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Interim Chicago Public Schools CEO Macquline King is planning to propose a $10.2 billion budget to the school board Wednesday that doesn’t include midyear cuts to schools or a reimbursement to the city of Chicago for a highly-debated pension payment covering the retirements of city workers and CPS staff, multiple sources told Chalkbeat.
Not including the pension reimbursement — a move that most elected school board members have said they support — would help close the district’s budget deficit, which was estimated at $734 million in June. According to a source with direct knowledge of the budget plan, King’s budget proposal also does not include a plan to take out a short-term, high-interest loan — a strategy to address the budget deficit previously pitched by the mayor’s office, where she worked before she became CEO.
But if the board adopts a budget without the pension reimbursement, it could lead to more tensions with City Hall as the district breaks away from 30 years of mayoral control. It could also prompt another midyear dispute over the matter.
A second source with direct knowledge of the budget plan said the proposal assumes CPS will receive $404 million from a city pool of taxpayer dollars meant to spur economic development, known as surplus Tax Increment Financing, or TIF, dollars. That is $100 million more than the record amount CPS received last year in TIF surplus dollars, which are controlled by the mayor’s office.
However, district leaders are willing to reimburse the city with the pension payment if the city provides additional TIF dollars beyond the $404 million included in the proposed budget, or if the state provides a “windfall” of additional revenue, to help cover the cost, the second source said.
Cassio Mendoza, a spokesperson for the mayor’s office, said Monday afternoon it is “not correct” that CPS’s budget proposal does not include the pension reimbursement. He said negotiations are ongoing between City Hall and CPS.
Earlier this summer, the district announced hundreds of layoffs and cuts, including to hot meals. King’s budget proposal does not include additional cuts that would impact classrooms or direct student services and avoids the need for cuts to schools in the middle of the year, according to a source with direct knowledge of the budget plan. It also does not include furloughs and fulfills commitments to unions, the source said.
There was “no way to avoid the potential for midyear cuts” or future cuts without declining to reimburse the city for the municipal pension payment, according to the source.
The district closed its remaining deficit through “additional savings and cuts away from the classroom,” other one-time funding sources and revenue and through refunding of existing debt, the source said, adding that there may be additional layoffs at the central office but that’s not yet certain.
In March, a coalition of Chicago’s newly-minted elected school board members blocked a budget amendment that would have transferred $175 million from CPS to the city to put toward a $1.13 billion payment to the Municipal Employees Annuity and Benefit Fund.
But not pitching in for that pension payment will likely draw ire from the mayor’s office and members of City Council as the city faces its own financial challenges. Aldermen and the mayor must pass a budget before the end of the calendar year and typically begin their budgeting process in October. CPS began reimbursing the city for a portion of that pension payment in 2020, under then-Mayor Lori Lightfoot. Former CPS CEO Pedro Martinez was fired, in part, for refusing to reimburse the city for the pension payment, which is for non-teaching CPS employees.
King is expected to present the budget Wednesday at a Chicago Board of Education meeting to review its agenda for its meeting later this month, when it is expected to vote on the budget — one of the last days the board can do so, per state law. The district’s new fiscal year began July 1.
“It looks like our superintendent is not a rubber stamp superintendent,” said elected school board member Che “Rhymefest” Smith, who voted against hiring King and opposed the pension payment in March and was aware of King’s upcoming budget proposal. “She heard the community loud and clear.”
Smith said many residents told district officials that they did not believe the cash-strapped district should take on the pension payment at a series of forums CPS hosted to get community input on the budget.
He said he and a majority of fellow elected board members remain staunchly opposed to borrowing, which he said would place the district on shaky legal ground and only defer the problem to next year while adding borrowing costs: “We’d be stuck repaying the loan and still needing the money.”
Norma Rios-Sierra, an appointed member of the board, said she is not yet certain what the budget proposal will include, but thinks that not paying the pension payment “is a mistake.”
She said she supports a budget plan that would avoid cuts to schools and said many of her constituents don’t want the district to pay the pension payment. However, she compared foregoing the pension reimbursement to not paying a bill and wants to have more conversations “with all stakeholders.”
“We need to find a permanent solution,” she said.
School board President Sean Harden did not respond to a request for comment.
Meanwhile, the Chicago Teachers Union announced that representatives from the union, school district, mayor’s office, and labor groups representing district principals and support staff will hold a series of briefings for aldermen and state lawmakers Tuesday to argue for more funding for CPS from the state. Illinois lawmakers have sent an additional $1.1 billion to the district over the past seven years, but by the state’s own calculation for what would constitute “adequate” funding, Chicago’s allocation remains $1.6 billion short.
Becky Vevea contributed.
Reema Amin is a reporter covering Chicago Public Schools. Contact Reema at ramin@chalkbeat.org.
Mila Koumpilova is Chalkbeat Chicago’s senior reporter covering Chicago Public Schools. Contact Mila at mkoumpilova@chalkbeat.org.
