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Rauner: Drain TIF Funds To Fill CPS Deficit

 Gov. Bruce Rauner has proposed using tax increment financing money to solve the Chicago Public Schools budget crisis.
Gov. Bruce Rauner has proposed using tax increment financing money to solve the Chicago Public Schools budget crisis.
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DNAinfo/Mauricio Pena

DOWNTOWN — Gov. Bruce Rauner Monday proposed allowing Mayor Rahm Emanuel to fill the Chicago Public Schools budget hole by draining the city's tax increment financing district funds.

Officials in the state budget office were drafting legislation to allow Emanuel the one-time authority to transfer TIF money from districts across the city to the school district "given the extraordinary mismanagement of both the city and CPS budgets," according to a memo released by Rauner's office.

The other option would be to add $215 million for Chicago's schools to the Illinois Senate's pension bill now pending in the General Assembly and removing it from the larger effort to reach an agreement on a state budget, according to the memo.

However, Emanuel immediately rejected the governor's proposals, which came just hours before Grammy Award winner Chance The Rapper planned to hold a news conference at an Englewood elementary school to announce his own plan to solve the fiscal crisis engulfing Chicago's schools.

Emanuel said the governor's proposals amounted to "no solution at all."

"[Rauner's] plan to fix the fact that Chicago taxpayers pay twice for teacher pensions is to have them pay three times instead," said Adam Collins, a spokesman for the mayor. "It's past time for the governor to step up, as Chicago's taxpayers already have, and end the state's separate and unequal funding for Chicago students."

The larger effort to reach an agreement on a state budget as well as changes to the state's pension system has failed twice in recent weeks to win enough votes to pass the Illinois Senate.

TIF districts capture all growth in the property tax base in a designated area for a set period of time, usually 20 years or more, and divert it into a special fund for projects designed to spur redevelopment and eradicate blight.

The Chicago Teachers Union has also proposed using money from TIF districts — along with taxing corporations — to solve the school's fiscal crisis.

In October, Emanuel agreed to use $88 million from the city's TIF districts to avert a strike by the teacher's union.

Emanuel has long resisted using TIF funds to bolster the CPS budget, saying that it was inappropriate to use money from a one-time revenue source to pay for school operations.

The fiscal crisis for CPS began in November, when Rauner vetoed a bill that would have given Chicago schools an additional $215 million to help cover CPS pension obligations.

Rauner blamed Illinois Senate President John Cullerton for violating a compromise signed last June that allowed schools to open in September. Part of that deal promised more money for Chicago schools in return for statewide "pension reform," a long-held goal of the governor.

CPS must pay its employees' pension fund $721 million by June 30.

In February, five families sued the state on behalf of CPS, claiming that the state has violated the civil rights of their children by giving Chicago schools less funding than other districts. CPS lawyers have said they will make a final decision May 1 on when the school year will end.

Unless Chicago's schools get more state money, CPS officials have said they will end school June 1 instead of June 20 to save $91 million. CPS would save another $5 million by canceling summer school for all students except those in high school, officials said.

Even with the additional state money, CPS will "have to borrow hundreds of millions" to pay its bills, according to the court filing. Claypool declined to say how much CPS would have to borrow.

In January, Claypool ordered four unpaid furlough days for all CPS employees to save $35 million. He also canceled professional development events for its central office staff to save million by and slashed charter school budgets by $15 million by the end of the year, officials said.

In February, Claypool cut another $31 million by freezing a portion of schools' discretionary funds, which can be used to purchase textbooks and technology as well as to pay for after-school programs, field trips and hourly staff.

Those cuts leave a deficit of $129 million, officials said.

In a message to legislators in December, Rauner said that he did not sign the school funding bill because it would amount to a "bailout" for CPS.

Cullerton denied breaking the agreement and said he was willing to continue working on pension reform with the governor.