Chicago schools budget includes $68 million in classroom cuts

Moody's downgrades the district's bond rating, citing growing debt and pension obligations.

July 24, 2013

(WBEZ/Bill Healy)

Chicago Public Schools unveiled a $5.6 billion budget that includes a tax hike and deep cuts to schools that parents and teachers have been anguishing over for weeks.

The district had been keeping this year’s budget under tight wraps; today’s long-awaited numbers confirmed the district will cut $68 million from classrooms.

“The charge card is tapped, and there’s no way for us to cut ourselves out of this deficit," district CEO Barbara Byrd-Bennett told reporters. "So the pain that teachers are feeling and children is real.”

Spending in the district will go up by $463 million — a sum school officials say is driven by a pension bill that increases by $405 million, plus $93 million in salary increases. The budget proposes raising property taxes to the maximum allowed—about 1.5 percent, school officials say. And it completely empties out the reserves for a second year in a row.

Before officials even finished unveiling the budget publicly, Moody’s downgraded CPS’s bond rating, citing growing debt and pension obligations.

For months the district had warned parents and teachers about this year’s $1 billion deficit. But nearly 70 percent of that shortfall — $696.5 million — will be wiped out by using money from reserves, a fund that the district said last year it was draining to zero.

Tim Cawley, chief administrative officer, said “total dumb luck” put hundreds of millions of dollars in the fund because Cook County property tax payments that would normally be counted as revenue arrived early and tallied as reserves. In addition, the state unexpectedly caught up in its payments to the district.

Revenues will increase for CPS by $93.7 million over the next year. Still, the district plans to spend about $630 million more than it’s taking in.

“We have changed the way we do just about everything,” said Cawley. “We’re streamlining operations. We’re looking for cuts that we can make away from the classroom. We’re managing our debt differently, we’re consolidating schools.” And yet the district was still not able to keep cuts from affecting students, Cawley says.

“So the solution for this is very clear. We need help in the overall funding level from the state of Illinois, and we need pension reform, and this has to happen, or the future is even more grim.”

While “pension reform” was a key talking point for school officials, they did not offer any new details about what that means. The school district and Chicago Teachers Union are split on the issue, with the union wanting to pursue ideas that increase revenue and the school district wanting to curb the amount it’s obligated to pay each year. Pension obligations compete directly with current funding for schools.

Jesse Sharkey, vice president of the teachers union, said the budget “confirms in a way what we already knew. The $68 million cut in educational services — that’s been playing out in the schools for the whole week. We’ve been receiving literally hundreds of phone calls from teachers who are trying to figure out the reality of not being in front of their kids next fall.”

The district laid off 2,100 teachers and school employees last Friday, bringing to 3,000 the total number of layoffs in the district this summer.

Chicago is increasing spending on some priorities — including full-day kindergarten, schools for dropouts, STEM and IB programs, and magnet and gifted programs. It is also creating an office with a $20 million budget dedicated to assisting struggling schools. Schools slated for closure in the past have complained that the district is quick to put schools on probation but does not provide enough assistance to help them get off.