A member of the Illinois General Assembly has proposed a bill that would allow Chicago’s deeply troubled public school system to solve its massive projected budget deficit of $1.1 billion by declaring bankruptcy.
The House member is Ron Sandack, a Republican from the pleasant Chicago suburb of Downers Grove, according to WLS-TV.
“This knee jerk reaction to always say ‘let’s just raise taxes,” Sandack told the ABC affiliate. “That’s where a bankruptcy can actually be helpful.”
Sandack’s matter-of-fact recommendation comes as Chicago Public Schools, the third-largest taxpayer-funded school system in the nation, faces a grave and immediate financial crisis.
The bulk of the $1.1 billion deficit is a mammoth $634 million pension payment which will come due on June 30.
Chicago Public Schools doesn’t have enough money to make the payment. It also has no reserve fund.
Sandack’s legislation would allow Chicago Public Schools and other cash-strapped school districts across Illinois to seek Chapter Nine bankruptcy protection. Federal bankruptcy judges could then order debt restructuring, which could include partial or full release from pension obligations.
“We can’t tax our way out of this problem,” Sandack told WLS. “We need additional, broader relief.”
“Some restructuring of that obligation I believe can occur at the federal level under a Chapter Nine construct,” the GOP state congressman added.
Chicago’s powerful teachers union opposes Sandack’s bill.
