Chicago Teachers vs. Billionaire Privatizers
The Chicago teachers' strike is about who will shape Chicago: billionaires who buy politicians to privatize schools, or working-class communities who want affordable housing, decent jobs, good schools, and justice. Here are some of the private equity barons and luxury developers in Chicago whom the teachers are up against.
Around 25,000 teachers are on strike in Chicago, the nation’s third-largest school district. Their union — the Chicago Teachers Union, or CTU — declared the strike on the evening of October 16. An astounding 94 percent of teachers voted in favor of going out on strike last month. The striking teachers are joined by around 7,500 Chicago Public Schools support staff from SEIU Local 73.
The CTU strike comes on the heels of a wave of recent teacher strikes in Los Angeles, Oakland, West Virginia, Oklahoma, Arizona, and elsewhere. It’s the first CTU strike since the union’s historic 2012 strike, which some say provided the model for today’s growing teacher militancy.
The CTU’s message is clear: teachers are not just striking for better pay and working conditions for teachers, but for better conditions for their students and their communities. They are demanding smaller classroom sizes, more nurses and counselors, more librarians and social workers, protection for immigrant students, and more affordable housing.
The strike is rooted in a stark truth about Chicago: namely, that the city’s governing class has no problem giving away huge subsidies to wealthy billionaires and developers, but it refuses to sufficiently invest in working-class students of color and their communities, schools, and teachers.
Here are some of the private equity barons and luxury developers whom Chicago teachers are pitted against. This strike is about whose interests and priorities will shape Chicago: those of billionaires who buy influence with politicians and back austerity and school privatization, or those of working-class communities of color who want affordable housing, decent jobs, good schools, and justice where they live.
Private Equity and Hedge Fund Billionaires Benefit From Lack of Public School Funding
A 2017 report, which LittleSis partnered with Hedge Clippers to produce, showed that Illinois could raise hundreds of millions of dollars from private equity and hedge fund billionaires simply by taxing carried interest at the state level. This money could go to public schools and affordable housing instead of further stuffing the pockets of billionaires.
Moreover, the billionaires that benefit from the current tax code have used the vast wealth they have amassed to buy influence with state and city politicians in order to protect their business interests and their fortunes, all while attacking teachers and public schools.
Take Ken Griffin, for example. Griffin is a Chicago-based hedge fund manager who is worth a whopping $12.8 billion, according to Forbes. He and his hedge fund, Citadel, oversee $32 billion in assets.
Griffin lives an incredibly lush life. Earlier this year, he bought the most expensive home ever sold in the United States — a $238 million New York City penthouse.
But that’s just the tip of the iceberg for Griffin. He has also bought up the most expensive homes in Miami and Chicago — last year he paid $58.5 million for the top four floors of a Gold Coast condo tower. He also bought a $122 million home in London earlier this year — the most expensive home purchase in that city in a decade.
Griffin doesn’t just splurge hundreds of millions on new homes. In 2016, he reportedly paid $500 million for just two paintings.
As the CTU has pointed out, Griffin has thrown tens of millions into the campaigns of anti-teacher and pro-school privatization politicians like Bruce Rauner, Scott Walker, Rahm Emanuel, and Bill Daley — the latter whom, during his failed 2019 mayoral race, proposed drastic changes to Chicago Public Schools that the CTU lambasted.
Griffin has been especially close to Rahm Emanuel — the New York Times once called them “Chicago’s Odd Couple.” Emanuel was widely seen as an opponent of the CTU while he was mayor. When Emanuel shut down fifty public schools in 2013, Griffin declared that it wasn’t enough — “The number should’ve been 125,” he said.
Griffin has also been a major donor to former Illinois governor — and fellow billionaire — Bruce Rauner, who was a dedicated advocate of austerity, wanted to break the Chicago Teachers Union, and is a major proponent of charter schools.
Griffin is not the only Illinois private equity billionaire or multimillionaire with close ties to politicians hostile to the CTU and favorable to school privatization. Others include Michael Sacks, chairman and CEO of Grosvenor Capital Management; Sam Zell, founder and chairman of Equity Group Investments; John Canning Jr, cofounder and chairman of Madison Dearborn Partners; and of course, former governor Bruce Rauner himself. (Read more about them in the Hedge Clippers report.)
Billions to Luxury Developers Instead of Schools and Communities
Chicago teachers have made demands for affordable housing a central feature of their strike. Their students face a housing crisis in their own city while billionaire developers and private equity firms receive hundreds of millions in subsidies to build luxury developments.
One example of this is seen in the more than $2 billion in subsidies being given to two luxury neighborhood developments, Lincoln Yards and “The 78.” These subsidies come from the city’s tax increment financing (TIF) funds — which critics refer to as “corporate slush funds.”
