Cook County Board President Toni Preckwinkle used her post-Board of Commissioners press conference Wednesday to again blast Gov. Bruce Rauner for a stalled budget and announced she’s asked departments to institute holdbacks for personnel and spending. She says some of the state’s Medicaid payments to the County’s hospitals are lagging by $100 million.

“Bureaus, departments and elected officials must trim their spending on personnel by an additional half a percent, and non-personnel items by three percent,” Preckwinkle told reporters. “These measures will not fully plug the gap created for us by Springfield. It will not pay for the expenses we incur every day enforcing child support for tens of thousands of Cook County minors. We continue to assess our options on that issue, including all possible legal remedies.”

The cutbacks would run from March 15 through November 30, the end of the fiscal year.

The Cook County Board last month passed a resolution from Comm. Larry Suffredin asking the State’s Attorney to look into ways the County could recoup that money. The resolution calls for the SA’s office to “review and research all existing court orders and consent decrees related to the 2016 Proposed State of Illinois Budget to determine if either they cover payments to Cook County or could be amended to cover payments to Cook County. Further, the Cook County State’s Attorney should research any new cause of action that would cause a Federal or State Court to order payment owed to Cook County.”

Preckwinkle says the state is more than $100M behind on some Medicaid payments owed to the Cook County Health and Hospitals System (CCHHS). “As a result of the failure of the state to pay its bills timely, [CCHHS is] running monthly deficits, and we’re going to have to take corrective action,” Preckwinkle said.

At a regular briefing during the Board of Commissioners meeting, CCHHS Chief Financial Officer Doug Elwell said the system was operating within “a fair amount of red ink as we continue to work through issues,” with enrollment in Cook County’s managed care Medicaid program, CountyCare. But Elwell anticipated the system would recover by the end of the fiscal year, as it had in 2014 and 2015. He said he’s getting advice from County CFO Ivan Samstein, and that the system is in negotiations with the state. “The state owes us $138 million,” Elwell said, though he characterized $68 million as a “normal lag.”

“We are now holding $31 million of their money and trying to negotiate with them to expedite the rest of the payments.”

Commissioners worried the delayed payments might impact CCHHS’ plans for new capital projects (including replacement of the outdated Fantus Clinic and CCHHS administrative offices), especially in light of lower-than-planned revenues from CountyCare and recent announcements of some possible competition: expansions at Rush University and the University of Chicago.

Elwell said the system is in talks with both Rush and U of C to ensure services wouldn’t be duplicative, and he’s confident issues with CountyCare will be worked out. “We just need to get our physicians to more often refer inside our system.” When asked, Preckwinkle didn’t express concern about CountyCare numbers at yesterday’s press conference.

Comm. Bridget Gainer asked that CCHHS brief the Finance Committee on enrollment in CountyCare and reimbursements to the system. “Those are troubling things. I want to make sure that before we make this enormous capital investment that we understand how people are using our system,” she said. Finance Chair John Daley agreed, and said he’d like an update on the impact of projects from Rush and U. of C.     

Other Items from the Cook County Board of Commissioners

Held:

• Litigation is still pending on Otero v. Thomas Dart, et al. The Litigation Subcommittee took up discussion of the case, which was slated to go to trial later this month. The two sides are instead pursuing a settlement. In 2011, Brian Otero was being held on Cook County Jail on a burglary charge, but was acquitted. Instead of going home, he was sent back to jail, told to put back on his uniform, and moved cell to cell for processing. He says when others found out he’d be going home, he was beaten, suffering torn ligaments in his hands and bruises on his face. Otero was released nine hours after his acquittal and is now lead in a class action lawsuit against the county for their post-acquittal detention policy. Commissioners requested monthly updates from the State’s Attorney’s office on the status of the settlement. A settlement on a similar issue in Los Angeles more than a decade ago cost taxpayers there $27 million, NBC Chicago reports.

Approved:

• A resolution from Comm. Jesus ‘Chuy’ Garcia urging Mondelez, the parent company of Nabisco, to continue its relationship with the South Side of Chicago, passed the board Wednesday. Garcia says 600 manufacturing jobs at the facility are “up in the air,” and the resolution “is simply imploring Mondelez and Nabisco to sit and continue to dialogue with affected workers, many of them residents of Chicago’s South and Southwest sides and suburban communities.” Comm. Richard Boykin, citing tax incentives Nabisco has received “reaching upwards of ninety million dollars” as well as an extended enterprise zone and $29 million in tax breaks over ten years, called for tougher legislation, or possibly penalties, for companies that leave the county after receiving tax breaks.

• Commissioners voted for a resolution calling for the U.S. Congress to pass the Recognize, Assist, Include, Support and Engage (RAISE) Family Caregivers Act, which “would help disabled and older Americans live at home” by offering more resources and options to the estimated 40 million unpaid family caregivers in the country.

• A nearly $700,000 contract to Catalyst Consulting Group to make further improvements to applications on County Clerk David Orr’s website also passed the full Board of Commissioners. Catalyst has run the Clerk’s website since 2009, and developed 20 applications, according to the contract.

