CPS is struggling with a budget crisis, prompting concerns about potential state intervention to address financial challenges.
Chicago: The new Chicago Board of Education is stepping into a tough situation. They’re facing a district that’s really struggling financially. There’s a budget that doesn’t add up, rising costs, and fewer students. Plus, there’s a long list of things that need fixing and a mountain of debt.
A budget watchdog group, the Civic Federation, is sounding the alarm. They say things are so bad that a state takeover might be on the table. They’re urging the new board to cut spending, plan for the long haul, and find ways to bring in more money.
The board’s challenges are pretty clear. CPS has a $9.9 billion budget for this year, but it’s not as solid as it looks. It doesn’t cover the costs of new contracts with teachers and principals. Just the teachers’ contract could cost around $125 million, and there’s no plan for how to pay for it. The budget also relies on one-time fixes, like leftover federal COVID relief funds.
Looking ahead, budget gaps for 2026 and 2027 could exceed $500 million. And the district’s debts have ballooned from $6.7 billion in 2014 to $9.3 billion now, not even counting pension liabilities, which are at $13.9 billion.
CPS can’t raise much money on its own. The state limits how much they can collect in property taxes, and their bond rating is pretty low, making borrowing more expensive. One rating agency warned that if they dip into their rainy day fund or take on new debt for union contracts, they could face an even worse rating.
Even though state aid has gone up since 2017, it’s still not enough. CPS has dropped in funding tiers, meaning they’re getting less compared to other schools in Illinois.
Enrollment has seen a slight bump due to the city’s migrant crisis, but the district expects numbers to either keep falling or stay flat. This leaves many schools underused, with 34% of them less than half full. Despite fewer students, the district has ramped up staffing, thanks to federal COVID relief money that will run out by the end of the 2025 fiscal year, creating a financial cliff.
The Civic Federation is pushing for the board to engage the community in discussions about options, including possibly consolidating schools to match enrollment trends. They also suggest looking at spending cuts, which the teachers’ union might not like.
Bringing in more revenue, like additional state assistance, will be crucial. Joe Ferguson from the Civic Federation wants the new board to involve the state early in budget talks. He emphasizes the urgency of the situation, saying everyone needs to come together to find a solution.
Back in 1979, CPS faced a financial crisis that led to the creation of the Chicago School Finance Authority. This group helped manage the district’s finances until its powers were reduced in 1995 and it was dissolved in 2010. The idea of reviving it came up again during a crisis in 2016 but was shot down by city officials and the teachers’ union. However, the enabling legislation is still available if needed.
