Chicago Facing Gauntlet of Pensions, Debt, Future Funding


Chicago Public Schools has presented a school spending plan that will require $500 million more than the district has budgeted.

The heads of Chicago’s principals association say this is tantamount to writing a bad check. Heather Gillers and Cynthia Dizikes, writing for The Chicago Tribune, say that if the state lawmakers do not help CPS, the district will be forced to borrow the money or make additional cuts at the halfway mark of the coming school year.

“They’re not the budgets that we would like to be presenting,” the district’s interim CEO Jesse Ruiz said in a conference call with reporters. “But they reflect the reality of where we are today: facing a budget deficit of more than $1 billion, the increasing costs of a broken pension system, and a state government that slashed education funding.”

The assumption is that the preliminary budgets will excuse CPS’ debt of $500 million as part of a $700 million pension payment due June 30, 2016, by giving the district more money or by allowing CPS to delay its payment until 2017 or later. CPS has tried to convince the Chicago Teachers’ Pension Fund to extend the debt payment until 2017 or later, but last week the pension fund rejected the request.

All this means that when Chicago principals receive their preliminary budgets next Monday, the budgets will not be useful in giving principals an accurate picture of what they have to spend for the 2015 – 2016 school year. Clarice Berry, the president of the Chicago Principals and Administrators Association, said:

“They have issued budgets that have no money to back them. They are giving the principals a check that is going to bounce right now.”

That could lead to massive school interruptions, layoffs, and program eliminations. The plan does not include the cost of a new teacher contract with the Chicago Teachers Union for the upcoming year and means that CPS will not continue to maintain funding levels to schools that experience a drop in enrollment. Now, schools that have enrollment decreases will receive about $100 million less than last year. Most of those cuts will affect district-run community schools, not charter schools.

Per pupil funding levels will remain the same as last year, write Lauren Fitzpatrick and Fran Spielman of the Chicago Sun-Times, which means that if more students show up than were planned, the school may gain some funding — but if fewer students enroll, the school will lose, according to CPS Chief Financial Officer Ginger Ostro. In other words, CPS will not provide a financial safety net for schools with fewer students than expected.

“Due to years of poor state funding, a broken pension system and bad fiscal decisions, we are left with no good choices until a comprehensive solution is reached, and these school budgets reflect that sad fact,” interim CPS CEO Jesse Ruiz said.

The bottom line, explains Greg Hinz of Crain’s Chicago Business is that some charter schools will get as much as $3.4 million more this year, and non-charters will lose as much as $1.35 million. This means that some of Chicago’s well-known traditional high schools may be the biggest losers. And even though some traditional high schools will gain as much as $1.5 million because of growing enrollment. the big winners will be charters, whether new or enlarging.

CPS watcher Linda Lenz, publisher of Catalyst, a news organization that tracks developments in Chicago education, says:

With regular schools losing money year after year, “At some point, you have a hard time providing basic services,” she says. And because neighborhood schools have union rules that the charters lack, “their money doesn’t go as far.”