CPS proposes cutting administrative costs, restructuring debt to close $500M deficit

Chicago Public Schools’ budget deficit for the upcoming school year ballooned to a half-billion dollars, officials said Wednesday, and has largely been filled by cutting administrative costs, laying off central office staff, restructuring debt and leaving vacancies unfilled.

The balanced budget proposal released Wednesday is only a first step as another deficit looms: CPS has not yet accounted for expected raises from new collective bargaining agreements with the Chicago Teachers Union and a newly recognized principals’ union that will likely be settled in the coming months.

Officials unveiled their spending plan for the fiscal year starting July 1 after a one-month delay to find solutions to the deficit, including unsuccessful efforts to persuade the city to resume pension payments for some CPS employees. To the consternation of some within CPS, Mayor Brandon Johnson continued his predecessor Lori Lightfoot’s plan to make the district cover a large portion of those pension costs.

The deficit had originally been projected at $391 million but rose to $505 million because of rising health care costs and required special education resources, CPS said on Wednesday.

The Board of Education is expected to consider the proposal at its monthly meeting July 25. Lightfoot faced pushback and close votes from her own appointed board about the pension payment. It’s unclear whether the same will happen under Johnson.

The $9.9 billion budget includes $149 million more than last year in school-level funding, mostly due to required special education services, legally required increases to charter schools and more bilingual services, officials said. That also takes into account 513 additional teachers and 337 more support staff than last year.

Those school budgets were determined by a new funding model that CPS announced in the spring, which guarantees a baseline of staff for every school, regardless of its size, and prioritizes students’ needs rather than the number of students a school enrolls.

“This budget very clearly puts teaching and learning front and center where it belongs,” CPS CEO Pedro Martinez said in a news release.

The district said it expects its enrollment to grow for a second consecutive year, a stunning turnaround after more than a decade of decline that has been driven by newly arriving migrant families. It puts enrollment at 328,000, up from 323,300 in fall 2023. But with those increases, CPS has taken on the costs of serving students with greater needs, such as 10,000 more English learners and 4,000 more students with disabilities in the last year.

CPS expects to spend $1.4 billion on special education, including an additional 900 positions at schools dedicated to serving students with disabilities and about $77 million “to provide every student access to a multilingual education."

Other funding includes $10 million for alternative safety measures for schools that removed their police officers, $57 million for library renovations, sports and career and technical education upgrades. Another $50.5 million will go to upgrading internet at schools by replacing aging hardware, and $5.5 million will help the previously announced decision to move custodial equipment in-house.

On the capital side, CPS is proposing a $611 million budget for facility projects, up from a significantly scaled-down $155 million budget last year. CPS wants to focus on priority needs at neighborhood schools, improvements to indoor air quality, school building envelope improvements, ADA accessibility, restroom modernizations and athletic improvements, among other areas.

District leaders have long said they didn’t want to scale back spending at schools to close the budget deficit, which is partly mitigated by the last remaining federal pandemic relief funding. Instead, they turned to central office expenses, where budget cuts saved $197 million.

Officials said they saved another $196 million through a one-time carry-over of $92 million in federal funding, by leaving $65 million worth of staff vacancies unfilled and some new federal and state money.

Another $112 million of the budget deficit was filled through $52 million in debt restructuring, $20 million for fewer central office staff, $10 million in reduced short-term borrowing costs and $20 million less for class-size reduction since CPS says the new school funding formula takes that into account.

CPS is still sounding the alarm about future years, though.

The district is projecting deficits of around a half-billion dollars in each of the next five years, and the teacher and principal contracts will add even more. About $62 million in projected TIF surplus funding is earmarked to cover a recent agreement with SEIU 73, which represents much of the support staff at CPS, officials said.

The district has long called for more state funding, including changes that match the funding all other Illinois districts get to cover teacher pension payments, and more help with special education, preschool and transportation.

The school district is hosting two budget hearings, on Tuesday and July 17 at Jones College Prep, at 700 S. State St., and also on the district’s YouTube channel.