City Hall to shift $55 million in costs onto Chicago Public Schools

A school crossing sign in a cross walk.
Among the new costs for Chicago Public Schools in tight budget times: $14 million for school crossing guards. (Stacey Rupolo/Chalkbeat)

In Mayor Lori Lightfoot’s efforts to close a $1.2 billion gap in the city budget, City Hall will shift more costs onto Chicago Public Schools.

In a 2021 city budget plan detailed Wednesday, which includes a property tax hike and job cuts, the mayor proposed shifting about $55 million in costs onto schools. But she offered a sweetener: additional funds from a tax surplus account, which would ostensibly cover the costs for this year and then some.

Under Lightfoot’s proposed $12.8 billion budget, Chicago Public Schools would receive $167 million from a $304 million tax-increment financing surplus, or TIFs. Those dollars are surplus property tax funds the city uses to spur development and pay for public works projects in high-need neighborhoods. The amount the school district receives varies each year. For this school year, the district budgeted $97 million. 

In exchange, City Hall is asking its public school district to pick up $40 million in pension contributions to the city’s municipal employees fund for some teaching assistants and other support staff. It is also shifting to the schools the $14 million cost and oversight of 898 school crossing guards, previously on the city’s emergency management budget.

According to the city, 110 of the guards are currently working near private schools that have reopened campuses. The others are not working since Chicago Public Schools is not conducting in-person learning, a budget department spokeswoman said.

One of the ways the mayor has proposed to plug holes in the citywide budget is by eliminating 1,921 positions, many of which are vacant. The shift in crossing guards off of the city’s budget would account for about 47% of that staffing decrease. 

Lightfoot’s budget proposal, which must be passed by the City Council and would go into effect Jan. 1., is separate from the public school budget. Because the city’s budget year and the school district’s budget year don’t line up exactly, some tax surplus funds from the city’s 2021 budget will spill over into school budget for next year.

That complicates the accounting. Chicago Public Schools, for example, will incur only half of the crossing guard costs this school year, due to the timing of the shift, and none of the additional pension costs will hit until the 2021-22 school budget, the district said.

After subtracting the added costs, the district projects it will receive $23 million more this school year than it had budgeted. A spokesman said the added funds will go to support any additional expenses or revenue needs “incurred throughout this highly unusual school year.”

Historically, some expenses, such as the cost of school police, have been transferred back and forth. 

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Last summer, the city pushed to schools the $33 million cost of staffing and overseeing the police program on more than 70 campuses. Reporting from Chalkbeat Chicago and WBEZ helped pressure the school district to release a public accounting of that program, showing that the school district had agreed to pay for officer pensions and healthcare costs for 12 months of paychecks, even though officers only serve in schools for ten.

The district cost of that program has since been revised down, to $12 million

Lightfoot said Wednesday in her address that, like many other municipalities, the city was under incredible financial pressure brought on by the coronavirus pandemic. “As this new year dawned, I certainly did not think that my year would be marked by multiple tragedies and crises, back to back to back.” 

Several civic group leaders said Wednesday that they supported the plan, saying it was a fiscally sound response to a crisis. But later in the day, the city’s powerful teachers union urged the council to reject the proposal, saying additional fines and fees would disproportionately impact the city’s working poor. “Workers and working families would be better served by the City Council rejecting this budget and forcing the mayor back to the drawing board,” said Stacy Davis Gates, the union’s vice president, in a statement.

Gates questioned exactly how the district will use the additional millions it should receive. “Will (CPS leadership and the school board) use them to address dire ventilation and capital upgrades needed to secure the health and wellbeing of students and workers who Lightfoot is forcing back into buildings ruled unsafe by an independent arbitrator? Or continue to shovel public dollars into consulting contracts and bloated central office and network staff?”

Like school districts across the country, Chicago Public Schools is trying to assess the impact of the pandemic on its finances. Recently, the district had entered a period of greater financial stability and seen some improvement in its ratings from investment agencies, though it carries more than $8 billion in debt. District leaders have credited a revamped state funding formula, which passed in 2017 and directed more money to high-need districts, with starting it on a stable path.

The extent to which that progress could be disrupted is not yet clear. The pandemic has hollowed out state revenues — the largest single source of funding for Chicago’s public schools — and statewide, school funding this year remains flat. 

Chicago also just reported 14,500 fewer students than the year prior, a 4% drop that leaders said was driven in part by declines in pre-kindergarten students. How that will factor into state funding isn’t yet evident. Overall enrollment and the number of low-income students both determine state funding. Chicago has not yet reported how the pandemic and a rising unemployment rate may have affected its percentage of low-income students.

Another pressing factor in the public school district’s financial health is whether a second stimulus effort comes through for schools. Chicago Public Schools’ budget for 2020-2021 factors in $343 million in additional federal relief money, a gamble that leaders defended in late summer. Talks are underway in Washington, but the federal government so far has yet to deliver. 

A Chicago Public Schools spokesman said that in the “unlikely” event that a second round of school stimulus is stymied, “we will have to take additional measures to maintain a balanced budget.”

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Editor’s note: This story has been clarified to explain how different budget cycles for the City of Chicago and Chicago Public Schools impact TIF distribution and that some costs will not be incurred until the 2021-2022 school year.

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