Fitch became the second credit rating agency in as many months to downgrade Chicago Public Schools’ outlook from “stable” to “negative.”
Fitch, in its assessment, put the blame squarely on the Chicago Teachers Union.
“The Chicago Teachers' Union (CTU) has filed a number of suits against the board and has voted to authorize a strike over what it considers unsatisfactory terms of a proposed new multi-year contract.
“Fitch believes continued litigation and the strike threat indicate an increase in the already high level of discord between the CTU and CPS, which will make the competing goals of managing expenses and improving educational standards difficult to achieve.”
The district’s increasingly bleak pension picture also contributed to the downgrade.
“Pension funded ratios have dropped significantly in the last several years due to a combination of lower-than-expected investment returns and payment deferrals for the CTU plan in fiscal years 2011-2013. As of June 30, 2011 the plan was 59.9% funded, or 51.4% using a 7% return rate, compared to 79.7% and 68.4%, respectively, in fiscal 2008. District non-teachers participate in even more poorly funded city of Chicago plans.”
With this disturbing yet unvarnished analysis, the moment has arrived for the board of education to get serious about completely reforming the school district. It has continued to attempt to operate in the outdated model of collective bargaining, a strategy which is obviously working to the district’s detriment.
Collective bargaining – that is, setting policy and spending in stone for several years at a time, based on unaffordable agreements with the union – is what got the school district into this financial mess. Does the board of education have the backbone to do anything about it?