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Huberman inflated expenses for salaries by more than a half billion dollars to create phony 'deficit'... But cuts will hit schools across Chicago this week!

George N. Schmidt - October 04, 2009

While dozens — perhaps hundreds — of schools across Chicago are poised to suffer disastrous budget cuts in the coming weeks because Chicago Schools Chief Executive Officer Ron Huberman has been claiming months that he has to reduce a supposed “deficit” (originally cited as $475 million) by another $61 million this semester, the Chicago Board of Education has been hiding budget information that shows that the CEO deliberately created a paper deficit to continue cutting at the school level while continuing to increase his own private patronage hires at the school system's central office. Additionally, Huberman has continued the massive privatization of public assets through CPS that has cost public education in Chicago hundreds of millions of dollars since Mayor Richard M. Daley took over the schools in 1995.

Chicago Schools Chief Executive Officer Ron Huberman presented the Chicago Board of Education with a Power Point claiming to show that the system faced an enormous 'deficit' ($475 million) that had to be pared down. The presentation took place at the Board's August 26, 2009 meeting. By that time, Huberman had spent six months proclaiming the existence of the deficit and refusing to go over the budget in detail with the public. By the time he reached the Board, Huberman had also suppressed the presentation of his proposed budget to the public. For the first time in more than 100 years, copies of the proposed budget were not distributed to aldermanic offices, public libraries, and schools prior to the annual budget hearings. Instead, anyone who wanted to critique the budget had to go to the Board's headquarters and 125 S. Clark St. and try and find a copy. All of Huberman's 'deficit' claims, and most of the information provided to the public in his first proposed budget, have been called into question as more and more people have been able to review the claims. Substance caption and photo by George N. Schmidt.According to the routine "Position File" (a budget document that shows every employee of the school system and lists the salary of each), Chicago will be paying at least 540 individuals more than Ron Huberman is budgeted to be paid this school year.

Huberman's salary was established by a vote of the Board of Education when it hired him in January 2009 at S230,000 per year. The 540 people budgeted on the recently revealed 'Position File' are supposed to receive salaries ranging from $260,000 to $15,000,000 during the 2009 - 2010 school year.

Many CPS executives have also been paid performance bonuses, although nothing in the public record shows whether Huberman's contract entitles him to a bonus, or on what basis.

None of the information about Huberman's contract — or the contracts of the 40 to 50 executives he has hired since January — is available on the Board of Education's Web site or in any other public place.

What the 'Position File' budget document shows

Chicago Board of Education documents provided to Substance under the Freedom of Information Act on October 1, 2009, show that Huberman’s staff deliberately inflated expenses for the 2009-2010 school year. The officials did so by increasing expenses for staff salaries by between a half billion and a billion dollars. When the individuals’ budget above Huberman's $230,000 annual salary at totaled, the amount comes to $978,396,682. The total CPS budget for 2009 - 2010 (operations and capital) is slightly less than $7 billion.

Huberman's lurid Power Point projections for the August 26, 2009 Board of Education meeting are based on 'deficit' claims which he has not been required to verify. As more and more information becomes public about the questionable public career of Chicago's latest public education CEO, teachers are demanding accountability at the top while draconian budget cuts are being forced in the schools by Huberman and his staff. Substance photo shows one of the TV screens projecting the Huberman Power Point at the August 26, 2009 Board of Education meeting. Substance caption and photo by George N. Schmidt.A 'deficit' can be created easily by the simple method of overstating potential expenses and understating potential revenues. Anyone who has ever managed a simple household budget knows how this can be done, and the basic method is no different for a school system that has more than 51,000 individuals listed on its Position File. If every family listed its expenses for meals every night at an expensive restaurant (or T-bone steaks) the estimated expenses would be significantly greater than could reasonably be expected.

CPS has been creating illusory 'deficits' in this manner since Mayor Daley took over the school system in 1995. The annual audit of the school systems finances (called the Comprehensive Annual Financial Report, of CAFR) always shows these claims to be false, but since the CAFR comes out in January of the following year and the deficit claims have been made 11 months earlier, the falsity of CPS 'deficits' is never reported in the general news media.

As more information about CPS finances becomes public this year, it is clear that Huberman and his staff have used both methods to create the “deficit” of $475 million that Huberman has been describing to an uncritical press since February 2009. Revenues have been deliberately low-balled. Expenses have been ludicrously exaggerated, as the new Position File shows.

