CPS Budget Plan Sparks Controversy

Introduction to the Budget Plan

Outgoing Chicago Public Schools CEO Pedro Martinez and his team are moving forward with a precarious budget for next school year that is based on $600 million that is not lined up — a move that could result in thousands of teacher and support staff layoffs this summer or even mid-year.

Criticism from Principals and the Mayor’s Office

The principals’ union and the mayor’s office blasted Martinez, saying that he is putting politics above the needs of students. Principals are expecting to get their school-level budgets on Thursday, but the Chicago Principals & Administrators Association called those budgets “false” and “magical.” School Board President Sean Harden also criticized Martinez last week for presenting the board with “unsatisfactory and incomplete” budget options. Harden called for Martinez, who has been terminated with an end date of June 19, to step aside immediately.

Assumptions Behind the Budget

The school-level budgets assume a best-case scenario in which the city gives CPS $300 million in surplus from special taxing districts called TIFs, and either the state or the city come up with an additional $300 million. Both the city and state are cash-strapped and are not planning any big boost in revenue for CPS. Last year, the city gave CPS a record $298 million in TIF surplus funds, but it was based on the premise that the school district would cover a $175 million municipal pension payment. Martinez rebuked the mayor’s demand that CPS pay it.

Defense of the Budget Plan

In a call with the media on Wednesday, Martinez defended going forward based on these assumptions. It allows the school district to allocate to schools about the same resources as last year, he said, though some schools might see increases or decreases based on enrollment and demographic changes. If CPS didn’t factor in this unguaranteed money, Martinez said, CPS’ budget deficit would be $529 million, school-based budgets would be reduced and principals would have to cut programs and thousands of staff.

TIFs and Their Impact on CPS Funding

Martinez insisted he was not being unrealistic by trying to get more money from the city. He has consistently pushed the idea that TIFs should be drained or liquidated. In TIFs, tax revenue is frozen in set areas of the city and the growth is used for local development and infrastructure programs. CPS would be due about $600 million more every year if TIFs didn’t exist, he said. Martinez pointed out that the CTU and Mayor Brandon Johnson have a long history of pushing to eliminate TIFs. They’ve argued that they are used as slush funds for developers, while diverting money from schools.

Challenges in Reducing or Eliminating TIFs

But reducing or eliminating TIFs are a hard sell because city council members depend on them to spur economic development. City Council members must agree to this plan. The city currently has more than 100 TIF districts with funds intended for ongoing and future projects, such as the long-awaited southbound extension of the CTA Red Line. There are TIF districts that are set to run as long as 2043 and 2052.

Risks Associated with the Budget Plan

Even the assumption that the city will provide another record-setting $300 million in TIF surplus is risky. TIFs are surplused by the city by going through each district and pulling money that is not already being used for a specific project. The financial information that principals are expecting to get Thursday will be used so they and their Local School Councils can make staffing and program decisions for the next school year. The district is already behind typical schedule in releasing school-level budgets, which means it may be harder to find people to fill open positions and give laid off staff less time to find new jobs.

Reaction from the Principals’ Association

“In a presentation by the lame duck CPS administration, we were told our members would be required to waste their time and credibility by drafting budgets for next school year that are based on numbers that CPS admits are off — likely by hundreds of millions of dollars,” the principals’ association said in a letter to its members, which was obtained by WBEZ.

Conclusion

The CPS budget plan has sparked controversy due to its reliance on unguaranteed revenue from the city and state. While Martinez has defended the plan, critics argue that it is unrealistic and may lead to thousands of layoffs. The plan’s assumptions about TIFs and federal funding have also been questioned. As the district moves forward with the budget plan, it remains to be seen how the city and state will respond to CPS’ requests for additional funding.

FAQs

• What is the basis for the CPS budget plan?
  The CPS budget plan is based on $600 million in unguaranteed revenue from the city and state.
• What are TIFs and how do they impact CPS funding?
  TIFs are special taxing districts that freeze tax revenue in set areas of the city and use the growth for local development and infrastructure programs. CPS would be due about $600 million more every year if TIFs didn’t exist.
• What are the risks associated with the budget plan?
  The budget plan is risky because it relies on unguaranteed revenue from the city and state, and assumes that the city will provide another record-setting $300 million in TIF surplus.
• What is the reaction from the principals’ association to the budget plan?
  The principals’ association has criticized the budget plan, calling it "false" and "magical" and arguing that it will require principals to waste their time and credibility drafting budgets based on unrealistic numbers.