• An amendment to the County Code allowing licensed firearm instructors with current registration from the state to use replica guns for education, instruction, and training on firearm safety within a business or classroom setting also passed the full Board. Comm. Gregg Goslin introduced a substitute that corrected County Code language in committee Wednesday morning. “A couple items were left off,” Goslin said, the replica gun used as cell phone holder ordinance and a section on toy guns commissioners already approved last October. A similar ordinance in Chicago City Council was passed the month prior.

Introduced:

• An ordinance from Comm. Larry Suffredin that would create inspectors general for all municipalities and specialty districts, including Cemetery Associations; Drainage, Mosquito Abatement, River Conservancy, Sanitary, and Street Lighting Districts; and Water Commissions, was referred to committee yesterday. Comm. Jeffrey Tobolski requested the State’s Attorney verify whether the program is constitutional or enforceable, “before we spend taxpayer money.”

• Suffredin also introduced a pharmaceutical disposal ordinance aimed at protecting the County’s waterways from “improperly disposed of prescription drugs passing through [the County’s] wastewater and treatment centers.” The ordinance cites Alameda County’s Safe Drug ordinance, which was passed and amended in 2012. The ordinance would establish a stewardship plan for the collection, transportation and disposal of covered pharmaceutical drugs. The program would be managed by the Cook County Sheriff’s Department. It was referred to the Legislation and Intergovernmental Affairs Committee.

• The so-called ‘tampon tax’ has made its way to the Cook County Board, after also being introduced at the City Council. Commissioners Richard Boykin and Deborah Sims introduced an ordinance that would exempt feminine hygiene products from the Cook County Retailers’ Occupation Tax. “Feminine products, like many medicines, are a necessity and not a luxury. Given this fact, these products should not be over taxed,” Commissioner Sims said in a release. Feminine products are currently taxed at the rate of any common product in Chicago: 10.25 percent. The proposal has been referred to the Finance Committee.

The 12th Ward Democratic Committeemen campaign got hotter today, as the Muñoz and Cardenas campaigns lobbed charges of vote buying at one another while allies of one campaign launched an attack website.

The Chicago Board of Elections reports the following:

UNOFFICIAL Early Voting - Day by Day - Citywide data thru 6 pm, March 2, 2016

UNOFFICIAL Cumulative: Feb. 17, 2016 thru 6:00 pm, March 2, 2016
Ward ......Early Voting Ballots

The 13th Ward continued on a tear yesterday, with 21% of all early votes submitted in the city so far. 5,972 early votes have been submitted across the city since ballots were first accepted on February 17, with 1,267 in the 13th. 
Also, a correction from the Board of Elections, The 11,003 total reported yesterday was actually the cumulative ballots cast since Feb. 17, not the one-day total for Feb. 29. The one-day total for Feb. 29 was 9,279.

Early Voting - Unofficial Ballots Cast by Ward - Feb. 17 through March 1
As of 5:47 p.m., March 1, 2016

The Chicago Board of Elections reports a new record for the first day of early voting with 11,032 votes cast. One especially big turnout: 1,003 votes in the 13th Ward, where Democratic Ward Committeeman and Illinois House Speaker Michael Madigan is rallying forces to combat primary challenger Jason Gonzalez.

The Board of Elections has also provided this history of early vote turnout. Below are unofficial ward-by-ward turnout numbers for yesterday as reported by the Board of Elections.

Unofficial Ward-by-Ward Early Voting for Feb. 29, 2016

• IG’s authority does not extend to reviewing, auditing or investigating waste and inefficiency in the City Council’s legislative processes and operations.


• The IG receives complaints against CC employees.


• Investigation against an alderman can be initiated only by a complaint that (1) names the alderman; (2) states the facts underlying the complaint; and (3) is signed by the person making the complaint. Any city officer or employee may sign such a complaint.


• The deferred and published IG ordinance is amended by inserting “whereas” clauses.


• The deferred and published IG ordinance is amended by removing a code section amending the OIG’s minimum budget. The minimum budget language is legislated and already included in the code.


• The deferred and published IG ordinance is amended by specifying that the IG can investigate alleged violations of Chicago Municipal Code Chapter 2-156 (the Ethics Ordinance), or any other law, order or regulation applicable to aldermen/CC employees’ performance of duties or discharge of responsibilities.


• The deferred and published IG ordinance is amended by correcting outdated effective date language.

Although she’s in Iowa covering the caucus, Super-Reporter Mary Ann Ahern from NBC5 scooped everyone last night by reporting that Ald. Will Burns (4) plans to retire and take a job at Airbnb. Burns did not respond to requests for confirmation by Aldertrack’s publication deadline.

Ald. Burns is Chair of the Education and Child Development Committee and has been holding a broadly supported resolution from a vote out committee calling for a halt to additional charter schools. Burns, who came to Council after three years as a State Representative and time in Springfield as former-Senate Pres. Emil Jones, Jr.’sconfidant, and was elected alderman with the support of 4th Ward Democratic Committeeman Toni Preckwinkle after she was elected Cook County Board President. Burns has also served as a contractor to lobbying powerhouse, AKPD, recently rebranded as Kivvit.

