Profiteer Spotlight: Mark F. Furlong!

Mark Furlong, part of Rahm's latest batch of appointees to the Board of Ed, is a profiteer nonpareil.  LEAP Innovations, a company Furlong was affiliated with, has received a contract extension from the Board for their $ervices. WCT thinks it's time to shine a spotlight on this deft kick-back artist:

1st Notable Profiteer Achievement: Receiving an $18.1M golden parachute payout despite the company he was CEO of, Marshall & Ilsley (M & I), not repaying a $1.7B TARP loan; receipt of bonus was contingent upon loan repayment while he was CEO. Chaaaaa-ching!

2nd Notable Profiteer Achievement: Orchestrating a cheap deal in which M & I, along with its debt, was taken over by BMO Harris. As part of the buyout, the TARP loan was paid by BMO Harris before the deal closed, thus ensuring bonus payout to its executives. Chaaaaa-ching!

3rd Notable Profiteer Achievement: Being offered an executive position by BMO Harris complete with a $6M "transition completion payment" for staying on one year after the 2011 buyout. You guessed it, he stayed. Furlong also collected a $600,000 salary, incentives of up to $800,000 a year, and equity awards of up to $1.1M. Chaaaaa-ching! 

All Chicago politicians rail against, "kicking the can down the road," but Furlong's actions while head of M & I are the very definition of that. Not only did BMO Harris repay a loan that wasn't theirs, but rewarded Furlong's delay with a lucrative deal. The collateral damage left M & I shareholders filing suit for the undervaluing of M & I's stock at the time of sale. 

This is who Rahm Emanuel wants to be a financial steward of our schools?

CPS parents, students, and teachers: you're about to get Furlonged, but good.

CPS Board of Ed = Bernie Madoff

Can someone please explain how those who raided the Chicago Teachers' Pension Fund are any different than Bernie Madoff?

• The pension fund was close to 100% funded in 2000.
• Between 1995-2005 and 2011-2013 CPS collected more than $2 billion in pension revenue from CTU members and paid none of that money into the pension fund
• The School Board itself sanctioned the pension holidays, periods during which the district was exempt from putting teachers' pension money into the pension fund
• The district does not account for where the pension money was spent; instead, new CEO Claypool lies and refers vaguely to the teacher pension system as "unfair"
• Daley and Rahm's banking buddies are making big $$ from CPS's lucrative pension debt

To add insult to injury, Rahm + Rauner's media machine continues to paint teachers as greedy pigs by distorting the truth about pensions and publishing a useless reporter's desire for a Chicago Katrina.

The biggest insult, however, is Claypool's insistence that CTU members contribute 7% more of our salary into the pension fund.  So we're supposed to reimburse ourselves for the money that the district stole?  No thanks!  Although CPS thinks we're idiots, we're not.  

Concede, Teacher Pigs!

In yesterday's Tribune, Forest Claypool laid out what he sees as the two possible solutions to CPS's budget crisis:

1. CPS teachers agree to contribute 7% more salary to pension pick-up (7% pay cut)

OR

2. Chicago imposes another property tax hike

Predictably,  comments posted online reflect the effectiveness of Rauner and Rahm's media campaign against unions, teachers, and public servants in general.  Highlights:

• "Let the teachers strike.  Fire them and break the union."
• "What will Rahm and Forest do when Boss Hogg and her CTU minions go beserk and walk out on strike?  Seeing that horde of slovenly-dressed, red-shired, vile-slogan-shouting, money-grubbing teachers may weaken their resolve."
• "Make the teachers pay 15% and cut their generous benefits."
• "Let Boss Hogg and her followers run wild downtown - and then have them arrested."
• "Asking the CTU to make concessions is like asking a pig to back away from the trough."

Interestingly, Chicago has one of the lowest property tax rates in Illinois.  The following percentages reflect average tax rates as a percent of home value:

Illinois as a whole: 2.28%
Chicago: 1.84%
Woodridge: 2.55%
Aurora: 2.65%
Lombard: 2.23%

So perhaps Boss Hogg and her vile minions' reluctance to take a 7% pay cut isn't so ridiculous? Particularly in light of the fact that the money-grubbing teachers are asked by CPS to work for free and buy students' school supplies? 

Interestingly, Claypool did not mention a financial transaction tax as a solution to CPS's budget crisis. Currently, traders at Chicago's rich-person casinos -- the Board of Trade, the Options Exchange, and the Mercantile Exchange -- pay state taxes that are 0.000014% of the value traded.  In contrast, gamblers at poor-person casinos -- the riverboats -- pay 3.32% per dollar wagered.

But can you imagine Rahm and Rauner asking oligarch Ken Griffin to part with one nickel of his $65M per month take-home pay? Certainly not! Quelle horreur!  

