CHICAGO – Chicago Public Schools face a looming budget catastrophe and some Illinois lawmakers think the school system should declare bankruptcy to avoid further burdening taxpayers.

“The school district, which has no reserve fund, faces a projected $1.1 billion deficit, including a $634 million pension payment due by June 30. And CPS is desperate for new revenue,” ABC 7 reports.

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One solution, proposed by state Republican Rep. Ron Sandak, would allow the district or any other financially doomed school system or municipality to file for Chapter Nine bankruptcy with the federal government. The move would allow the district to restructure its debts and pension obligations while avoiding another tax increase, he said.

“We can’t tax out way out of this problem,” Sandak told the news site. “We need additional, broader relief.”

The Chicago Sun-Times reports school officials are “staring down the barrel of impossible choices” as officials scramble to find a way to pay the massive pension obligation at month’s end. The $634 million payment is part of a massive refinancing deal inked by district officials as credit rating services dropped CPS’ rating to junk status.

“How they meet payroll and make the pension payment at the same time is the magic question,” an unidentified confidant of Mayor Rahm Emanuel told the news site. “That’s what they are trying to figure out.”

Civic Federation President Laurence Msall told the Sun-Times the district essentially has three horrible options to choose from: make the pension payment but cut student programs and issue layoffs, miss the pension payment required by state law and risk a union lawsuit and another bond rating decrease, or ask for an emergency fix from state lawmakers.

“If the stalemate isn’t resolved and CPS doesn’t have the liquidity to make the pension contribution, they will be faced either with enormous cuts in staffing and changes to school budgets or the possibility of violating the law and not making the contribution,” Msall said.

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“That would be uncharted territory. Unlike police and fire pension funds, the teachers pension fund does not have the ability to intercept state school aid if a pension payment is missed.”

And Illinois House Majority Leader Barbara Flynn Currie, a Chicago Democrat, doesn’t think an ongoing conflict between pro-business Gov. Bruce Rauner and the Democratic General Assembly will allow for a quick solution from Springfield.

“It’s a terrible, terrible problem. But, I don’t see light at the end of the tunnel if the end of the tunnel is Springfield. I don’t see the General Assembly saying, ‘Open Sesame, Chicago. You can have more state aid,’ ” Flynn Currie said.

“We passed a bill to address the police and fire pension problem and it didn’t get any Republican votes. The governor wouldn’t sign it. Should the Legislature send him a [teacher pension] bill, would he sign it? I don’t think he would.”

The situation has forced CPS officials to put off negotiations with the Chicago Teachers Union over a one-year employment contract extension that would give teachers a minimum of a 3 percent raise and add $105 million to the budget, the Chicago Tribune reports.

That makes the only other possible solution to the district’s budget woes nearly impossible.

Currently, taxpayers fund almost all of the pension contributions for the teacher retirement system – for both the employer and employee – as well as payments to a different pension system for teachers outside of the city.

For Fiscal Year 2015, for instance, “Employees … are required by statute to contribute 9 percent of their salary to pensions (called the ‘employee contribution’). However, CPS pays 7 percent of the 9 percent for a total of $134 million budgeted in FY15 for participants in (the Chicago Teachers Pension Fund). Non-teacher employees are part of a separate municipal pension system. CPS also pays 7 percent of the 8.5 percent employee contribution for these employees, at a cost of $40 million in FY15,” according to the CPS budget.

Some have suggested that Chicago teachers make their full contribution toward their own retirement, which would be a huge relief to the CPS budget, but union officials argue a contract negotiated in 1981 states they don’t have to, and they like it that way. The move would save the district about $174 million, according to media reports.

CTU leaders, however, have resisted that idea as a “highly insulting” proposal that stems from a manufactured financial crisis tied to city politics. In other words, fat chance.

“Once again, the board has created a fiscal crisis in order to justify its continued attack on our classrooms and communities,” CTU President Karen Lewis, who led the union on a massive strike in 2012, told the Sun-Times. “By citing its so-called $1.5 billion deficit, the mayor is proposing a reduction in teaching staff which will result in larger class sizes and the loss of teaching positions.”

That is, of course, if the union in uncooperative in finding a better solution, which certainly seems the case.