Despite its name, the Education Committee has virtually no purview over Chicago Public Schools, since education reforms passed in 1995 removed all Council oversight from CPS and gave the mayor total control. Burns is highly unpopular with the Chicago Teachers Union. “Burns is like Ken Dunkin to the CTU,” said one labor organizer speaking anonymously last night.

Because Burns retired before a 28-month cutoff date, the time an alderman must serve to allow the Mayor to appoint a replacement, the 4th Ward will need to conduct a special election to replace him.

“Total shock,” said Ald. Joe Moore (49), who has worked with Burns closely in the past. “If he was not happy, he certainly kept it close to his vest.”

This winter, Chicago will need to dig out of a number of major challenges, including policing reform, city pensions and a storm of shootings in our poorest neighborhoods. But the blizzard that threatens to overtake them all is last week’s failed Chicago Public Schools $875 million bond issue.

The concepts behind it are dry, but CPS’ giant problem with bond markets has the potential to permanently damage the school system, halt a burgeoning white, upper-middle class student body, decimate property values in some of Chicago’s hottest neighborhoods and possibly harm the city’s residential property tax base.

I’m not exaggerating.

CPS’ financial problems have been building for some time. It hasn’t had a balanced budget in four years. Last year, it used 13 months of revenue to pay for 12 months of operations. This year, it passed a budget with a $480 million gap, expecting the state legislature to fill it. But as we all know, Republican Gov. Bruce Rauner has refused to support a CPS bailout, and the Democratic-controlled state legislature lacks the votes to override Rauner’s veto.

So the schools have been borrowing. There’s two kinds of debt: Short-term, which comes from banks and has high interest rates, likely in the double digits. And long-term, which comes in the form of bonds, debt taken on by investors in an open market.

Last December, CPS Vice President of Finance Ron DeNard reported the schools had already incurred $1.065 billion in short-term debt on an overall annual budget of $5.692 billion. This sort of short-term borrowing for CPS–especially without a serious revenue solution on the horizon publicly–is unprecedented.

So then we get to last Wednesday’s $875 million bond offering. The offering, which was part of a regular borrowing by the school system–they’re carrying over $6 billion in bonds–failed, just a week after investors heard talk from Gov. Bruce Rauner and Springfield Republicans that they want a state takeover of CPS and to allow the district to declare bankruptcy.

Nobody wants to lend money to an organization that might go bankrupt.

Chicago CFO Carole Brown and CPS CEO Forrest Claypool ran to the microphones Thursday to say that pulling a bond issue from the market at the last minute is “common”. And that Gov. Rauner’s declarations had nothing to do with the bond offering. But we reported analysts saying otherwise. So did Bloomberg. And so did the trade newsletter Bond Buyer.

Last week Claypool said that the school system will, “definitely go to market before next week, early next week at the latest,” but since the bonds are already on the market day-to-day (that means they’re actively looking for investors and trying to figure out how much buyers will pay, and how much they’ll buy), that’s a fairly squishy statement. The key question is, when does CPS expect to close the sale, but saying so would tip their hand to the market too much.

After such a public failure, and little support from the Governor, bond investors are spooked, and CPS’ ability to borrow is on the line. Since its property taxes are capped and Springfield won’t bail it out, without the ability to borrow, CPS could be quickly sent into a death spiral.

Here’s why: While the vast majority of Chicago’s public school students are lower income and minority, some of the city’s trendiest, largely white neighborhoods are deeply linked to CPS. Ravenswood, North Center, Lincoln Square, Roscoe Village, West Lakeview, West Town and Wicker Park have some of the city’s best neighborhood elementary schools, and their high schools are improving, too. Many of those schools have improved because of the personal investment area parents have made, including through many “friends of” fundraising organizations. Gradually, the schools in these areas have become high performing, excellent education options for families.

As a parent for one of those schools, I can attest to the changes. But for four years I also reported for a neighborhood publication covering many of those neighborhoods, and I heard endless stories about school crowding because of their popularity. Realtors were selling homes purely because of the neighborhood school and a burgeoning pride in public education. Ald. Ameya Pawar (47) has made neighborhood school improvement his centerpiece, and recently his neighboring colleagues, Ald. Pat O’Connor (40) and Ald. Tom Tunney (44), have joined him to push for more resources to the area neighborhood high schools, Lakeview and Amundsen.

The local interest in public schools is not altruistic. It’s because housing costs east of Western Ave. and south of Foster Ave. are incredibly expensive. Single family homes are rarely found for less than $600,000, and $1 million-plus is becoming the norm. After paying the mortgage, few families–even ones able to afford a million dollar house–are able to afford the $15,000 per year more per child many private schools cost.

As a result, many of these North Side white parents are living in Chicago, rather than the suburbs, because of their schools.

If the quality of CPS schools begins to decline noticeably, and already many of even the “best” schools have 25-28 kids in a classroom with little special education support, then there’s a danger well-to-do parents will pick up and move to the suburbs. Because they can.