How to project a 'deficit' from family to school board

As just about everyone who has to live within his means knows, the easiest way to create a “deficit” at the beginning of any fiscal “year” (or family spending period) is to inflate potential expenses and deflate potential revenues.

While both methods have been used by the Chicago Board of Education for more than 20 years, the 2009 – 2010 budget that Huberman proposed to the Board of Education in August 2009 is the most dramatic example in history.

In Huberman’s budget, which was approved by a unanimous vote of the Board of Education on August 26, 2009, the school system’s CEO claims that 540 individuals will be paid “salaries” greater than the $230,000 budgeted for Huberman himself.

According to the CPS “Position File” provided to Substance under a Freedom of Information Act request filed on August 26, 2009, 356 individuals are scheduled to be paid more than $2 million each in the coming school year, while an additional 188 are scheduled to be paid between $260,000 and $2 million each in the coming school year. The FOIA request was finally filled on October 2, 2009.

Officially, the highest paid person working for the Chicago Board of Education is Ron Huberman, who is budgeted to be paid $230,000 during the 2009 – 2010 school year. Huberman's salary, which was not noted in the rest of the Chicago media, is considerably higher than the $200,000 paid to Huberman's predecessor Arne Duncan, who kept his salary at or below $200,000 per year during his term (July 2001 through December 2008). The dramatic exaggeration of salaries buried in the Position File is the most ever reported. What CPS budget officials did was schedule enormous lines as “salary” for individuals, then scattered those throughout the Position File under, for the most part, “Sports Administration.” Since the official position file is rendered in alphabetical order, noting the total number requires some computer work. The total salaries being paid in the current fiscal year (July 1, 2009 – June 30, 2010) according to Huberman’s Position File to people who are budgeted above the CEO’s salary is $978,396,682.

Substance has been utilizing the Board of Education’s Position File to compare and analyze budgets since 1989, and Substance has been analyzing the Board of Education’s public budgets since 1979.

2009 - 2010, Huberman budgets produce a year of firsts

August 2009 was the first time that the Chicago Board of Education refused to publish the annual budget and distribute it to public libraries, schools and aldermanic offices. For more than 100 years, the proposed school budget has been printed and distributed across the city, so that citizens can review it and offer their comments at three public hearings. This year, for the first time, the proposed budget never made it across Chicago. Instead, copies of the budget were only available at Chicago Public Schools headquarters at 125 S. Clark St., and only to those who were persistent enough to search through the building looking for them.

CPS officials claimed that the budget was available on the Internet via the Board of Education's Web site, but that was not even completely true. The total number of pages in the proposed budget was more than 1,800 (the proposed budget contained a printed section and a CD that had to be printed out for anyone with a high speed printer). For those who wanted to print the budget at their local library if they had been able to download if from library computers (most were unable to handle the size of the PDF), it would have cost between $400 and $600 to print out the budget at library duplicating rates.

When one teacher asked Board of Education spokesman Monique Bond in August why the budget had not been distributed in print form in the usual manner, Bond glibly said, "We're going green" and then laughed at the question.

At every point in public, CPS officials have stated that they are in favor of "greater transparency." Then they carry out policies which keep important financial information from the public. The most dramatic early example came in August 2009, when CPS for the first time in history refused to print and distribute its Proposed Budget to locations traditionally served across the city. The budget in August 2009 was treated by Huberman and his top aides as private property.

The August Budget Hearings

As a result of the secrecy which attended the budget process, the public was at a great disadvantage in trying to prepare for testimony at the annual budget hearings. The budget hearings were held from August 17 through August 19, 2009.

The Chicago Sun-Times and Chicago Tribune ignored the budget hearings completely, choosing to cover the budget story by repeating claims by the corporate Civic Federation that Huberman's budget was OK. Television news also ignored the budget hearings. The only press that attended any of the hearings was Substance, Catalyst (one night) and public radio. Neither Ron Huberman nor any of his executive staff attended any of the hearings.

Extensive reports on the August budget hearings were published at www.substancenews.net and are now available in "Back Issues", "August 2009." Readers can find them by scrolling down through the Home Page. At Substance, each new month begins a new Home Page.

The transcript of the testimony given at the hearings was not available to Huberman or the members of the Chicago Board of Education when the Board voted to approve the budget without change on August 26, 2009.

Obfuscating the value and location of public property

Among the more interesting problems with the Proposed Budget was that a listing of the city’s public schools was in alphabetical order by First Name, not Last Name.

