By: Mark Glennon*
Paul Vallas took some heat while running for Chicago mayor in 2023 when he said on our podcast that he agreed with our longstanding view that Chicago Public Schools should be entirely reconstituted.
Vallas was right then and it’s more true now. That’s exactly what’s truly needed. With CPS and Mayor Brandon Johnson’s policies toward it now being mocked nationally, might Springfield lawmakers finally have to courage to face that reality? No, experience tells us, they almost certainly won’t. Just for the record, however, here’s a reminder of what should be done:
– Create a new entity, or perhaps several of them, to run the schools.
– Redirect to the new entity the taxes and other funding now going to CPS.
– Transfer needed assets to the new system, not including empty and badly underutilized schools.
– Freeze the Chicago Teachers’ Pension Fund and, instead, begin funding a new, affordable retirement plan.
– Terminate all CPS employees and rehire the good ones on terms affordable for the city.
That’s what Michigan did with Detroit schools at about the same time as Detroit went through its bankruptcy reorganization. In fact, we wrote over nine years ago explaining why CPS was even better suited to being reconstituted than Detroit was. It’s a concept frequently used in the private sector. General Motors, for example, did the same thing in its bankruptcy. The GM you know today is actually a new company formed in 2009 to take over assets of the old, insolvent GM. For CPS, a bankruptcy proceeding might not even be necessary.
What that would take is a bill from the General Assembly. The new law should also include revisions to statutes that made the Chicago Teachers Union so powerful, ending the tragic nightmare CTU has imposed on the city and students for decades. That could include eliminating the risk teachers will strike over their current, exorbitant contract demands. Ideally, new legislation would also include a school choice program making the new CPS schools one of the options available to students and parents.
The immediate problem facing CPS is the need to kill Johnson’s plan to take out a high interest, short term, $300 million loan to cover operating costs, which has been correctly ridiculed as a “pay-day loan.” To accomplish that, Johnson recently installed his own slate of school board members to replace a group that resigned. The new legislation could fix that as well, stripping the mayor of his power. The majority of the board should be appointed by adults with expertise in education and finance. Debate who should make the appointments if you want, but that’s not Johnson.
On the other hand, maybe a better option would be to first let the $300 million loan go through. Take the money and apply it somewhere sensibly, then reconstitute the school district. That means stiffing the lender on the new loan. Whether that would work is an open question — a detailed review of the loan terms and lien situation on CPS assets would be needed for a clear answer.
If stiffing lenders sounds harsh, it’s not. Any lenders participating in a loan to the current CPS will know full well of the risk they face, whether from reconstituting the school district or having it go bankrupt. The same goes for other, earlier lenders. They assumed known risks. And please don’t claim that would render a new, reconstituted CPS unworthy of new credit. The opposite is true because the new entity would be properly funded to meet reasonable expenses, free from legacy debt run up by the old CPS. That’s how the world works. Deal with it.
Hardball, comprehensive solutions to Chicago’s failing schools are years overdue. Just don’t think that means our ruling class is ready to act.
*Mark Glennon is founder of Wirepoints.
Earlier Wirepoints columns with more details on reconstituting CPS:
- Here’s A Comprehensive Solution For All Chicago School Financial Problems And The Teacher Strike: Reconstitution
- Why Michigan’s Approach for Detroit’s Schools is Better Suited for Chicago’s
- Reconstituting CPS is the comprehensive solution for it and its AWOL teachers that lawmakers ignore
- Springfield Should Authorize Lightfoot To Negotiate With Chicago Teachers Union (But Won’t)
- Wholesale ‘Reconstitution’ of CPS: The Only Real Option?
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
Or just move out of Chicago. Sending your kids to CPS is child abuse.
The bright spot of this BJ/CTU criminality is that finally parents and Chicago taxpayers are waking up to the farce that is CTU. For decades, the parasites of CTU brainwashed children while pretending to teach and hid behind children while reaching around them to steal from the parents. This vast criminal scam is now exposed to sunshine and, like vampires, the nightmarish goons of CTU will soon turn to dust.