What then happens to these “hot” neighborhoods? Some will stay and find a private school, but many will move out. We should expect to see moving vans filling the streets, but an inexorable decline seems likely. Despite the housing downturn, Chicago’s North Side neighborhoods south of Foster and east of Western have bounced back the fastest and highest in terms of property values.

The Chicago Public Schools “pulled” a planned issuance of $875 million in bonds yesterday, throwing into question the school system’s ability to issue further long-term debt and jeopardizing its ability to get through a major cash crunch in the coming weeks.

Yesterday morning, the school system planned to offer the debt at an exorbitantly high rate of 7.7%, but then pulled the deal before finalizing pricing, typically the last step before a sale. In a call with financial reporters yesterday afternoon, City of ChicagoCFO Carole Brown said, “CPS did not pull its deal, the deal has not failed…[We] had numerous discussions with investors and they are making evaluations of the credit on structure, terms and price. They asked for more time.”

PDF of bond offering document.

However, Brown’s claim did not go over well on the call with financial press, at one point resulting in a shouting match on the call between Brown, CPS Vice President of Finance Ron DeNard and reporters over whether or not it should be termed a “pulled” deal or a “failed” deal.

“We’re still on course to issue CPS’ bonds,” said Brown yesterday. “The fact that the CPS bond deal has not sold today has not altered the funding plan.”

CPS is now planning to go “day-to-day” on the sale, which means that it will keep the terms open until underwriters can assemble a large enough group of buyers to complete a sale. In yesterday’s call, CFO Brown said that the size, structure and yield of the bond offering could still change.

“For bond buyers to be shirking a deal, the issue of the state takeover was likely the last straw. People don’t like to buy bonds that have uncertainty,” said Kristi Culpepper, Executive Director of the Kentucky School Facilities Construction Commission, which manages school bond offerings statewide in Kentucky.

Gov. Bruce Rauner’s announcement last week of plans to attempt a CPS takeover and enable Chapter 9 bankruptcy in Illinois likely impacted this week’s CPS bond offering, said Culpepper. Even if it wasn’t politically likely.

“A lot of muni market participants aren’t digging into the details of the credit,” said Culpepper. “Now you have people looking at it, and evaluating the risk. When you have a giant headline with the governor saying ‘We’re going to take it over,’ people think about it differently.”

CPS’ bond rating is four notches below investment grade, according to ratings agencies Standard & Poors and Fitch.

The 7.7% rate originally offered for the bonds is unusually high for munis, 5.24% higher than the standard rate investment grade bonds get. Because yesterday’s offering was not successful, CPS has two options: Raise the offering to a higher rate to attract more investors, or reduce the amount offered to the number of investors willing to buy. A higher rate means more costly borrowing, a lower amount offered means a more likely cash crunch later in the year.

As Aldertrack reported last week, CPS is heading into a dire cash position, projecting to end the school year in June with about $33 million in the bank. At the start of 2013, the Board had $1.07 billion in the bank. This month’s bond issue will help CPS get through a tight cash position and allow the school system to avoid more borrowing at high short-term rates. In December, CPS announced it had already incurred $1.065 billion in short-term debt.

If the current offering is not completed soon, CPS may fall back on even more costly bank debt, said DeNard. “We will make our cash flow needs. We do have short term financing available,” he said yesterday to reporters.

Meanwhile, if CPS is unable to complete the $875 million bond offering, or it has to reduce the size of the offering, there are few funding options available because the district has already met its property tax cap and Gov. Rauner has refused to approve a bailout without passage of his Turnaround Agenda. Chicago CFO Carole Brown alsosaid earlier this month, “The city has no plans to directly, financially assist CPS.”

Illinois Democratic Legislators, joined by Chicago Aldermen and the Chicago Teachers Union yesterday morning announced plans to introduce legislation in Springfield that would compel Chicago to declare an annual TIF surplus to fund the financially beleaguered Chicago Public Schools, and direct the city to conduct more transparent accounting of how much money in each TIF has been committed to projects.

But whether or not there are funds available to actually be declared surplus is up for debate.

At yesterday's press conference, chief bill sponsor and Illinois House Democratic Leader Barbara Flynn Currie asserted that the city has anywhere between $150 and $350 million in uncommitted funds that could be declared surplus. She said in this emergency situation, instead of those funds being dispersed to local taxing bodies like Parks and the Metropolitan Water Reclamation District, all of those TIF funds would be given to CPS. “The potential impacts of inaction to address CPS’ financial needs are potentially far greater than the impact of less TIF surplus to the various non-home rule taxing districts,” a press release from sponsors says.

A briefing document to muster support for Currie provided to Aldertrack earlier this week had claimed an even bigger surplus: $445 million or as much as $700 million.

Ald. Carlos Ramirez-Rosa (35), who is leading a charge for TIF accounting on the City side, told Aldertrack after a sit-down with the Department of Planning and Development, he figured the TIF in his ward, Milwaukee/Kedzie, had about $24 million alone that “could be” surplus. “There are a lot of tricks,” he said, what’s marked as “earmarked” might not really be earmarked.