So let's carry on with what everyone is comfortable with:  money-loving teachers and fat pig union bosses need to make some fucking concessions.

CPS Debt: Cha-ching!

Floated quietly on July 4th, the Sun-Times outlines the minefield that is CPS borrowing and its associated fees. In the Spring, CPS sold $478,000,000 in bonds, and the $4,400,000 fee for such borrowing has been spread around to those with ties to mayors past and present.

Chris Fusco has connected all the dots for anyone who cares to see how the connected continue to make money while CPS and the city go broke:

• Law firm Katten Muchin & Rosenman's profit: $300,000. The connected: former Mayor Daley who made pension holidays de rigueur is Of Counsel at the firm, and the firm's attorneys have contributed $61,000 to Emanuel's campaigns since 2010. 

• Law firm Thompson Coburn's profit: $350,000. The connected:  John Cullerton, Mayor Emanuel's bro in the Illinois General Assembly.

• Finance firm Loop Capital Markets profit: $180,000 in underwriting fees. The connected: James Reynolds, Jr., firm founder who's also an Emanuel appointee to World Business Chicago and the Illinois Sports Facilities Authority. World Business Chicago has a sleek website but WCT is unsure of what they do to benefit citizens. IFSA is an ineffectual organization who does things like pay the debt on U.S. Cellular while not collecting the rent.

Going broke has never paid so well, at least for some. WCT thought Mayor Daley's continued profiteering from the mess he created was the big middle finger to the taxpayers, but it turns out the giant middle finger is:

• Finance firm Cabrera Capital Markets: A portion of the $2,300,000 in fees for this year's bond deal, plus half of the $18.1M in fees since 2011.  If the name Cabrera rings a bell it should: Martin Cabrera, Jr. was UNO Charter Schools chairman after the SEC probe of UNO's awarding of construction contracts based on best price nepotism. Cabrera Capital, not coincidentally, was one of the underwriters of the $37.5M in loans UNO received in 2011.

The list of the connected goes on and on. Don't be a-feared, citizens, Emanuel spokesperson Adam Collins reassures readers, "...there is no connection between the awarding of CPS bond work and contributions to the mayor's political fund." Thanks for clearing that up. If City Hall says it, it must be true.

Our political ruling class engages in financial malfeasance as its sole practice, and the constellation of cronies assembled in Chicago is continually enriched thanks to such deals. Meanwhile, Chicagoans are bracing for a slew of taxes ranging from increased property taxes to a tax on the cloud so our ruling elite can remain so.

Rahm's Pension Wizardry

As Bozo Show fans from way back, WCT immediately thought of Wizzo the Wizard when we read about Rahm Emanuel's latest pension follies. Wizzo did card tricks, magic tricks, and used sleights of hand to entertain thousands of children. He would do all of this while saying do-di-do-di-do and waving his fingers right before the big payoff. Rahm Emanuel, just a day after funding the Chicago Teachers Pension Fund, directed the city's new CFO to ask for $500M of the $634M back. Now you have it, now you don't. Magic! 

Maybe Rahm and Chicago's CFO Carole Brown were looking at spreadsheets saying, "do-di-do-di-do," as they hit upon the idea to ask for 78% of the pension payment back. Brown called the request a, "big ask." We'd call it another accounting scam, but okay. Brown's wizardry continued as she used words like "cash-flow relief" and "assumed actuarial return." You can almost see her waving her fingers and saying "do-di-do-di-do" to Charles Burbridge, the CTPF's executive director, as she explained the details of her big ask.

In the fine print of Rahm's pension proposals, he suggests combining CTPF with the state's pension fund for more equity. The writers at International Business Times detected a sleight of hand with this change, too: 

What the mayor did not say is that the initiative could end up shifting billions into a fund whose portfolio is run, in part, by Grosvenor Capital and Madison Dearborn Partners, two firms whose executives have together given over $4 million to the mayor's campaigns and affiliated PACs. That includes over $2.7 million from Grosvenor CEO Michael Sacks and his wife, Cari. Sacks has been called Emanuel’s “fixer” and “go-to guy;” he was appointed by Emanuel to serve as vice chairman of World Business Chicago, an economic development group that Emanuel chairs.

The IB Times also notes that, "In fiscal year 2014, Grovesnor collected over $3.2M in fees from the state's Teachers Retirement System, and Madison Dearborn Partners over $370,000." Cha-ching!

Today's 3 part trick is as follows: 1) Take back 78% of a payment you just made, 2) Suggest combining pension funds under the guise of equity, and 3) Make sure to further enrich hedge fund pals and campaign donors in the process. Yes, and don't forget to go full-tilt Wizzo and finish with a flourish and the signature, "do-di-do-di-do" so we know when the trick's over.

Where did the money go?

