike for the second time in four years on Oct. 11 — puts a "serious dent in the cost curve" that created the district's $1.1 billion budget deficit, Claypool said.
But Claypool warned that the district is "not out of the woods yet."
CPS officials will have to find another $100 million next year to cover the cost of the contract with the teachers' union, Claypool said, adding that he was "confident" that officials would be able to cover the tab.
In spite of the additional costs, the agreement is the most "cost-effective" contract to be reached since 1995, when former Mayor Richard M. Daley took over CPS, Claypool said.
The agreement must now be approved by the Chicago Board of Education along with a revised budget to account for the additional expenses. That vote is scheduled for Dec. 7. Two public hearings on the revised budget will take place at 12:30 p.m. and 3:30 p.m. Nov. 28, officials said.
The $5.4 billion Chicago Public Schools budget, adopted in August, assumed officials would reach an agreement with the teachers' union that saved $31 million.
Instead, the district will use roughly $55 million from Tax Increment Financing District accounts to balance its 2016-17 budget and cover the additional cost of the agreement with the union, Claypool said. In all, CPS will get $87.5 million in TIF funds, officials said.
TIF districts are used by the city to spur the redevelopment of blighted areas for the property tax base in a designated area for a set period of time — usually 20 years or more.
The eight-month deadlock over a new deal ended once Emanuel agreed to heed months of calls from union officials, aldermen and parent-led group Raise Your Hand to give schools millions of dollars from TIF districts.
In a speech at the City Club of Chicago, union President Karen Lewis said Wednesday she was pleased Emanuel agreed to open up the TIF "piggy bank."
Approximately 70 percent of the votes by union members counted so far have been in favor of the deal, Lewis said.
More teachers did not vote to ratify the agreement because of the "level of distrust" between union members and the district.
"We are working hard to repair those wounds," Lewis said Wednesday.
Despite the contract agreement, significant disagreements remain between the union and the district, including over the use of bonds to fund early childhood education services. Lewis decried that as a giveaway to banks and wealthy Chicagoans, "who need it the least."
The agreement requires CPS to continue paying the bulk of pension contributions for current teachers, who put 2 percent of their salaries into their own pensions, while CPS pays 7.4 percent. That will cost the district $130 million a year, though it will decrease as teachers retire or leave the district, officials said.
CPS agreed to pay part of teachers' pension contribution in 1987 in place of a pay raise as part of contract negotiations.
New employees will be required to contribute 9.4 percent of their yearly salaries to their retirement accounts. In return, teachers hired after Jan. 1 will get two raises of 3.5 percent — one effective in January and the other effective in July.
Steps and lanes
Teachers will get raises based on their experience and education starting in the second year of the deal, which is retroactive to the 2015-16 school year, at a cost of $25 to $30 million annually, district officials said.
Teachers will get 4.5 percent over the four years, starting in 2018, with no pay raises during the 2015-16 and 2016-17 school years.
In the 2017-18 school year, those raises will cost the district $36 million, officials said. In the 2018-19 school year, the cost will be between $45 million and $50 million, officials said.
Health care insurance costs
Union members will pay 0.8 percent more for health care coverage, the first time in many years that teachers and support staff members will cover more of the costs of health insurance, Claypool said.
Because of the additional contributions, and changes in the plans offered by CPS to its employees, the district expects to save $11 million next year and more than $30 million once the changes are fully phased in, officials said.
Protection for teachers
An agreement to allow laid-off teachers to earn their full salary for essentially an entire school year while waiting for a permanent position to open up will cost the district approximately $18 million, officials said.
Class sizes, charter schools and wraparound services
The tentative agreement also includes the first enforceable limit on the size of classes in 20 years, union leaders said.
CPS officials agreed to earmark $6 million to hire teachers' assistants in kindergarten through second grade classes with more than 32 students starting in January.
The contract also puts a cap on the number of charter schools at 127 campuses.
That would still allow room for new "high quality" and "proven" charter operators to open new schools, Claypool said, noting that a "cap" is different from a "moratorium."
The agreement also earmarks between $10 million and $27 million for after-school programs, counseling, social work and psychiatric services and medical clinics at 20-55 schools to be picked by a joint committee of union members and CPS officials.
Fight shifts to Springfield
The school district's budget relies on $215 million that the General Assembly and Gov. Bruce Rauner promised to give CPS in exchange for "pension reform."
Claypool said he was confident that Springfield would make good on its promise and avoid mid-year cuts, but acknowledged that final approval of the extra funds hinges on the outcome of Tuesday's election for seats in the General Assembly.
In addition, Claypool said he would continue to work to convince Gov. Bruce Rauner, and the Democrats who control the General Assembly, to change the way schools are funded in Illinois.
"We are going to fight hell to get fair funding," Claypool said.
Lewis said she and the union would join the district in that fight.
"We will work with them to get adequate and equitable funding," Lewis said.
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