If I hadn’t seen it, I wouldn’t believe it.
There must have been more than 100 people—most of them parents of Chicago Public Schools students—sitting in the auditorium of a south-side grammar school last week and talking about radically reforming Mayor Daley’s tax increment financing program.
For as long as I’ve been writing about it, school and city officials—as well as other reporters—have been telling me that this day would never come. The TIF program, they told me, is too complicated for ordinary citizens to grasp, much less organize against. I heard it so often I figured it must be true.
But the parents at the June 8 meeting—members of the newly formed Raise Your Hand coalition—showed a sophisticated understanding of how the mayor’s pet economic development scheme sucks the schools dry.
In short, they want to offset budget cuts, class-size increases, and teacher firings by taking roughly $250 million a year in property tax dollars out of the TIF program and sending it back to the schools.
“We have to be realistic about the impact TIFs have on school funding,” says Jonathan Goldman, a member of the Raise Your Hand steering committee. “We have to change this system.”
They’re hardly alone, by the way. As the economic crunch continues, not just parents but also housing activists and even aldermen are eyeing the $500-million-a-year TIF honeypot and starting to talk about how it could be raided to avoid cuts, expand basic services, or fund favored projects.
Second Ward alderman Robert Fioretti has proposed steering TIF money back to the Chicago Police Department budget to fortify a force that’s at least 700 officers understaffed.
His colleague Tom Allen (38th) says we should use TIF money to expand the blue cart recycling program, which has been offered to fewer than half the 700,000 households served by city garbage crews, a disgrace in a city led by a “green mayor.”
And Sweet Home Chicago, a coalition of housing groups, wants to earmark 20 percent of the funds collected in every TIF district—roughly $100 million a year—to create more affordable housing.
All of these are laudable goals and would potentially offer a more prudent investment of property tax dollars than, say, the $8.5 million handout to Grossinger Auto Group in 2008, to cite just one example of how this program intended to fight blight in poor communities has been abused. Grossinger apparently needed help financing a new dealership at North and Clybourn—you know, that severely blighted intersection on the near north side that’s surrounded by bustling retail outlets and new condos.
“I think as money is tight more people are looking at the TIFs and are starting to study them and realize what’s going on,” says Fioretti.
As Fioretti notes, state law prohibits governments from spending TIF dollars on operational expenses like garbage collection and police salaries. “But these are tough times and maybe the time has come to change the state law,” Fioretti says. “I don’t think it would be that hard to change the law.”
In March, 27th Ward alderman Walter Burnett introduced an ordinance to the City Council that would mandate the 20 percent housing set-aside called for by Sweet Home Chicago. It’s been stuck in committee ever since. And so far neither Fioretti nor Allen has made any formal proposals. They say they’re studying the matter.
But the members of Raise Your Hand are demanding that Mayor Daley and schools CEO Ron Huberman change the TIF program right now.
It’s a pretty audacious request from an outfit that didn’t even exist a few months ago. The group consists of parents from across the city who banded together in April after Huberman announced that a deficit approaching $1 billion would force him to fire hundreds of teachers and raise maximum class size from 30 to as high as 37.
If the cuts went into effect, popular classes—including accelerated math, full-day kindergarten, art, and music—would probably have to be dropped. Scores of younger teachers, who are not protected by seniority rules, would likely be forced to shift schools just weeks before classes start in the fall. There would almost certainly be chaos at the start of the new school year as principals tried to rearrange schedules to accommodate the cuts.
“It would be a nightmare,” says Goldman.
At the start, coalition members identified two goals. One was to join Huberman’s effort to pressure Governor Pat Quinn and the General Assembly into sending more aid to CPS—an effort that was successful at least in part, since the state has agreed to restore some educational funding. Huberman now says the budget deficit is around $600 million (though the numbers keep changing).
They also realized they had to look at the way CPS and Mayor Daley spend the education money they have, instead of merely asking the state to send them more. Eventually, that led them to the TIF program.
To understand what they’re proposing, you need to understand how the program works. The amount people pay in property taxes is determined in part by the assessed value of their property. After the City Council, at Mayor Daley’s urging, creates a TIF district, it basically freezes the level of property tax revenue that the schools, the parks, the county, and all the other taxing bodies can divvy up from that district for up to 24 years. If property in a TIF district increases in value during that time, the extra tax revenue goes into a special account controlled largely by Mayor Daley. The schools, which count on property taxes to fund 37 percent of their budget, see none of it. So when they need more money, they have to raise their tax rate—or make cuts, or ask the state for more help, or all of the above. Last year about $250 million that without TIF would have gone to the schools was diverted into TIF accounts.
If the members of Raise Your Hand get their way, the aldermen and Mayor Daley will be able to keep creating TIF districts, but CPS won’t concede its right to tax property in those districts.
In a town—in a school system—that’s been under Daley’s rule for more than two decades, this is a pretty radical idea. Maybe even revolutionary.
“We’re proposing to amend the TIF statute so CPS is taken out of the program,” says Goldman. “So that if you have a TIF district you can pull money from the other taxing bodies but not the Chicago Public Schools.”
Just imagine if the Park District, the water reclamation district, and Cook County were to follow suit.
I’ve been hammering away at CPS officials on this idea for so long that they generally roll their eyes when they see me coming. Under Arne Duncan, Huberman’s predecessor, officials used to tell me that, yes, it may not be an ideal arrangement for CPS. But if you want to play on the mayor’s team you have to play by the mayor’s rules.
Of course it was easier for Duncan to cavalierly relinquish control over hundreds of millions of dollars since he oversaw the schools before the great real estate collapse created massive budget holes for local governments.
Huberman is not so fortunate. And yet, when I recently asked CPS spokeswoman Monique Bond, chief financial officer Diana Ferguson, chief human capital officer Alicia Winckler, and operations manager Jerome Goudelock how they could allow $250 million to fly out the window while they’re threatening drastic cuts, they insisted that the TIFs do good things too and left it at that.
It may be harder for them to ignore a growing coalition of parents.
“We’re in this for the long term,” says Goldman. “Yes, our first priority is to see to it that school opens in the fall without hikes in class size and without cutting teachers. But we realize that this funding problem is not going away. We don’t want to have to keep fighting the same old fight every year.”
Can they pull it off? Well, the odds are against them. But they’re clearly a determined bunch.
At their first meeting in April they had representatives from about 12 schools, most of them on the north side. They now have representatives from more than 100 across the city, and on May 3 they drew about 800 people to a rally at Lane Tech High School. Their most recent meeting was held at Ariel Elementary, at 1119 E. 46th, partly to try to build a stronger base on the south side.
This Thursday, June 17, at 10:30 AM, they’ll hold a rally at City Hall.
They’ve also been trying to communicate with the mayor and Huberman directly—on June 1 they delivered a letter to both offices outlining their TIF proposal. “One of the most critical issues affecting school funding in Chicago is the system of Tax Increment Financing Districts,” the letter reads. “We urge you to take the lead in reforming the TIF system to halt this diversion of funds.”
So far the group hasn’t heard back from either of them.
Goldman concedes that his group faces an uphill struggle on this issue. It’s very unlikely that Mayor Daley will give up control of $250 million a year without a fight.
And over the last few years, very few citizens have had the nerve to take on our powerful mayor. But given the alternatives, it may finally be the case that parents have no choice.
>Ben Joravsky discusses his reporting weekly with journalist Dave Glowacz at mrradio.org/theworks.