The negative outlook reflects the school district’s budgeted depletion of reserves to fund ongoing operations in fiscal 2013, the moderate additional unbudgeted salary costs of labor contract negotiations, which have not yet been ratified by CTU, an estimated $1 billion budget for fiscal 2014, and the sizable increase in pension contributions following a three-year relief period.

Logo of the Chicago Teachers Union.

Logo of the Chicago Union. (Photo credit: Wikipedia)

There it is in black and white: the Chicago teachers’ union deal can’t be paid for. Therefore we’re (Moody’s) downgrading Chicago’s credit rating (again):

Significant budget adjustments will be necessary, but the demonstrated of collective bargaining suggests that future budget controls may be difficult for the district to implement. (my emphasis)

I love this. The are supposed to teach, aren’t they, and the are supposed to represent them in their efforts to teach, right? Not. The unions are there to protect the unions and the salaries and benefits negotiated with the school board, even if they aren’t affordable. Who cares? We’ve got ours!

Chalk one up for the Chicago Teachers Union. It’s insistence on pressing for higher wages at a time when the district could not afford it has pushed CPS even closer to financial collapse. And Mayor Rahm Emanuel doesn’t deserve a pass. He didn’t have the guts to stand up to the union, and now schoolchildren and taxpayers will pay.

Olson points out that the agreement isn’t affordable now, and the agreement which has forced the Moody’s downgrade is going to cost the district even more, exacerbating the financial situation:

The downgrade will, of course, make it more expensive for the school district to borrow money, complicating an already messy financial situation.

That’s how work when dealing in Chicago. It’s the Chicago way: vote the benefits, secure them against revolt, and let the future take care of itself. Tough.

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