And there’s sometimes confusion among aldermen about how TIF money is spent. Last week, for example, some Finance Committee members pushed back on spending $4.6 million in TIF money to be used for an athletic field for Jones College Prep and National Teachers Academy in the 3rd Ward. Aldermen were surprised to find that the field had already been built, and they were just reimbursing CPS. Not only that, the money was being “ported” to the contiguous Michigan/Cermak TIF from the 24th/Michigan TIF. The TIF money hadn’t been doled out yet at the request of local Ald. Pat Dowell, who wanted an MOU in place between “CPS, the Board of Education, the community, and the two schools” for open use of the field. Confused yet?

Budget officials with the city estimate the real surplus is far below what Currie, Rosa, and their colleagues estimate. Chicago Budget Office spokesperson Molly Poppe told Aldertrack yesterday that while the city has $1.38 billion in TIF accounts, only $140 million is not already committed to projects. Of that, “$113 million was surplused in the 2016 budget,” she said. The rest, Poppe says, is already committed to bond payments or in accounts with less than a million dollars in their balance. This past summer, the Mayor announced the City would freeze seven downtown TIFs, and estimated the move would free up $250 million over the next five years, half would go towards CPS.

The source of the dispute is that Chicago is only required to report TIF account funds once a year, and even then, a whole six months after the fiscal year is complete–providing an out-of-date snapshot. In addition, allies of Flynn Currie on the bill allege the city can say funds are “committed” without actually providing a contract, essentially budgeting for incomplete deals and walling them off from being surplused.

Flynn Currie’s proposed legislation would create a new classification, “obligated” funds, according to CTU Legislative Director, Stacy Davis Gates.

“[The legislation] only allows for ‘obligation’, things that are already contracted out or payments made to debt service. What the city has been successful at doing is obscuring the number because they have the loophole of anticipated [spending],” said Davis Gates.

CTU is optimistic the bill will pass the legislature, especially since Flynn Currie ranks second in the House to only Speaker Mike Madigan.

“We anticipate it will pass. We have a good sponsor,” said Davis Gates.

Yesterday, Ald. Rosa announced he has 30 aldermen co-sponsoring a resolution calling for the city to declare a TIF surplus so funds could be directed to CPS.

“We need to open the books and figure out what projects have been voted on by the City Council. If they’re not going to break ground for two or three years, that’s money that’s on the table and should be declared surplus,” he told Aldertrack last night.

A Council source also told Aldertrack that the Mayor’s Office is considering either holding an aldermanic briefing or a Budget Committee hearing on available TIF funds next week.

When considering the proposal to push Chicago Public Schools into receivership put forth by Illinois GOP legislative leaders yesterday morning, only one thing matters: The Illinois Senate President and Illinois House Speaker, both Democrats, control whether or not the bill will get to a vote.

According to a tweet from Reuters’ Dave McKinney, Senate President John Cullerton said of the proposal, “Not going to happen. It’s mean spirited and evidence of their total lack of knowledge of," CPS' problems.

So the proposal, which would place CPS under control of a state oversight board, is dead on arrival. Meaning, a continuation of the status quo.

However, yesterday’s GOP legislative leaders’ proposal did make clear one thing: Chicago Public Schools’ financial crisis is no longer something state leadership is interested in solving any time soon. It is a political chit to be used in the larger battle: resolving the CPS financial crisis through Gov. Bruce Rauner’s Turnaround Agenda, which includes eliminating collective bargaining by government employees, including teachers.

When asked during yesterday’s press conference if the state oversight board proposal was linked to Rauner’s Turnaround Agenda, GOP Senate Minority Leader Christine Radogno said, “Yes, it’s about helping the city and state, both.”

Considering that the CPS financial crisis impacts educating children in the City of Chicago, a basic government service, a statement by Radogno that the problem is somehow linked to state problems is perplexing. It can only be understood as a political statement.

The reasons for why CPS is funded partly by the state, and requires state funding to move forward every year, is complex and better explained at length elsewhere. But everyone of every political shade agrees: The system for funding schools in Chicago and Illinois is broken.

Yet, while CPS is experiencing a fiscal problem, Illinois is experiencing a political problem: No one group has enough political power to push through their solution for fixing CPS’ short-term and long-term funding solution. And so we are stuck with a status quo.

As Aldertrack’s Claudia Morell detailed Tuesday, next week’s CPS bond issue, while likely to be priced at usurious rates, will provide the school system with enough cash to get through to mid-February, when property tax revenue begins to be transferred from the Cook County Treasurer. After that, CPS will have enough cash on hand to muddle through to the end of the school year. Then, until classes begin in September, the school system’s cash needs are significantly lower.

Without state help, CPS has few options to solve its long-term financial problem. Its ability to raise property taxes is severely limited by a state cap.

One potential solution: CPS could get money from Chicago.

City Council members are pushing for Mayor Rahm Emanuel to declare a TIF surplus, an amount that is also under dispute. A Mayoral Budget Office spokesperson yesterday estimated this year’s surplus at around $90 million, while TIF surplus proponents are saying it’s closer to $400 million, maybe more than $700 million. A declared surplus would be divvied up by the same formula as property taxes in the city, so CPS would get $45 million 50% of that windfall. CPS needs close to $500 million to close their budget gap this year.

