The rhetoric over the future of Chicago Public Schools ramped up Wednesday.

Leaders at the school district have been asking Illinois lawmakers to help them fix the district’s serious financial problems.

On Wednesday, Illinois Republicans put forward two radical answers: The state takes over Chicago Public Schools, and the state allows CPS to declare bankruptcy. Neither option is what city leaders want to hear.

City officials and top state Democrats say both proposals are essentially dead on arrival.

How CPS got here

CPS has been spending outside its means for the last decade or so. The district owes billions of dollars that it does not have to both banks and the teachers pension fund.

With $6.2 billion in outstanding debt and an annual operating budget of around $5.7 billion, CPS has faced serious cash flow problems the last two years. Budget officials have used one-time windfalls of cash, like federal stimulus money and a surplus of special taxing money from the city, to make ends meet.

This year, despite all the the uncertainty around its finances, the Chicago Board of Education approved a budget with a $500 million hole in hopes that would pressure state lawmakers to do something to fill it.

That gamble has not come through. Republican leaders, including Gov. Bruce Rauner, made it clear Wednesday that they would not be giving CPS state money to avoid potential layoffs.

Bankruptcy

Rauner recognizes that the term bankruptcy has negative connotations, but he told reporters that allowing Chicago Public Schools to go to a bankruptcy judge would be good for a school system that he says hasn’t helped itself in years.

“Bankruptcy law is designed to protect an organization that has too much debt, that has too many liabilities. It gives court protection to an organization that files bankruptcy while it reorganizes its liabilities, its debts, its contracts, its obligations and reorganizes it in a way that’s more affordable and sustainable over time,” Rauner said.

Rauner said he believes bankruptcy could allow Chicago Public Schools to avoid layoffs.

Democrats wholly rejected Rauner’s idea, much like they have for Rauner’s proposals for state government.

“This is not going to happen,” said Senate President John Cullerton, D-Chicago, in a written statement.

“Republicans’ ultimate plans include allowing cities throughout the state to file for bankruptcy protection, which they admitted today would permit cities and school districts to end their contracts with teachers and workers – stripping thousands of their hard-earned retirement security and the middle-class living they have worked years to achieve,” House Speaker Michael Madigan, D-Chicago, said in a statement.

State takeover

It wasn’t long ago that CPS found itself in a similar position. In 1980, the state appointed a School Finance Authority to oversee the financially beleaguered school system. That governing body took a back seat in 1995 when the state handed control of the schools to then-Mayor Richard M. Daley. In 2010, the School Finance Authority was officially dissolved.

Rauner said Wednesday that Mayor Rahm Emanuel has failed at running the school system. Senate minority leader Christine Radogno noted the corruption scandal of former CPS CEO Barbara Byrd-Bennett and fudged graduation rates as examples of Emanuel’s mismanagement.

But state takeovers across the country have had mixed results. A recent study by the Pew Charitable Trusts’ Philadelphia Research Initiative found little consensus among researchers over which model of school governance is best for improving academic and financial outcomes.

“It doesn’t guarantee anything,” Radogno said of the state takeover model proposed Wednesday.  “But what it does do is it opens up the Chicago Public Schools for a much more transparent view of what’s going on. Right now, the same people that control the state, control the city, appoint the school board, appoint the bureaucrats that run it, and that has certainly not been working out so well for the schools.”

Emanuel’s current schools chief, Forrest Claypool, said the Republican proposals are missing the real problem facing the school district. Claypool argued that the state government has never adequately funded Chicago’s schools. In large part, the underfunding he’s talking about is driven by the state not paying into the Chicago teachers’ pension fund.  

Emanuel criticized Rauner’s state takeover idea in a written statement, saying it makes zero sense to give control of CPS “to a governor who can’t pass his own budget,” referring to the seven months Illinois government has now gone without a budget.

Contract negotiations

The district is currently working with the Chicago Teachers Union to lock in a new contract that could avoid mass layoffs in the middle of the school year.

After years of public disputes, the Chicago Teachers Union echoed CPS in a rare moment of consensus, saying it would make no sense to give control of CPS to the state. The union also took a jab at Rauner, likening his leadership style to a “bull in a china shop.”

Both the union and CPS positioned themselves as the “grown-ups” in disputing Rauner’s plan.

“It’s hard to see how what he’s doing helps add pressure to anybody,” said CTU vice president Jesse Sharkey. “It’s just the kind of interference which gets in the way of grown-up work.”

The two sides met over the holiday weekend and are meeting almost daily this week to negotiate a new contract for teachers that would help avoid mid-year layoffs.

“While Republican leaders choreograph this distraction, CPS is taking steps to fix everything within our fiscal control and keep as much money in our classrooms as we can,” Claypool said in a statement. “Instead of offering a reckless smokescreen that distracts from the real financial problems facing CPS, the Governor should pass a state budget that treats CPS students equally with the rest of the state.”

But all this talk about bankruptcy might speed up more action in contract negotiations, because bankruptcy protection would give the district the ability to cancel any collective bargaining agreements it holds.

Becky Vevea covers education for WBEZ. Follow her @wbezeducation.

Tony Arnold covers Illinois politics for WBEZ. Follow him @tonyjarnold.