Noted by several people who tried to testify on the budget, the publication of school names in this unusual way made it nearly impossible for anyone to locate the schools, or even know what schools CPS still owned and operated. A decade of privatization has made ownership of some schools a question. Like the city's parking meters, school buildings have been privatized with no public debate or transparency about cost. Most recently, the Board of Education gave away the De La Cruz middle school building to the UNO charter schools — for a lease cost of $1 per year. Protests against the giveaway and the Board's doubletalk about the deal were ignored when the Board pushed the deal through in a matter of two weeks in August 2009 [the UNO story is also covered in Substancenews in August 2009]. The public schools of Chicago constitute one of the most valuable assets owned by the Chicago Board of Education. For the past ten years, privatization has been a major force moving the Board’s agenda, and giving away public school buildings to private corporations has become the norm. As a result, some critics suspected that the Board deliberately left the list of these assets obscure in the Budget so that the public would find it difficult to locate them.

All of the other problems with the budget were also ignored between the end of the hearings on August 19 and the day of the budget vote on August 26.

Claiming a 'deficit' by making it up

Since he began claiming that CPS faced a “deficit” of $475 million in February 2009, Huberman has chosen to avoid public hearings on his claims at which he would be subjected to questioning. Instead, he has taken the claims privately to the editorial boards of the city’s daily newspapers and briefed the editors using a Power Point that he also provided for the school board on August 26. None of the Board members questioned any of the material in Huberman’s August 26 Power Point before voting unanimously to approve the budget.

The Board is also refusing to publish the Final Budget. On September 28, Substance tried to locate copies of the final budget, which are always printed and available to the public within a month after the Board votes to approve it, and was told that the budgets wouldn’t be available for “two weeks.” When asked where the budgets were being printed, however, CPS budget officials admitted that the budgets had not even been sent out for printing.

The Proposed Budget that CPS refused to provide to the public in August 2009 was printed on an emergency basis at great expense by Kinkos.

Prior to the privatization of CPS printing, the Board had its own in-house print shop that turned around massive jobs such as the budget printing as a matter of routine. Board officials such as Monique Bond now claim that printing the budget costs too much, when it has been Board decisions and privatization that has left the city and Board with no reasonable printing services.

The highest paid school workers in history are in "Sports City-Wide" at the Chicago Board of Education

If the Board of Education’s position files are accurate for the 540 individuals being paid more than the system’s CEO, the windfall is enormous. The four highest paid CPS employees listed in the Position File are:

Stephen Bauer

Eliza Caplan

Molly Carroll

Patricia McKay

Each is listed in a Position Number at a salary of $15,000,000 for the coming school year.

According to the Position File, Troy Gilmore, who supposedly works in “Sports – Citywide” in Position Number 376202 will be paid $3,001,369 this school year. No one at CPS has been available to comment on these budget lines. Christine Herzog, the current Budget Director, has failed to return Substance phone calls for weeks. Monique Bond has ignored Substance questions for more than eight weeks, since the budget debate began in August 2009. Ron Huberman refuses to hold press conferences on the budget and is afraid to give an interview on the budget and other issues to Substance.

Fifty-seven people, all listed with Position Numbers and all in “Sports City-Wide” are scheduled to be paid $2.501,141 each this school year. Alphabetically, their names go from Maria Aguirre to Ronald Wilson.

For six months, Ron Huberman, through the Board’s spokesman Monique Bond, has declined to be interviewed by Substance. In the most recent exchange on the request for an interview, Bond demanded that Substance provide her with the questions in advance of the interview. The reply was that the topic of the interview would be budget, and the first question would determine what the subsequent questions would be.

The complete list of all 540 names with salaries from the Position File can be found on the Substance Web site, posted October 5, 2009, in the ‘Millionaires’ article. 

Final edited version of this article posted at www.substancenews.net October 4, 2009, 7:00 a.m. CDT. If you choose to reproduce this article in whole or in part, or any of the graphical material included with it, please give full credit to SubstanceNews as follows: Copyright © 2009 Substance, Inc., www.substancenews.net. Please provide Substance with a copy of any reproductions of this material and we will let you know our terms — or you can take out a subscription to Substance (see red button to the right) and make a donation. We are asking all of our readers to either subscribe to the print edition of Substance (a bargain at $16 per year) or make a donation. Both options are available on the right side of our Home Page. For further information, feel free to call us at our office at 773-725-7502.

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