Why has the CPS budget increased while enrollment has shrunk?

In The People’s Agenda survey from WBEZ/Chicago Sun-Times, a question about the Chicago Public Schools budget required explaining.

The People’s Agenda
The People’s Agenda

Why has the CPS budget increased while enrollment has shrunk?

In The People’s Agenda survey from WBEZ/Chicago Sun-Times, a question about the Chicago Public Schools budget required explaining.

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We’ve been asking Chicagoans to tell us what they want the mayoral candidates to talk about in our People’s Agenda, and nearly 25% of the responses were about education and kids. That included this question and comment from Ken Cox:

“Why does the Chicago Public Schools budget increase every year when enrollment continues to decrease? A corporation would not act that way, neither should the city.”

ANSWER: I reached Cox by phone to get more details. As a Rogers Park resident of 38 years, Cox explained he sees that 50% of his tax bill goes to Chicago Public Schools and he wonders why that portion keeps going up, since he knows enrollment has been going down.

A supporter of public education, Cox said that his own son graduated from one of CPS’ sought-after selective enrollment high schools – Northside College Prep – and that getting a seat felt to the family like winning the lottery.

“I think you need good schools because I want to live among educated people so I’m willing to pay whatever it is,” he said. “But it makes no sense to me as a businessman. I think the costs need to equal the enrollment, just from a sort of a business standpoint.”

So, what’s the deal?

Let’s break down the two parts of Cox’s concern: First, why does the CPS budget go up every year even though enrollment drops. Second, how does his personal contribution to public education – through annual Chicago property taxes – relate to how the school district pays its bills.

The cost of running CPS rises every year. A decade ago, in 2013, the school district’s total budget, at a time of cuts, was $5.3 billion, or about $13,200 for each of the 403,000 students. The 2023 budget is $9.4 billion, or about $29,400 each for 322,000 students. Meanwhile, over the past decade, enrollment is down by about 81,000 students.

Here’s the short answer to why CPS’ budget has been going up while enrollment has been declining: Long understaffed, CPS has made an effort to improve the picture in recent years. As a result, its payroll has not shrunk. And, like in every business, personnel costs make up the bulk of CPS’ expenses (65%), and its 43,000 employees get raises every year.

For more context, I called Ralph Martire, the executive director of the Center for Tax and Budget Accountability. He pointed out that during the years when CPS enrolled a higher number of students, the understaffing problem led to larger class sizes, fewer extracurriculars, more of a struggle to provide even an adequate education. Now, with fewer students at CPS, the school district is still hiring just to catch up. In fact, this year, the state determined the school district would need more than $1 billion more to reach “adequacy.”

Take, for example, school counselors. The state’s so-called “evidence-based formula” for funding — which is based on research about what schools need to provide a quality or “adequate” education — calls for one for every 450 elementary school students and 250 middle and high school students.

A decade ago, CPS schools had 782 school counselors, according to the district’s employee roster. Using the state’s formula, CPS should have had about 1,250. This year, CPS has 878 counselors on staff, compared to the recommended 1,024 to properly serve all the students.

Some contend that a better way out of this staffing problem is to reduce “inefficiencies” — in other words, close schools with low enrollment and shift teachers and resources elsewhere. But research has shown that closing schools hurts students in the short term and in the long run does not result in big cost savings.

On top of all of this, Chicago Public Schools are burdened by pension payments and debt financing, further diluting what can be spent in the classroom. About $4,000 of the CPS budget per student is used to pay for these non-academic expenses.

Not enough state funding

Which brings us to part two of Ken Cox’s question: Why does CPS get more money from property taxes every year? Martire, of the Center for Tax and Budget Accountability, says school districts in Illinois, compared to others nationwide, get the least in state funding and are among the most dependent on property taxes. This forces districts to rely heavily on increasing property taxes for revenue.

Slightly more than half of Chicago Public Schools’ budget comes from local taxes, mostly property taxes; about 30% comes from the state; and typically 14% comes from the federal government. In recent years, federal dollars have been augmented by an influx of COVID-19 relief money.

Of these revenue sources, federal money is the one most closely tied to enrollment: School districts receive a set amount per low-income student.

School funding from the state is somewhat connected to student enrollment, such as how many low-income students a district enrolls. But it’s also based on the formula that factors in what a school district needs to provide an “adequate” education.

CPS’ biggest revenue source — local property taxes — isn’t tied to enrollment. State law dictates that the property tax levy for education can’t increase more than the rate of inflation, although school districts are free to lower taxes as much as they want.

Suburban and downstate districts can ask voters to raise the tax levy on behalf of schools, in the form of a referendum, and many suburban districts have done just that. Illinois’ overreliance on property taxes creates huge disparities in the amount of money school districts have to spend. For example, some school districts receive more than 90% of their revenue from property taxes.

But that hasn’t happened in Chicago. The school district is controlled by the mayor and raising property taxes is politically unpopular. However, the state legislature let former Mayor Rahm Emanuel enact a separate property tax levy that helps pay CPS’ pension.

Candidates’ plans

The candidates running for mayor are largely focused on increasing the proportion of CPS funding that comes from the state. Several – including Ald. Sophia King and Ald. Roderick Sawyer – have suggested lobbying lawmakers to make that happen.

“We’ve got to get more money from Springfield, bottom line, we’ve got to make sure that every single state rep and every senator single senator understands that their obligation is to make sure that our public school system is fully funded, and they don’t get it,” said Mayor Lori Lightfoot at a forum earlier this month.

Congressman Jesús “Chuy” García and State Rep. Kam Buckner said their experience as state lawmakers make them uniquely qualified to get that help.

“I know how the legislature works, and I will be an effective negotiator for our city to bring more funds to CPS,” García said. He is promising he’d push the state to increase CPS funding by $350 million, and said he will be able to raise more money from philanthropies too.

Buckner wants the state’s school funding formula to factor in the level of trauma in school communities in deciding how much money each district needs. This would likely mean more state funding for CPS.

Businessman Willie Wilson has joined other candidates in saying he would close severely under-enrolled schools to save money. Cook County Commissioner Brandon Johnson, activist Ja’Mal Green and former CPS CEO Paul Vallas said, as mayors, they would do a comprehensive analysis of how the school district spends its money to see what efficiencies can be found.

“Where’s the money going? $30,000 A kid. Do you see it in the classroom?” Vallas said at a recent forum.

Sawyer said he also wants to know where the CPS money is going. “Don’t get me wrong: I don’t want to cut spending, I just want to find out why the money we spend — which is as high or higher than any other city in the world — isn’t getting us a better outcome. A MUCH better outcome,” he said.

Sarah Karp has been covering education for WBEZ since 2016.