With the usual poisonous comments about CPS teachers (pigs, whiners, swine) being posted in response to the CTU's announcement that contract negotiations have stalled, we turn our attention to one of the essential questions:  Where did the money go?

Background info:

• The teachers' pension fund was close to 100% funded in 2000
• Between 1995-2005, CPS collected more than $ 2 billion in tax revenue from CPS teachers, counselors and paraprofessionals (and paid none of that revenue into the pension fund)
• At the request of the School Board, CPS has been twice granted "pension holidays," periods of time during which CPS does not have to put any money into the pension fund
• Pension Holiday #1: 1995-2005
• Pension Holiday #2: 2011-2013
• Currently, Illinois has the worst unfunded pension liability in the U.S., at $85 billion
• Tax Increment Financing (TIF) districts were established under Mayor Washington in 1986
• TIF $$ comes from property taxes within each district that are diverted from government units, including public schools, for public and private inve$tment in community improvement projects
• Chicago's TIF program was greatly expanded during Mayor Daley's term

On 6/30, a $634 million pension payment is due from the city to the pension fund. The city's cry: BROKE!  Which brings us back to the question:

Where did the money go?

• Block 37 Development:  Over $50 million; paid from diverted TIF funds; still largely unoccupied
• Block 37 Underground Loop Train Station: $213.3 million; paid from diverted TIF funds; designed to connect Midway to O'Hare but currently non-functional
• Millennium Park: Over $280 million paid from diverted TIF funds
• Central Loop Public Improvement Projects: $365.5 million in TIF funds spent in 2008, with no obligation for Mayor Daley to account for the recipients 

Where else did the money go?

Cronies, kick-back artists, charter profiteers, Aramark big wigs, vendors, University of Chicago thought partners, number-crunchers, CPS Talent Office staff, CPS Network chiefs, and David Vitale and Deb Quazzo's banker buddies

CPS Waste: The Talent Office Pt. 2

Recent reporting by the Trib refers to CPS's financial crisis as "appalling."  We find much that is appalling in CPS, including the Newspeak renaming of the Human Resources office as the "Talent Office."

More appalling facts:

• Number of employees at CPS's Talent Office:  206
• Combined salaries of all Talent Office employees:  14, 436, 239.00  
• Notable Broad Resident Profiteer currently at CPS Talent Office:  Traci Thibodeaux
• Ms. Thibodeaux's prior corporate experience:  Sales Finance Manager at Frito Lay
• Frito Lay's former blunder:  Olestra fat substitute
• Unpleasant Olestra side effect:  anal oil leakage

Clearly, Ms. Thibodeaux's Frito Lay experience will assist her and her ilk in their continued cornholing of CPS teachers and students.

Swine! Thugs! Greedy Pigs! 3rd World Educators! Boss Hogg's Minions!

Following Tuesday's rally, the CPS School Board, ed reform profiteers, kick-back artists, hedge fund managers, and David Vitale's banking buddies breathe a sigh of relief as online comments posted to the Chicago Tribune demonstrate that Rahm's media machine is fully operational.

Be Noble

How gallant

It must be wonderful to be Bruce Rauner. Only he could tell us where he gets his vim and vigor, but it must have something to do with his estimated $1B net worth. Oh, and simultaneously profiting from the public school system whilst bankrupting it.

This humble lover of fairs and corn dogs should thank public school teachers and their pension funds for part of his success. As he bragged, "I've invested teachers' pension money, I've done very well...I've taken that money and the No. 1 place I've donated that--millions of dollars..." Readers, guess where that No. 1 place is! If you've guessed alleviating poverty, funding vaccine preventable diseases in the Third World, or creating the first fair with an exclusive focus on corn dogs, guess again. He's donated every last penny to charter proliferation. Finally! A cause the masses can rally around!

Chicago Public Schools has also done their share of donating to the Noble Street network of charter schools, of which Rauner is a part. According to openthebooks.com, in 2014 Noble Street received $69,857,041.00 in funding; however, their banner year in profiteering was 2013 when they raked in $80,732,016.00. Since 2010, Noble Street has received about $277,000,000.00 from CPS coffers.

Rauner's day must run something like this: 1) ensure net worth still intact, 2) reflect on job well done lining own pockets off backs of teachers, and 3) enrich charter cronies with money that could otherwise better existing schools.

Spotlight on Cornholer Extraordinaire: Ken Griffin!

Move over minor cornholers -- WCT's spotlight is on Ken Griffin!

