Chicago Schools Announce 2016 Budget with $500 Million Gap


Chicago Public Schools has announced a budget aimed at making Governor Bruce Rauner and Illinois lawmakers provide almost $500 million in teacher pension relief – a move that school leaders say will prevent dramatic cuts that are inevitable if help does not appear by Jan. 1.

Juan Perez, Jr., Hal Dardick, and Heather Gillers of the Chicago Tribune report that in addition to assistance from the state, the $5.7 billion operating budget will be relying on broad borrowing, tens of millions of dollars in excesses from special city taxing districts, and a larger district property tax.

“We cannot cut our way to a balanced budget,” said Chicago schools chief Forrest Claypool in a call with reporters. “Unfortunately, if Springfield fails to do its part, we will be forced to close a $500 million gap later this year with a mixture of more unsustainable borrowing and even deeper cuts.”

And even if state lawmakers come through – a big “if” – the district will still need the union’s concessions and larger increases in taxes in coming years in order to stay ahead of ballooning pension payments.

The pension relief issue could not come at a worse time for the legislature. Republican Gov. Rauner and the Democratic-controlled legislature are at odds over the state’s own budget even as Illinois persists in spending more than it is taking in.

In return for helping CPS, the governor wants to build in provisions that would weaken the influence of unions for all Illinois school districts. However, Laurence Msall, president of the nonpartisan Civic Federation budget watchdog group, said the district’s spending plan is a huge risk.

“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,” Msall said. “To call this spending plan a budget challenges the common notion of having your expenses match your known revenue.”

Officials counter by noting that the proposed budget is lower by $68 million from last year, and earlier this year the district said it was making cuts amounting to $200 million including doing away with approximately 1,400 jobs. This week, the district announced that around 480 teachers are being laid off. Still, these teachers may apply for the 1,450 teaching vacancies expected before school begins.

The budget crisis also comes in the middle of tense union talks over a new contract. The union’s one-year deal was jettisoned last week, and now the district is pushing for a multiyear package.

The district’s plan is to tax property owners at the maximum allowable rate, which with the additional new buildings property tax collections will create a total of $80 million for CPS. City tax-increment financing dollars and cash reserves will loosen up $137 million, and $255 million will be generated by “scoop-and-toss borrowing” to ease short-term cash-flow issues, a move which will affect taxpayers more in years to come.

Even Claypoole is implementing $1 million in cuts from his office, write Chris Fusco, Natasha Korecki, and Jordyn Holman, reporting for the Chicago Sun-Times.

NBC Chicago’s Mary Ann Ahern quoted Claypoole on his view that the move is necessary:

“This budget reflects the reality of where we are today: facing a squeeze from both ends, in which CPS is receiving less state funding to pay our bills even as our pension obligations swell to nearly $700 million this year,” CPS CEO Forrest Claypool said in a statement. “We look forward to continuing to work with our leaders in Springfield to prioritize education funding reform and finally end the inequity that requires Chicago alone to take scarce dollars from the classroom to pay for teacher pensions.”

CTU President Karen Lewis said in response to the city’s mandate that teachers pay 7% more toward their pension payments that the move was “strike worthy.” The school district has, for many years, paid 7% of teachers’ 9% retirement contribution. Claypoole wants to gradually eliminate the pension benefit.