As Cities Subsidize Billions for Developers, Teachers Ask, “What About Us?”

CHICAGO — When Hilario Dominguez looks around his school, he sees dilapidated bathrooms, students taking recess in the parking lot, and sick kids going through the day without care because there’s a nurse on staff just one day a week. But, beyond the school’s walls, Dominguez, a case manager and special education teacher at Peter Cooper Elementary Dual Language Academy, sees money flowing.

Not far from his school building on Chicago’s Southwest Side, construction crews recently broke ground on “The 78,” a $7-billion waterfront project by luxury real-estate developer Related Midwest. A few miles away, along the Chicago River, developers are building an upscale 55-acre commercial and residential project named Lincoln Yards.

Together these projects could receive up to $2.4 billion in funding through a controversial city program designed to spur redevelopment in blighted neighborhoods. But teachers here say the program, known as Tax-Increment Financing, or TIF, has been a giveaway to corporate developers, and that it is hurting the city’s schools.

The subsidies the city is set to dole out to the Lincoln Yards and The 78 developers were a driving force behind the Chicago Teachers Union’s recent strike, with educators calling on the city to redirect some of that money to help close the $38 million gap between the CTU’s demands and the amount offered by the district. Dominguez was among nine teachers who were arrested during the strike after they entered the building of Lincoln Yards’ developer, Sterling Bay, to protest the project’s $1.3 billion in subsidies.

“Our city continues to say it’s broke, when that’s not the reality,” said Dominguez, while marching with other striking teachers at City Hall in late October. “We know that the reality is actually that our priorities are broken. The city isn’t broke, our priorities are.”

Chicago is not the only city where outrage over corporate incentives has sent teachers out of classrooms and into the streets. In April, hundreds of teachers in Columbus, Ohio, marched to the headquarters of healthcare software company CoverMyMeds, chanting “Pharma got handouts, kids got sold out,” to protest a property tax abatement the company received for a new office complex. The city estimated that the 15-year abatement will cost local schools about $55 million. A year prior, 17,000 Colorado teachers marched on the state’s capitol, demanding that legislators fund “classrooms not corporations.” In St. Paul, teachers began their contract campaign in 2017 with a rally outside U.S. Bank’s operations center, which had been financed through the same redevelopment program used in Chicago. During strikes last year in West Virginia, Kentucky and Oklahoma, teachers loudly called out coal and gas companies’ low tax rates as a drain on school funding.

The unrest signals that educators are moving beyond bread-and-butter issues like salaries and pensions to protest what they perceive as systemic injustices in the way schools are funded. Increased transparency about the financial impact of corporate subsidies on schools, along with a broader public awareness of economic inequality, has emboldened teachers and helped them win allies among parents, community members, and school administrators.

“This is really a matter of trying to challenge the dominant economic power in this country,” said Randi Weingarten, president of the American Federation of Teachers. “Since the elected officials either have not been able to, or have not been willing to, it’s the teachers of the country who are starting to challenge it.”

A 4-year-old accounting rule has helped illuminate the extent to which schools are losing out to corporate subsidies: For the first time, thousands of school districts are required to report these figures. In some parts of the country, the numbers are significant. According to a December 2018 analysis of the data by Good Jobs First, which tracks corporate subsidies, schools in 28 states lost at least $1.8 billion over the previous fiscal year as a result of corporate tax subsidies, with nearly $1.6 billion coming from just ten states. If abatements in those ten states were curtailed, the group calculated that the additional revenue could be used to hire about 28,000 teachers.

Like many corporate incentives, Chicago’s subsidy program, TIF, was ostensibly designed to spur development in overlooked parts of the city. But the subsidy, which diverts any new tax revenues in a designated area into development in that same area, rather than into the city’s general coffers, has been used in already-developing (and often gentrifying) areas, to subsidize hotels, private sports fields and luxury apartments that benefit few Chicago residents. A combination of loose restrictions and a lack of transparency and oversight have made the program ripe for abuse.

In 2016, after teacher protests, then-Mayor Rahm Emanuel agreed to release $88 million of surplus money from the TIF program to city schools. In October, Mayor Lori Lightfoot released an additional $66 million in TIF funds to the school system to help end the strike, an increase over the $97 million from that program that she had already redirected to schools.

But the teachers’ union and some community organizations said the city could afford much more. An analysis by the TIF Illumination Project, run by local nonprofit CivicLab, estimated that, last year, the subsidy program collected more than $350 million that would otherwise have gone to benefit schools across the city.

