Chicago Schools Want Funds Normally Given to Developers

Chicago Public Schools CEO Pedro Martinez is pushing for nearly $1 billion from the city’s tax-increment financing districts, typically used to spur real estate development in economically distressed areas, to instead solve the school district’s looming budget crisis.

Martinez, in his first major interview since Mayor Brandon Johnson requested his resignation, called for TIF surplus to help cover mounting district expenses, including a $175 million pension payment and anticipated salary increases for union staff, Crain’s reported.

Martinez’s appeal comes amid heightened tensions between the Chicago Teachers Union, the Johnson’s administration and himself over how best to address the school district’s financial challenges.

Martinez previously declined Johnson’s proposal to take out a $300 million loan, fearing it would place the district in deeper debt. He believes the TIF surplus presents a more sustainable solution.

“I still think that’s a very reasonable request,” Martinez said, saying the city collects about $1.2 billion annually in TIF funds.

The city is planning to scale back its use of TIF districts to supplement development costs, although the funding tool is part of the plans for office-to-resi conversions in the LaSalle Street area, and Alderman Byron Sigcho-Lopez is pushing for a TIF district in Pilsen to be expanded.

Martinez sees the surplus as a resource to address the school district’s financial shortfalls without burdening taxpayers or risking teacher layoffs.

He has been meeting privately with City Council members to make his case, outlining a plan that would nearly double last year’s record TIF surplus of $434 million.

Alderman Nicole Lee, after attending a briefing with Martinez, expressed support for using existing resources rather than involving further borrowing with high-interest debt.

“The recommendation that’s out there to take out a high-interest payday loan is absolutely an irresponsible way to handle what’s happening with CPS finances,” she said.

The teachers union, which has been at odds with Martinez over labor negotiations, recently put forward its own proposal to terminate TIF districts altogether. The union argues that doing so could unlock $1 billion in funds to support public school programs and prevent potential layoffs.

“Our revenue recovery plan is necessary right now to stave off mass layoffs, school closings and more furloughs that will wreak havoc on our students and classrooms,” Union president Stacy Davis Gates said.

Martinez’s TIF surplus plan faces opposition from some in the City Council. Alderman Jason Ervin, chair of the budget committee, called the idea a “nonstarter,” stressing that TIF funds are intended for economic development, not operational expenses. Ervin also cautioned against using the funds to target specific budget numbers.

“It’s not designed to hold money to give it back. It’s designed to create money to be spent in an area that we want to build up,” he said.

Martinez is expected to present his proposal in detail during a budget hearing later this month.

— Andrew Terrell