The Chicago Public Schools (CPS) recently released its budget for the upcoming year. Pension and other structural debts continue to eat away at district resources and have left a gaping $1.1 billion hole in the current budget.
Paying for pensions isn’t cheap. Earlier this summer, CPS barely scraped together its required $634 million annual pension payment. The district did the right thing by paying the full amount on time, but in exchange, had to borrow an extra $200 million (in addition to the half billion it already needed) to fix cash shortages. To cover costs, the district will lay off 1,400 staff workers, including 480 teachers. CPS’ main source of revenue comes from city property taxes; even with city property taxes set at their maximum level (capped at inflation) and additional surplus tax funds and savings, CPS still needs additional revenue.
How does CPS plan on filling the rest of its massive budget hole? The district is counting on the state to deliver. CPS’ budget relies on the big assumption that the state will provide $480 million in pension funding. Governor Rauner has proposed supplying the district with relief, but only after a few labor trade-offs. Rauner wants to give local school districts’ the ability to limit what unions can and cannot collectively bargain for, something the Chicago Teachers’ Union isn’t going to give up without a fight. And Illinois still hasn’t been able to pass its own state budget. In other words, CPS is playing roulette with the school district’s finances.
How Chicago Public Schools Plans to Fill Its Budget Hole (in millions)
Lawrence Msall of the Civic Federation, an Illinois budget watchdog group, says, "It's difficult to even call it a budget because it has a half-billion dollar hole that the district hopes will be filled by Springfield — and we have seen little positive evidence that that will happen. To call this spending plan a budget challenges the common notion of having your expenses match your known revenue."
With just a few weeks before school, the district may be in for a mad dash for more funds. CPS could start the year without balancing its budget, but then they will likely need to make even riskier borrowing and cuts later in the year and down the line. Meanwhile, Chicago’s teachers, taxpayers, and students will continue paying for a system that doesn’t benefit the majority of teachers.
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