Board of Directors: Chicago Public Education Fund

$ervices provided to CPS by CPEF:  SUPES Academy, REACH, TFA recruitment, University of Chicago Consortium on School Leadership, publication of BBB's strategic action plans, and a vast array of additional tran$formation programs

Gains produced by CPEF programs: pockets of profiteers lined; data manipulated; resumes padded

Major donor: Republican Governors Association

Major donor: Rahm Emmanuel mayoral campaign

Wealth class: Billionaire; Illinois' wealthiest man

Profession: Hedge Funder; founder and CEO of Citadel (global investment firm)

Monthly salary after taxes: $68,000,000

Average Chicago Teacher Pension Fund retiree monthly benefit:  $3,500

Description of Illinois pension benefits: "generous"

Description of CPS:  "criminal"

Wife's opinion of Chicago: "unsophisticated"

Preferred method of wife intimidation:  bedpost

Included in (now) ex-wife's monthly alimony claims: $160,000 for vacation accommodations, $6,000 for groceries, $7,200 for dining, $2,000 for stationary

Percentage of CPS students living in poverty: 83%

Readers, turn to your copy of Margaret Atwood's Oryx and Crake and let's examine if the future is indeed here.  Corporations driving public policy? Check. Loathsome and hypocritical elites insulated from the nuisances of middle-class life, working-class life and poverty? Check. Corporate elites believing that the illusion of democracy is still worth maintaining? Check.  

Junk in the Trunk

Double Junk

Hey, City. Hey, CPS. Do you two have a minute? We don't want to hurt your feelings, but you've gotten a little big in the, ahem, interest rate.

Between Mayor Daley's financial deviance and Mayor Emanuel's continued pension dallying, the City's bond rating is now at junk status. Emanuel's mayoral challenger was accused of, "lacking gravitas with the bond market." After two downgrades, seems there's not an ounce of gravitas to go around as investors have little confidence of bond repayment should Chicago or CPS iwant to issue bonds to raise much needed money. Junk status means a higher cost of borrowing that is, of course, passed along to the taxpayer. Thanks, gents!

While Rahm is busy pouting over the downgrade, Governor Rauner has decided to go the disappointed dad route saying, "It (CPS) has not really served the families and the parents of the children in a very long time." CPS seemed to be serving parents just fine when Rauner clouted his daughter into selective enrollment Walter Payton. If CPS isn't serving families and parents it's not because of bond downgrades, but because of constant defunding, school closings, and chaos created by Rahm and his appointees as they go about happily dismantling public education in favor of profiteering charters.

Spotlight on Anne Mueller!

Noble Charters have received some media praise recently for their excellent results in tran$forming the lives of inner-city students and eroding the foundations of public education.  Let's turn the spotlight on their Board of Directors' Community Leader:  Anne Mueller!

Communities served by Mueller:  low-income inner-city Chicago neighborhoods

Community of Mueller's residence:  Wilmette

Percentage of renter-occupied units within nearest Noble community to Mueller: 69%

Value of Mueller's Wilmette home:  $913,164.00

Wilmette public school attended by Mueller's  2 children:  New Trier

Private alternatives to New Trier: North Shore Country Day School

Cost of one year's tuition at North Shore Country Day School:  $28, 350

Charter alternatives to public or private options in Wilmette: 0

Glib statement made by Anne Mueller designed to alleviate the guilt of being wealthy and isolated from the factors causing dysfunction in many regular CPS high schools:  "Some of these charter schools are turning out to be the envy of the North Shore."

Percentage of current Wilmette residents sending their children to Noble Charter schools: 0

Percentage of current Noble Charter students permitted to join the Gay Straight Alliance: 0

Percentage of current Noble Charter students suspended at least once during the school year: 51%

Rock on, Anne Mueller!

All census info easily Googled.

Auction-Rate Education

Nothing will ruin a perfectly fine day away from school faster than another phone call from your delusional principal reading the Chicago Tribune's exacting, hair-raising reporting of David Vitale's investment follies on behalf of CPS. To use Common Core parlance, Vitale and the Board's investment in auction-rate bonds and interest-rate swaps could be described as robustly complex. You see, reader, auction-rate bonds are bonds that go to the lowest bidder and whose interest rates are regularly reset. This practice has been so successful the SEC issued a Cease and Desist order to stop such *innovation* and a basic Wikipedia search notes these markets have largely been frozen since 2008. No matter, nothing like using an untested, risky means of finance to needlessly expand the district.

Unfortunately for tax-payers and public school students, such robust complexity may end up costing the district $100,000,000 more than necessary upon repayment. One can safely assume the Board's, "unanimously approved contracts...that didn't even specify exact costs," will benefit Wall Street grifters and not any students. 

If terms like auction-rate bonds and interest-rate swaps don't readily roll off your tongue, the Tribune describes such deals variously as: exotic, unconventional, flavor of the day, and risky. If these articles were not so finance-laden one would think you were reading about CPS education policy. 

Using another refrain that could be a blanket statement for most CPS decisions, Jackson Potter of the CTU puts it best when he says, "It did not have to be this way."