The City of Chicago could also directly transfer funds to CPS. While there are plenty of reasons this would be bad policy–the City of Chicago and CPS are two different entities, and therefore CPS should have to stand on its own–Chicago has home rule and the ability to raise as much taxes as it wants. Technically, Chicago could just raise property taxes and funnel the money to CPS, which is a suburban Republican’s dream: Make Chicago pay for everything on its own.

But last week Chicago CFO Carole Brown threw cold water on both of those possibilities when she told reporters, “The city has no plans to directly, financially assist CPS.”

So the problem is ultimately political, putting everything on the ballot booth for state legislators. The first test will be with the March 15 Democratic Primaries, when State Rep. Ken Dunkin will fight for his political life against challenger Juliana Stratton. Dunkin, you may recall, is a lynchpin vote for the Illinois House Democrats. With him, Democrats have a veto-proof majority (Senate Democrats also have one, but with less drama). Without Dunkin voting with Democrats, Gov. Rauner’s plans are potentially viable.

We’re told by sources that SEIU Illinois and the United Working Families labor umbrella group are going all out to defeat Dunkin this March. Meanwhile word on the street is that Dunkin’s original political sponsor, Secretary of State Jesse White, has abandoned him. Rauner and the pro-Rauner PAC Illinois GO could still jump in, but outside support doesn’t usually hit until the last three weeks before Election Day.

Then, in November we’ll likely see a battle royale for control of the Illinois legislature. Only about 30 House and Senate seats out of 158 will be seriously contested, but just two House seats and four Senate seats going Republican would break the Democratic veto-proof majority, giving Gov. Rauner and GOP leaders a fighting chance to pass at least some of their agenda.

So, November’s elections are what we’re really waiting for. That’s what Leader Christine Radogno was really saying in yesterday’s press conference.

Until then, Chicago Public Schools should expect to mire in a financial mess.

While Mayor Rahm Emanuel got most of his new bond authorizations through Finance Committee yesterday, the Progressive Caucus and the Chicago Teachers Union say the city has not done enough to push back on banks over hundreds of millions of dollars of termination fees and other payments for swap deals. Meanwhile, taking an unusual step, Chicago’s Chief Financial Officer Carole Brown made herself available yesterday for a conference call with reporters to rebut those accusations.

CTU and the Progressive Caucus charge the city’s move to unwind its previous swap agreements for bonds is premature, and the $100 million in termination fees the city plans to pay for ending variable rate bond deals so they can move them to fixed rate deals is too much.

“The Mayor is voluntarily choosing the pay the termination fees,” says CTU spokesperson Matt Luskin. Instead, the city should be using political leverage and legal means to push banks into better deals.

Pressed by reporters on this issue yesterday afternoon, CFO Brown pointed to a 2014 outside counsel study conducted on behalf of the city to determine if there was a legal basis. The report, written by a pair of financial securities law experts, attorneys Dan Collins and James Kopecky, found, “no evidence that would support a claim that the City's swap agreements were procured by fraud or that any of the City's swap counterparties made any material misrepresentations or omissions of fact.”

Asked for examples of how the city has worked to reduce the fees it owes, CFO Brown said that bankers who work with the city appreciate how important a client Chicago is. There is no need to threaten to take away anyone’s business, she said.

“It’s not lost on anybody [working] on the transaction how important the City of Chicago is to business lines for the banks and to individuals,” said Brown.

Deputy Comptroller Jeremy Fine said, “In our estimate we were able to save $20 million or so with the help with our advisors.”

In CTU’s opinion, a great deal more could be done. “They have a whole range of options,” said Luskin. “They could rank banks, based on the impact they make on the community,” and threaten to take away city business if they don’t reach a certain threshold. Last September, Treasurer Kurt Summers proposed a similar ranking for determining if banks should be used as municipal depositories.

CTU also has their own expert, who claims the Emanuel administration's experts are wrong. Former Congressman Brad Miller (D-NC), an attorney who sat on the House Financial Services Committee and led passage of a number of consumer-activist federal measures, has been consulting for CTU and disputes the city’s 2014 study.

“The study does an excellent job of demolishing arguments never made,” said Miller, who says common law in Illinois has no statute of limitations on claims against banks. He says banks who underwrote bonds for the city made fraudulent representations on the variable rate bonds the city is now attempting to replace.

Illinois’ fraudulent concealment law says there’s a duty to disclose information about the risk of a deal and what could go wrong, says Miller. The banks who underwrote the deals Chicago made did not disclose they were the main buyers of the bonds, and that as soon as buyers lost interest in the bonds, the rates would spike and the market would collapse.

Deputy Comptroller Fine, who oversaw the variable rate bond sale and was interviewed for the city’s 2014 legal study, told researchers, “the City's debt management team was well informed about the risk factors associated with swap agreements.”

In other words, if the guy in charge of the city’s bad deal says he went into it with eyes wide open, you don’t have much of a legal case for fraud.

