CPS CEO Forrest Claypool unveils district’s FY18 budget at Galileo Elementary School Friday afternoon.Chicago Public Schools unveiled what district CEO Forrest Claypool called a $5.75 billion budget “outline” Friday, stressing that too many unknown variables, particularly state action on a school funding reform bill, SB1, could significantly alter the district’s spending plan for the upcoming school year.

“State law requires CPS to release a budget today, even though the state of Illinois has not lived up to its budget obligation to provide funding, not just for CPS, but every other school district in the state of Illinois,” CPS CEO Claypool said in his opening remarks to a classroom full of reporters at Galileo Elementary School on the near West Side.

CPS FY18 Budget

CTU Response

For the third year in a row, CPS is building its budget around the expectation of state aid. This time, it’s banking on about $300 million promised under SB1, as well as $269 million in local revenue from the city. Governor Bruce Rauner filed an amendatory veto to that bill. On Sunday, the Illinois Senate is scheduled to vote to override the governor’s veto, followed by a likely House vote on Wednesday. “So, the budget we released today, is more of an outline than a traditional budget as we wait for the resolution of the the education funding stalemate in Springfield.”

 

Comparison of FY17 and FY18 Expenditures from CPS budget book.

If the Illinois General Assembly fails to override the governor’s veto, the school district will “get zero”, Claypool said. But he refused to talk worst case scenarios, nor would he detail how the district determined that it needed $269 million in local revenue from the city or exactly how that revenue would be generated.

“Our first order of business is to pass Senate Bill 1. For the last two years, I’ve worked with superintendents statewide… that’s the first order of business, that’s the first piece of the puzzle,” Claypool told reporters. “And as the mayor said yesterday, we are not in a position to talk about local resources or local options, until Springfield has lived up to its responsibility to fund schools.”

Even if the General Assembly is able to override the veto, CPS still won’t get the full amount it’s entitled to, he added. We received $500 million dollars less than our enrollment would dictate. SB1 does not give CPS equality, but it’s a significant step in the right direction and we recognize that politics is the art of the possible.”

SB1 would replace General State Aid with an “Evidence Based Model”, replacing at least four state grants CPS currently receives: (1) Funding for Children Requiring Special Education, (2) Special Education Personnel, (3) Special Education Summer School, and (4) Bilingual Education.

The $300 million CPS is banking on from its passage includes $221 million toward its annual pension payment and $71 million the in new formula funding from the state.

On the specific $269 million dollar amount, he explained, “It’s a number that given all the other expenses the district has and the structural deficit we began the year with that’s necessary to balance the budget as required by law.”

Reporters continued to press Claypool several times to reveal the source of the new money, whether it would come from an existing or new revenue stream, and if it includes the annual TIF surplus the city provides CPS. On the former, he responded with various renditions of  “it’s Springfield’s obligation” to properly fund schools.

“There are many options for local resources to fill this gap and meet our commitment for a balanced budget. […] This is not the time and place to discuss them. […] We will be coordinating tightly with the city of Chicago,” he told another reporter. Eventually, he passed over reporters who continued along that line of questioning.

Claypool was able to say that local source does not include the TIF surplus, which is already built into the budget. CPS anticipates the city will surplus $22 million from TIF accounts, about $65 million less than in FY2017. According to CPS budget documents, last year’s surplus was higher than anticipated ($88 million).

Highlights of CPS Budget Numbers

  • Total Budget – $5.75 billion, representing a $338 million increase over the FY17 amended budget of $5.41 million.
  • TIF Surplus – $22.3 million would come from the City of Chicago declaring TIF surplus, $65 million less than 2017. That’s because last year’s surplus was higher than anticipated at $88 million.
  • State and Federal Funding – Total state aid is budgeted at roughly $2 billion. The district anticipates a $167.2 million increase in state funding under SB1, compared to last year. It also projects a $56.8 million decrease in federal funding. (As noted in the budget book, “Federal title grant dollars will decline by $60 million due to a combination of factors, including reduced federal funds from the Trump administration, a decline in CPS enrollment, and a reduction in the concentration of poverty in Chicago, according to federal data.”)

 

  • Some Big Expense Increases
  • $124 million in one-time spending reductions that occurred last year now reinstated in FY18;
  • $99 million in teacher salary and benefit increases over FY17;
  • $81 million in accounting reserves used to balance the FY17 Budget;
  • $52 million increase in pension contributions over FY17 Budget; and
  • $40 million from inflation in healthcare, transportation and non-CTU salary increases. (The budget report adds the following disclaimer, “Increased state revenue related to SB1, local resources, including $71 million from property taxes, and expenditure reductions, including projected lower enrollment, will partially offset these higher expenses.”)

 

  • $773 Million Pension Payment – An increase of $52 million compared to FY17, and represents 13% of the budget. The CPS budget book notes significant increases in future payments: “The District’s required pension contributions increase even more in the coming years – a total cost of $849 million in 2021 and more than $1.7 billion in 2059 – highlighting the need for a long-term solution on pension parity between CPS and other districts in the state.”
  • Property Taxes – CPS’ FY18 projection for property tax revenue is $2.8 billion, of which $96 million is dedicated for debt service, and $5 million for capital expenses, leaving a total of $2.7 billion for the operating budget. Total operating revenue is $71 million more than the FY17 Budget. That increase includes $45 million “from taxing to the cap, or rate of inflation, on existing and new property”, another $16 million from the CPS Pension Levy, and a new Transit TIF (likely the one for the Red and Purple Line Modernization Program) will provide $10 million.
  • Student Based Budgeting (SBB) Formula – For FY18, the base SBB rate is increased from last year’s rate of $4,087 per student to $4,290, representing a 5% increase.

 

  • Capital Budget – $136 million “for urgent facility renovation and maintenance projects, IT investments, and school security equipment”
  • Enrollment Declines – CPS anticipates a decrease in districtwide enrollment, about 8,000 less students than FY2017. Claypool said it’s “misleading” to think the enrollment drop is a “misjudgement on the schools, because a higher percentage of parents with school age children…are choosing CPS than ever before. “The birthrate is falling like a rock, and there’s depopulation,” he added. “So the number of ‘potential’ students is much lower than the past and rapidly decreasing.”

 

Public Hearing Schedule – CPS has four public hearings scheduled to receive public comment on the budget. Hearings on the capital budget have not been scheduled. Hearings on the overall budget will be held August 23rd at CPS Headquarters (12:30 p.m. and 3:30 p.m.) The final budget is expected to be presented to the Board of Education for a vote at its August 28th meeting.