The week before the protest at Sterling Bay, Chicago teachers had brought their message to The 78 waterfront project, with a “teach-in” outside its developer, Related Midwest. Reading from a storybook they wrote and illustrated titled “Are You My Mayor?” teachers told the story of a fictional Chicago student, Jayla, who wonders why her cousin’s school in the suburbs has a full-time librarian, nurse and social worker when her school doesn’t. After journeying through city projects financed with subsidies, Jayla finally finds Mayor Lightfoot, who, upon hearing Jayla’s grievances, promises to return the money to the city’s schools.

But in reality, despite campaigning as a critic of the TIF program, the newly elected Lightfoot has been hesitant to push too hard on the status quo. While she agreed to divert the additional $66 million to schools, she added a requirement that the school system repay $60 million to the city for pensions and refused to entertain teachers’ requests that she return more.

“Beyond what we put on the table, there is simply no more money,” Lightfoot said at a press conference during the strike. “We cannot strike a deal based on the illusion that there’s Lincoln Yards money available that we can just shift somewhere else. That’s not realistic and it doesn’t work like that. Enough is enough.”

Rachel Weber, a professor of urban planning and policy at University of Illinois at Chicago, says that technically, Lightfoot is right. “The Lincoln Yards money doesn’t exist yet. They’re basically promising future cash flows — that’s what TIF is doing, it’s not like there was a one-for-one sort of shell game or magic trick where they took money from the school’s budget and gave it to developers,” Weber said, noting that TIF instead affects schools by limiting the taxable base available to them.

For this reason, Weber argues, larger-scale reforms — narrow the use of the program to places that would not experience investment otherwise and institute greater transparency around the program — are needed. The Chicago Teachers Union agrees: It wants the state legislature to limit the parts of the city where the program can be applied. It also wants the state to reconsider a 2017 bill that would direct surpluses from the subsidy program to education. A group of progressive aldermen are pushing to approve an ordinance to automatically send all surplus dollars through the TIF program to schools. Some of its members are aiming much higher: they want to abolish the program altogether.

Byron Sigcho-Lopez, a newly elected alderman who represents the neighborhood where Dominguez’s school is located, said he’d ultimately like to see a TIF surplus institutionalized and the program made more transparent. He credited the teachers’ union for helping to educate people about the drawbacks of the subsidy program. “It took way too long to admit that we do have a problem,” he said. “Inequality is a massive problem in Chicago and we’re going to start to address it when we start making different decisions.”

Teachers unions across the country are also bringing these issues beyond the negotiating table and to the legislature. In Philadelphia, teachers have pushed the city council to consider legislation that would cap property tax abatements, or remove the most profitable ZIP codes from eligibility, to help fund programs to remove hazardous lead and asbestos from school buildings. Colorado teachers have called on the legislature to commit to reducing or freezing corporate tax breaks until per pupil funding reaches the national average. According to a report published by the Colorado Education Association last month, 92 percent of its members support an end to corporate tax breaks until education is fully funded in the state.

While these efforts have resulted in little legislative change so far, the National Education Association and the American Federation of Teachers, the country’s largest teachers’ unions, say their members across the country are planning to make corporate giveaways an even bigger focus of teacher actions in the coming months. The American Federation of Teachers plans to draw national attention to the issue as part of its new “fund our future” campaign; the National Education Association is training state affiliates on the Good Jobs First analysis so they can more effectively challenge local tax policies in strikes and walk-outs.

“We have evolved from bargaining simply around, ‘We need more money and it’s up to you to figure out how to get it,’ to being much more explicit around the problems of corporate tax breaks and loopholes,” said Tom Israel, director of state affiliate growth for the National Education Association. “When the economy is recovering, and some people are getting wealthy, but your kids are still suffering, you’re more willing to speak out.”

In Chicago, teachers are eagerly awaiting the changes — increased support staff, caps on class sizes and higher pay — promised in their new contract. But for many, these changes remain distant: social workers and nurses won’t be guaranteed in every school until the fifth year of the contract.

“Our students deserve much more than we won his time around,” said Roxana González, a social studies teacher at Dr. Jorge Prieto Math and Science Academy on the city’s Northwest Side, who was arrested at Sterling Bay during the strike. She’s optimistic, though, that the strike will spur further change in Chicago’s schools and elsewhere by inspiring teachers to “take on austerity and continue to demand that schools be funded, despite this rhetoric that we are always broke, to interrogate that and see if that’s really the reality, to demand certain things that in the past have never been a part of bargaining.”

This story about public school funding was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Hechinger’s newsletter.