“Sure. This would be embarrassing,” responds Miller. “They would be played for chumps, and nobody wants to do this. [Attorneys suing the banks] would have to show they did not understand.”

The solutions for Chicago Public Schools’ growing financial crisis narrowed down by two today, as leaders from Chicago and the state rejected the possibility of direct aid to the school system any time soon.

In a conference call with reporters yesterday afternoon, Chicago CFO Carole Brownacknowledged that CPS has a pending financial crisis, but then said, “The city has no plans to directly, financially assist CPS.”

And, in an interview with CBS2’s Derrick Blakely yesterday afternoon, Gov. Bruce Rauner said the state won’t step up either. “Just raise taxes in the state and send us cash? That’s not going to happen,” said Rauner.

While CPS has not set a specific date for when it will run out of cash, a recent analysis by Aldertrack found that mid-February will likely be when the cash crunch arrives. Property tax receipts do not begin to arrive until February 20, according to the Cook County Treasurer’s office.

CPS’ ability to raise property taxes is capped: Last year’s maximum levy increase only raised $19 million last year. And because the city and state have both said a financial bailout is out of the question, CPS is left with choosing either conducting layoffs or borrowing hundreds of millions of dollars more to get through the school year.

A conference call organized by a pair of Black pastors late last night resulted in dozens of high-profile activists and pastors from across the city agreeing to boycott Mayor Rahm Emanuel’s Martin Luther King day breakfast at McCormick Place and to begin planning protests of the event.

The call, organized by Rev. Jedediah Brown and Bishop James Dukes, included dozens of callers, confirmed by an Aldertrack reporter who was able to hear the closing minutes of the conference call. Brown later confirmed for Aldertrack that the call included pastors such as James Meeks, Ira Acree, Bishop Larry Trotter and activists such as Ja’Mal Green and Ameena Matthews.

“We’re not going to dishonor Dr. King by having breakfast with a man that has not delivered justice to our community,” said Brown. “I’ve never seen the clergy have such a rebellious nature to do something.”

The group agreed to boycott the breakfast, encourage other pastors and activists to boycott the breakfast, and to organize a small protest at McCormick Place next Monday. In addition, the group will hold a press conference before Wednesday’s City Council meeting and hold an organizing meeting on Thursday.

Brown has also been leading a push to organize a group of activist leaders, The First Fifty, to help plan an agenda and list of demands to present to the Mayor. The group, which is close to completion, Brown says, requires a time commitment and a $1,000 contribution to management of the group. Brown says it includes not just activists and pastors, but a few high profile African-American celebrities. Their first meeting is set for January 21.

Last week’s New Year’s Eve release of thousands of email messages between top Chicago administration staffers in response to multiple news organizations’ Freedom of Information Act requests provides an unprecedented look into the workings of the top levels of an active Chicago mayoral operation. The messages, related to the Laquan McDonald shooting, illustrate the extensive authority the mayoral press operation has within city government.

WTTW’s Chicago Tonight has provided an excellent reference to the messages released, and a volunteer group, led by data analyst Steven Vance, has created a catalogue of each email message in the FOIA dump.

While the huge volume of email communication provides insight into how Mayor Emanuel’s office operates, it is far from a complete picture. There are likely many other related policy discussions elsewhere, either in email, on the phone or in person. Indeed, several message chains end with “please call me”, suggesting many decisions were made offline.

Reviewing the email trove, other news organizations have reported that Scott Ando and the Independent Police Review Authority coordinated closely with the Mayor’s office, that the McDonald family attorney threatened to reveal evidence of a “cover up” if there was no settlement and that the release of the McDonald video produced an “all hands on deck” response from Mayoral staff. There are likely to be more reports stemming from the email dump.

Early in my career, I served on personal staff for a pair of Cabinet Secretaries during the Clinton Administration. While these kinds of communications are familiar to me, a few things stand out.

Primarily, the communications between Emanuel staffers are extremely disciplined and process-oriented. There’s little personal talk, or references the usual familiarities that litter email between people in constant communication. Especially after the release of the McDonald video, when things are moving quickly, the team remains highly focused on the facts as they understand them and oriented towards delivering the message of the day.

This sort of message and process focus is no small feat, especially when so many average citizens are vilifying your boss on the outside. It is natural for even small challenges to the goal to come up (e.g. someone asking, “Is this the right thing to do?”), but the Emanuel team consistently seems to have its eye on the ball: Do everything possible to ensure Team Emanuel’s message wins the day.

After the release of the McDonald shooting video, the Emanuel team seems taken aback at the virulence of the protests and the extent of the national response to the video. At one point, Communications Director Kelley Quinn says about a relatively tame December 1 New York Times Editorial suggesting Emanuel has lost credibility, “Well, I knew it'd be bad but this is ridiculous.”

