Introduction to CPS’ Financial Struggles
Chicago Public Schools is so cash-strapped that its new interim CEO and board president are scrambling to find a way to send out back pay owed to teachers and staff that was negotiated in the Chicago Teachers Union contract, which was settled in March.
Background on the Contract
The CTU won 4% raises plus additional salary increases for experience and advanced degrees. Because the old contract expired last June, the raises cover a whole school year and will cost the district more than $100 million. Teachers and staff are expecting CPS to deliver that retroactive pay this summer.
Commitment to Pay
“The district has every intention of satisfying the obligation and will continue to work feverishly to do so,” said Chicago Board of Education President Sean Harden. “Any delay should not be taken as we are not going to pay. We have an absolute commitment.”
Challenges in Paying Retroactive Pay
In an interview with WBEZ, CPS Chief Budget Officer Mike Sitkowski suggested that CTU members may have to wait until sometime in the fall when CPS receives the second installment of Cook County property tax revenue. The union would not be happy about that prospect, and Harden and CPS interim CEO Macquline King say they intend to prevent that from happening. They hope to have a different plan mapped out by early this week.
Union Expectations
CTU President Stacy Davis Gates said in a statement that the union was told retroactive pay would be sent out this month and that she has every expectation that will happen. “Retro pay is wages that are already earned and owed to the educator who worked the entire school year in good faith without a contract,” she said.
Financial Constraints
Sitkowski said last week that CPS does not have the money on hand to send out the $100 million owed to Chicago Teacher Union members. Twice a year, CPS takes out short-term loans to manage cash flow, but Sitkowski said the district is maxing out those lines of credit on other expenses and doesn’t have room to also send out retro pay.
Property Tax Revenue
CPS gets an infusion of property tax revenue from Cook County government twice a year, once in February or March and again in August. CPS uses the August installment to satisfy outstanding bills and pay back the short-term loans taken in the prior fiscal year, even though its fiscal year ends June 30. But Cook County has announced that the August installment of property tax revenue will be delayed at least 30 days, if not longer, as it upgrades its computer systems.
Impact of Delay
The delay could stretch on even longer as fixing hundreds of errors are now listed as “TBD.” “That’s just putting pressure on our cash situation, not our budget situation, as we head into the summer,” Sitkowski said. “And so that’s something we’re keeping an eye on. And so the timing of the retro pay, which is an obligation that’s part of our 2025 budget, is going to rely on the receipt of those property taxes.”
Budgetary Challenges
The Chicago Teachers Union’s contract expired at the end of June 2024, but at the time the contract was still being negotiated and the school district didn’t include any money for raises in the budget. The Board of Education approved the CTU contract in April and also amended the school district’s budget to include money for the raises. The board also instructed CPS to use extra money provided by the city by pulling money from special taxing districts, called TIFs, to pay for those raises.
Ongoing Financial Struggles
Sitkowski said that even with that extra money, CPS has a lot of bills to pay at the end of the fiscal year, and it is constantly struggling to keep enough cash on hand to satisfy payroll and other costs. CPS also over-estimated the revenue it would get from Personal Property Replacement Taxes, a revenue source collected by the state and delivered to local governments, by $90 million.
Future Budget Shortfall
Closing out last fiscal year is just part of the current challenge. CPS leaders also are trying to figure out how to fill a $730 million budget shortfall for the 2025-26 school year. King, the interim CEO, has said she is going to do a deep dive on the budget to look for efficiencies and also hold hearings around the city to hear what people think.
Conclusion
The situation highlights the ongoing financial struggles of Chicago Public Schools and the challenges faced by its leaders in managing the district’s budget. The delay in paying retroactive pay to teachers and staff is a significant concern, and it will be important to monitor how CPS addresses this issue in the coming weeks and months.
FAQs
What is the amount of retroactive pay owed to teachers and staff?
- The amount of retroactive pay owed is more than $100 million.
Why is CPS struggling to pay the retroactive pay?
- CPS is struggling due to cash flow issues, maxed-out lines of credit, and a delay in receiving property tax revenue from Cook County.
When can teachers and staff expect to receive their retroactive pay?
- Initially, it was expected to be paid out in the summer, but there might be a delay, possibly until the fall, depending on when CPS receives the necessary funds.
- What is being done to address the budget shortfall for the 2025-26 school year?
- The interim CEO, Macquline King, plans to conduct a deep dive into the budget to find efficiencies and will hold citywide hearings to gather input from the community.