Federal receivership law has been used to control public schools in order to implement integration. Who might have standing to seek such a receivership in order to arrest the current chaos? Creditors? Parents? U.S. Dept. of Education?
The process seems to involve a federal judge and doesn’t seem to flow through the DOJ, so perhaps politics could be minimized.
Politics minimized??? Only in anyone’s dreams.
And I do not see any type of Federal receivership ever happening. The Chicago political establishment would any and every means to stop that.
The problem with starting a new district is who would be in charge of establishing this new district.
If it is the same politico’s (Democrats) then it will also be a farce.
Maybe my memory is faulty, but did not CPS go thru a reconstitution in about 1980? A financial manager was hired, I think named Joseph Marin, paid a salary considered high at the time. I have found nothing about this episode in the ordinary news sources. Perhaps I am an incompetent searcher or perhaps it has been well scrubbed (or both). Anybody know more about this?
Replying to myself with an update here.
(1) There was a Chicago School Finance Authority, set up about 1981, run by appointees of the Mayor and Governor, which had power to issue bonds backed by real estate tax. It wound up about 2010. I guess it was considered to be successful.
(2) I found a succinct history of Chicago Public Schools, up to 2015, done by the Chicago Reporter. Very readable and very bleak.
Nothing about Joseph Marin. Perhaps he was imaginary.
The superintendent at the time was Joseph Hannon. He was in charge when just before the Christmas Break the board had no money to issue the pay checks. CTU went on Strike. Hannon was replaced by Manfred Byrd. Banks were very leery about a Jane Byrne administration. Crazy times, crazy people then and now, nothing has changed!
CPS as of this June had $9.3B in debt. Mark, would the new entity absorb any of it? Under the proposal outlined I would think the answer would be no. But it does show just how many feed off this underperforming system. Note that even if the proposal cannot be realized it is helpful because it provides a realistic baseline for viability.
The new CPS would absorb some but not all of the debt. The new entity has to pay fair value for the assets it takes. That price is usually paid in the form of debt assumption, especially if the asset is encumbered by a mortgage or lien securing a particular debt. In any event, the new entity takes only the assets it wants and pays no more than fair value, which surely would total much less than that $9.3 billion, which is why much of the debt would not be assumed.
Why not close the schools in the middle to okay desirable locations and send those kids ( if it’s not too far ) to the half empty ones? The influx of ( relatively ) better performing students might make a difference and the real estate could then be sold. The resulting income, coupled with dismissal of teachers that can’t handle more than 10 kids per classroom ( and secretaries, custodial staff, counselors and, especially, administrators ) would probably amount to a huge increase in funds for the seemingly always cash strapped CPS.
We actually had one at one time. It was called the Archdioces of Chicago.
Pritzker has already set the tone for bailouts of Chicago’s jobs programs when he dog robbed the earmarked gas tax monies for the CTA, with no stings attached of any kind. I fully expect to see pretty much the same with CPS. The suburbs and downstate are viewed by Democrats as just plebs, rubes, mouth breathers, and carnival barkers to be mined for $$$ to prop up Chicago’s malfeasance.
CPS bankruptcy should be welcomed. The sooner the better. Only then will positive change be possible…. when it’s forced down their throats. There is no way they will ever prioritize the students or the taxpayers until absolutely given no other choice. WP should put this article in the vault and pull it out when the time is right. It’s a good idea, but ahead of its time. For those in Chicago that don’t have the patience to wait, you know the solution. This doesn’t need to be your problem anymore.
…and the chances of it happening are zero percent.
I like it.
I like this proposal. Longer term, however, Illinois will have to address the fact that it is rapidly becoming a distant outlier with regard to school choice. Other states, including neighboring states, are empowering students to attend public charter schools, private schools and even home schools. Someday, Illinois will have to reverse negative trends in population, employment and tax revenues with real reforms in a number of areas, perhaps most notably in primary and secondary education.
Or have a national commitment to eliminate all public employee unions .
Or let Chicago and its surrounding blue city’s become thier own cess- pool state and leave the rest of Illinois alone! The whole state suffers from chicago and it’s complete failures