Officials at Chicago Public Schools laid out a “dire financial situation” for aldermen at briefings Monday and Tuesday: not only will the district need a school funding reform passed through Springfield, it also needs aldermen to file an additional property tax levy to address its cash crunch, slated to hit this summer. The district projects by June 30, it will have only $24 million cash on hand, enough to cover a day and a half of expenses, according to an 11 slide powerpoint deck provided to Aldertrack.
The district is already “borrowing on a credit card” to address its cash flow needs. It has an $870 million line of credit that expires in August. In order to cover costs for the next school year, CPS would need to renew that $870 million line of credit, but it can’t do so without a Fiscal Year 2017 budget and a new property tax levy. “Banks will only lend if they see a balanced budget with meaningful progress to structural balance and positive projected cash flows for FY 2017,” the powerpoint says.
CPS is scheduled to release that FY 2017 budget later this month, and school officials said it will need help from the Chicago Teachers Union (CTU), Springfield, and the city to close a yawning $1.1 billion structural deficit: “[it] will require shared commitment from all parties, starting with Springfield in the form of both pension parity and equitable funding; a contract with CTU that is fair to teachers, students and taxpayers; and the restoration of the pre-1995 property tax levy.”
The district has publicly supported school funding reform bills currently being pushed by State Sen. Andy Manar (D-Bunker Hill) and State Rep. Christian Mitchell (D-Chicago). CPS estimates Manar’s bill (SB 0231) would provide an extra $300 million a year to CPS in FY 2017; Mitchell’s (HB 4272) would provide an extra $260 to CPS in FY 2017 and more than $280 million the following years.
During the briefings, CPS officials outlined a plan dependent on the General Assembly passing funding reform and Gov. Bruce Rauner signing it into law. CPS would then ask City Council to approve a $142 million property tax levy devoted to CPS capital improvements. City Council has a separate property tax levy it can raise for CPS capital spending–last October, aldermen approved a $45 million levy, though they demanded CPS regularly report on what projects that money would be spent on.
“They’re not asking us to do that yet, they’re counting on Sen. Andy Manar and [State Rep.] Christian Mitchell’s bills,” said Council Education Committee Chair Howard Brookins, Jr. “But nobody, including CTU, believes there will be a permanent fix to anything until June 2019, when Rauner will be out office.”
CPS shot down revenue ideas pitched by CTU and some Progressive Caucus members–a Lasalle Street tax on financial transactions, and the use of TIF surplus funds–calling them both “unviable.”
Other statistics included in the PowerPoint:
CPS will pay $700 million to teacher pensions in FY 2016. Its unfunded liability is $9.6 billion.
The system’s long term debt is $6.7 billion.
Most rating agencies expect between 30-90 days of cash on hand. In CPS’ case, that would be $470 million to $1.4 billion of the district’s $5.7 billion in expenditures for 2016, far short of what the district is expected to have at the end of next month.
Since FY 2011, CPS has cut $740 million in administrative, central office, program and operating expenses.