For years, the CTU has criticized the use of TIF funds for big high-end development projects that enrich the wealthy at the expense of public schools and working people. As one writer put it in 2016:
On paper, TIFs are a tool for cities to funnel property tax revenue into “blighted” areas that need economic investment. In reality . . . almost half of Chicago TIF money goes toward high-end development in the central business district downtown.
CTU has taken a stance against the $2.4 billion in TIF subsidies that are going to the Lincoln Yards and “The 78” luxury developments — money that could be going to things like affordable housing and schools instead of making billionaire developers even richer.
One of those billionaire developers is John Grayken of Lone Star Funds, one of two financial partners at Lincoln Yards who stands to receive half of the first TIF payout of $490 million. Lone Star had been accused of being a predatory lender, and the CTU has described it as “built on a business model of private equity pillage that includes payday loans, bulk home loan buying, and ruthless mortgage foreclosure tactics.”
CEO Grayken is worth $6.9 billion, according to Forbes. Lone Star Funds oversees $85 billion in private equity funds. Forbes has called Grayken one of “the robber barons of the new millennium” because of, in the words of the Boston Globe, his “long track record of profiting from delinquent mortgages and other battered financial assets.”
Like Griffin, Grayken has built up a collection of extremely expensive and luxurious homes. In 2016, he bought Boston’s most expensive condo for $33 million — “a 13,000-square-foot penthouse on the 60th floor of Millennium Tower.” However, he cannot spend more than 120 days a year in it without “triggering US tax consequences” — he renounced his US citizenship in the 1990s for “tax purposes.”
Grayken is also reported to own a “17,500-square-foot mansion in London’s Chelsea neighborhood and a twenty-acre country manor.”
Another big Chicago developer who has received major subsidies while backing city leaders hostile to public schools is Larry Levy. In 2016 — when the Chicago Public Schools system faced a $1.1 billion budget deficit — Hedge Clippers reported that developer Larry Levy had been “approved for $46.5 million in subsidies from the city’s TIF coffers.” The report also stated that:
To secure his place among the power brokers of Chicago real estate, Larry Levy has made extensive efforts to subsidize and court the very politicians that subsidize him. Throughout his career, Levy and his companies have donated thousands to Governor Bruce Rauner, Mayor Rahm Emanuel, and former mayor Richard Daley to purchase power in Chicago.
Levy was also very close to — and a big donor to — former Chicago mayor Rahm Emanuel, who went so far as to name October 8, 2014 “Lawrence F. Levy Day.”
Billionaire Casino Magnate With Ties to Mayor Lightfoot
Another billionaire Chicagoan is Neil Bluhm, a real estate and casino magnate worth nearly $4 billion. Bluhm and his family own the Rivers Casino in Des Plaines, Illinois, as well as other casinos across the United States. They have close ties to Chicago mayor Lori Lightfoot and have made significant donations to her mayoral campaign.
Lightfoot has drawn scrutiny for taking money from the gambling industry — and particularly, the Bluhms. The Bluhms are considering applying to open Chicago’s first casino. As the Chicago Sun-Times wrote, “[t]he final decision on where that casino would go lies with the Illinois Gaming Board. But Lightfoot is expected to play a big role in determining the best site, as well as who would run the casino.”
Neil Bluhm holds a number of powerful positions in Chicago’s high society, including positions on the board of trustees of the Art Institute of Chicago and the Whitney Museum of American Art. He’s also a minority stakeholder in two Chicago professional sports franchises — the White Sox and the Bulls. He even hosted Barack Obama’s forty-ninth birthday at his home. In 2016, he was ranked the twenty-first most powerful person in Chicago.
Bluhm’s daughters, Leslie Bluhm and her sister Meredith Bluhm-Wolf, gave $212,500 to Lori Lightfoot’s successful mayoral campaign, and Leslie hosted a fundraiser for Lightfoot, according to the Chicago Sun-Times. Leslie and Lori Lightfoot are friends who went to law school together and have known each other since 1986.
Another wealthy Chicagoan close to Mayor Lightfoot is Ty Fahner, who is the former president of the Civic Committee of the Commercial Club of Chicago, a powerful business association. Fahner is also a former chairman of Mayer Brown, a powerhouse Chicago corporate law firm where Lightfoot used to work. He gave $20,000 to Lightfoot’s mayoral run. Mayer Brown has said that Lightfoot’s victory was “nothing but good” for their firm.
As Chicago teachers remain on strike, the question is clear: will Chicago continue to work primarily for billionaire private equity CEOs and real estate and casino developers under the new administration of Lori Lightfoot? Or will the power, wealth, and subsidy gifts to these rich elites be curtailed to direct more resources to schools, workers, housing, and communities?
At its core, this is what the 2019 Chicago teachers’ strike is all about.