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The Chicago school board is poised to increase the amount the district is borrowing to make payroll amid delays in receiving property tax revenue.
The board is expected to boost that amount by $400 million, to $1.65 billion — a change that district officials estimate will set the deficit-plagued Chicago Public Schools back about $6.6 million in added short-term borrowing costs.
District officials told the board this week they estimate that delays in receiving property tax revenue from Cook County have cost the district more than $70 million over the past eight years. This school year, they are costing CPS about $220,000 in interest costs a month — “a lot of money and definitely more than the cost of one teacher,” as school board member Carlos Rivas put it at a Wednesday meeting to review the board’s monthly agenda.
“All of these delays cumulatively have really been a pain point for us,” said Wally Stock, the district’s acting chief financial officer.
In recent years, the delays have been caused by massive issues with the county’s efforts to update its computer system. The board will vote on the midyear increase in its short-term borrowing, which allows the district to keep paying its staff and vendors, at its regular meeting in late January.
After the latest round of property tax delays, county tax bills went out in November, with a due date in mid-December. The district is in the process of receiving its revenue, almost eight months into the fiscal year, Stock told the board.
“I am optimistic and hopeful that with the new computer system, they will get back on the rails and get the bills out on time,” he said. But he added, “It’s hard to say.”
Cook County is helping some smaller suburban taxing districts weather the delays with a bridge loan program, but CPS does not qualify. Still, Rivas and other members suggested CPS officials should speak with county officials about the possibility of chipping in for the district’s swelling borrowing costs. Rivas said he worries the district will find itself once again navigating property tax revenue delays later this year.
“We need to keep putting pressure on our county folks to help us out,” he said.
Some fiscal experts have said that CPS should build up the kind of cash reserve that school districts with healthy finances set aside to weather unforeseen expenses or revenue delays without having to borrow in the short term. The district also has hefty long-term debt related to maintaining its portfolio of aging buildings, and the costs of servicing it are a significant drain on its budget.
At a special meeting during the district’s winter recess, the board approved a modest property tax levy increase by a 15-to-5 vote, with board members arguing that CPS should tap any possible influx of dollars at a time of increasingly tight finances and looming deficits. That increase, which will cost the owner of a $250,000 home an additional $8 a year, will bring in an extra $40 million for CPS this fiscal year. It bumped up the levy amount to the maximum the district can set, which officials had slightly underestimated when they determined it back in the summer.
A Cook County spokeswoman said she couldn’t comment on the board members’ interest in redress for the added borrowing costs because that has not been communicated to the county. But she noted that as of earlier this week, nearly all taxing districts in the county have received 80% of their property tax distributions, and the remainder are being processed.
Mila Koumpilova is Chalkbeat Chicago’s senior reporter covering Chicago Public Schools. Contact Mila at mkoumpilova@chalkbeat.org.
