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The Mechanics
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Chicago Public Schools Tue Jun 05 2012

REPORT: TIFs Exacerbate Neighborhood Inequalities

As the education privatization reforms spread across the country (from Chicago via D.C.), a report out of Roosevelt University threatens to add fuel to the fire of privatization critics, particularly here in Chicago.

The study, by sociology professor Stephanie Farmer, examines how tax increment financing (TIF) funds have been spent on schools. TIFs are controversial financing mechanisms originally created to allow cities to fund development in blighted areas by dedicating property values above a specific amount to projects within those areas. Thanks in no small degree to the work of Ben Joravsky of the Reader (and the now-defunct and terribly named Neighborhood Capital Budget Group), TIFs came to the public attention as de facto slush funds, with little or no oversight, used to divert property tax revenue (mostly from the schools) to be used as "incentives" or givebacks to developers. Because the revenues diverted into funds come from property taxes, the Chicago Public School systems has consistently been the biggest loser in the TIF craze.

Farmer's study does little to assuage the public's concerns. In it, Farmer finds that

CPS's top priority for the allocation of TIF revenues to school construction projects is to support selective enrollment schools....Though selective enrollment schools account for 1% of all CPS schools, they received 24% of all TIF funds spent on school construction projects.

It is hard to merely call it a "perception" that TIFs have been abused to accelerate gentrification, thus substituting displacement for economic development. That selective enrollment and charter schools received more than a third of all TIF funds spent on school construction and improvement projects isn't just an isolated fact. School quality is a strong, if not the strongest, component that determines not only property values but the attitude of young families and professionals to a neighborhood. Therefore diverting funds from CPS by creating a TIF, and then disproportionately spending that TIF money on already-elite schools actively harms the city's working class neighborhoods.

See the full report here.


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