To ensure message consistency, the emails show the Emanuel press team to be in regular, close communication with other city agencies, including the heads of communications from the Police Department, Chicago Public Schools and the Independent Police Review Authority. While it’s not surprising that former IPRA Executive Director Scott Ando and Chief of Staff Larry Merritt were in contact with the Mayor’s communications team on an issue that involved them, the level of guidance they received is surprising. Rather than setting an independent communications strategy for IRPA, on multiple occasions Ando and Merritt checked with Mayoral staff to see if they should even respond to press requests for interviews and for guidance on specific reporter requests.

In April, Mayoral Deputy Communications Director Adam Collins writes, “I found out a bit ago that IPRA's PIO talked to Monica [Davey from New York Times] about the structure of IPRA and how they operate without checking in with me (and despite the fact I had already reached out to coordinate earlier in the day).”

Some other observations from the New Year’s Eve FOIA dump:

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  Prior to the video release, there was a great deal of discussion between the press office and Law Department about how to honor FOIA requests. While freelancer Jamie Kalven was moving for the video release in court, Sun Times columnist Laura Washington and Tribune crime reporter Jeremy Gorner were pressing Emanuel staff for details on the circumstances surrounding the McDonald video and shooting as early as January 2015.

  
  


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  A few local politicians are referenced as clear friends of the Mayor’s office in attempts to influence reporters: Ald. Will Burns (4), Ald. George Cardenas(12), Ald. Raymond Lopez (15) and Ald. Carrie Austin (34) as well as State Senator Kwame Raoul. Austin at one point goes so far as to run proposed press release language by Mayoral staff.

  
  


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  Early every morning Mayor Emanuel receives an email with top press issues of the day and suggested talking points. While not unusual, this sort of message guidance is not typical. Many top politicos resist a “message of the day”, preferring to speak more extemporaneously. Clearly not Emanuel. Anyone who has watched Emanuel’s press conferences can see evidence of his strong message discipline.

  
  


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  Mayoral communications staff seem to pay much closer attention to television reporting than other outlets. The emails suggest they closely monitor morning and evening broadcasts and respond with much more urgency to TV than to a print or digital media request.

  
  


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  Mayoral staff put an enormous amount of energy into the December 2 Politico Q&A with Mike Allen, clearly thinking the event would be an opportunity to shape national thinking. Instead the event was overtaken by Emanuel’s anger over Allen revealing his Cuba holiday vacation plans.

  
  


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  Deputy Mayor Ken Bennett and Mayoral Deputy Chief of Staff Vance Henry seem to be the point persons to gather information on protestors and organizers.

  
  


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  When protests really began to roll, Vance Henry, the Office of Emergency Management and Communications and other Mayoral staffers attempted to track the when and where of every protest. One email chain on December 7 with Dep. Chief Operating Officer Lisa Laws seems to suggest she was monitoring the protests using city surveillance cameras at the OEMC control room.

  
  

Elections attorney Perry Abbasi, representing an objector to State Rep. LaShawn Ford’s ballot petition to run for 29th Ward Committeeman, says the Chicago Board of Elections will remove Ford from the Committeeman ballot when it meets on Tuesday. Abbasi, who is representing long-time West Side operative Tommy Simmons in the objection, and is paid by Ald. Chris Taliaferro, says a Board of Elections Administrator shared a draft of his report on the Simmons objection, and will sustain it.

Ford turned in 2,229 signatures, but after Simmons’ objection only about 404 were sustained, says to Abbasi. 759 are needed to stay on the ballot. Ford could file a “Rule 20” request to appeal the ruling directly to the Board of Elections, but as of Friday afternoon he had not yet done so.

Ford also filed an objection to Taliaferro’s Committeeman ballot petition, but Abbasi reports the Board of Elections did not sustain enough objected signatures to knock Taliaferro off the ballot.

Ford says he’ll be talking with his attorney, Mike Kasper, to decide whether or not he’ll be filing a Rule 20 before Tuesday’s Board of Elections hearing. “I focused on making sure I had my State Rep. stuff and I relied on someone else to get my Committeeman signatures. I think he screwed me.”

If the Board of Elections removes Ford from the ballot and keeps Taliaferro on, Taliaferro will run unopposed for 29th Ward Democratic Committeeman. Former 29th Ward Ald. Deborah Graham, the incumbent, did not file for reelection.

Ald. Michele Smith will not be running for reelection as 43rd Ward Democratic Committeeman, according to a statement her office provided to Aldertrack last week. Instead she will be supporting Lucy Moog, a former Congressional staffer for Mayor Rahm Emanuel and wife of successful internet entrepreneur Matt Moog.

The 2014 fatal shooting of 17-year-old Laquan McDonald and its horrific circumstances are adding fuel to a steadily growing fire of anger and discontent with the city’s criminal justice system among Chicago’s Black community, according to African American activists, pastors and aldermen Aldertrack spoke with yesterday.

The City Council approved new regulations for privatizing city assets and services, “no-fly” zones for recreational drones, $700,000 in police settlements, an amended e-cigarette tax, a new airport parking program and fees for parking operators around city airports.

CPS CEO Forrest Claypool wants to revoke the charters of four “chronically underperforming charter schools” currently listed on the Academic Warning List. Pending approval by the Board of Education, the following schools won’t have their charter renewed at the end of the current school year: