CPS Budgets:
Past, Present, and
Future
Prepared by the Chicago Teachers Union
September 25, 2013
1
INTRODUCTION:
TRUST, PRIORITIES, AND
THE RECENT PAST
2
Three Key Elements Drive
CPS Budget Perceptions
• Trust between the district and key constituencies is
extremely low:
1. Parents and communities
2. School Personnel
3. Policymakers
• This lack of trust has two primary causes:
1. The district’s lack of forthrightness on policy
decisions
2. The strongly negative impacts of many of those
decisions
3
Budget Claims: A Case Study
CPS Budget Deficit/Surplus, 2005 – 2012 SY
$400,000,000
$200,000,000
$0
2005
-$200,000,000
2006
2007
2008
2009
2010
2011
2012
Press Release Deficit
Estimated Deficit
-$400,000,000
Actual Surplus/Deficit
-$600,000,000
-$800,000,000
-$1,000,000,000
4
CPS Revenues, 2003 – 12 SY
6,000,000
5,000,000
4,000,000
Local Revenue
State Revenue
3,000,000
Federal Revenue
Total Revenue
2,000,000
1,000,000
5
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
How did we get here?
• To be clear, surpluses stemmed from cuts directly to schools.
• CTU has been involved. CPS has imposed 9-figure
“concessions” in each of the last four years.
• 2010: More than 1300 teachers were laid off to fix an
alleged budget deficit.
• 2011: The district rescinded a contractually-agreed raise to
fix an alleged budget deficit.
• 2012: The district attempted to impose a four-year contract
with 20% more work for a one-time 2% raise.
• 2013: CPS proposed more than $250 million in pension
benefit cuts, closed 50 schools, and laid off thousands of
employees.
• The district has cut other vital priorities, too.
6
How did we get here?
• The program of cuts allowed expenses to be inflated, causing
the deficit to appear larger than it really was.
• The following slides show how expense variance explains the
district’s surpluses.
7
CPS Expenditures, Projected vs. Actual
5,500,000
Spending in 000s
5,000,000
4,500,000
Projected Expenses
Actual Expenses
4,000,000
3,500,000
8
3,000,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Teacher Salaries, Projected vs. Actual
2500000
Teacher Salaries (in 000s)
2000000
1500000
Final Budgeted Salaries
Actual Teacher Salaries
1000000
500000
9
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
CPS Educational Equipment Spending, Projected vs. Actual
70000
60000
Spending in 000s
50000
40000
Final Budget
Actual
30000
20000
10000
10
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
CPS Textbook Spending, Projected vs. Actual
120000
100000
Spending in 000s
80000
Final Budget
60000
Actual
40000
20000
11
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
CPS Supplies Spending, Budgeted vs. Actual
90000
80000
70000
Spending in 000s
60000
50000
Final Budget
Actual
40000
30000
20000
10000
12
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Spending Tradeoffs
• Spending cuts in some areas are more than offset by major
increases in spending in other areas.
• Questions about the district’s priorities are readily apparent
from the following slides.
13
CPS Spending Trends, FY04-FY13
800
700
600
$ in Millions
500
Capital Spending
400
Debt Service
Charter Schools
300
200
100
14
0
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY 2010
FY2011
FY2012
FY2013
Charter Spending as % of Total CPS Spending, FY2004
2%
TOTAL OPERATING FUNDS
Charter Schools
Total Budget: $3.76 billion
Charter spending: $66.6 million
98%
15
Charter Spending as % of Total CPS Spending, FY2013
9%
TOTAL OPERATING FUNDS
Charter Schools
91%
Total Budget: $5.16 billion
Charter spending: $483 million
Charter spending increased 625% vs. a
total spending increase of 37%.
16
School “Choice” Impact
• Total operating and capital costs associated with
school closures and turnarounds since 2003: more
than $500 million.
• Capital costs for 50 closed schools in 2013 alone:
more than $150 million.
• Costs to disrupted communities: devastation
• Academic results: mixed at best for charters per
CREDO study; turnarounds/closed schools worse for
students per University of Chicago.
17
Impact of Debt Service: $100
million
18
The Latest Cut:
Student Based Budgeting
(SBB)
• SBB was rolled out this spring as a way to “empower
principals” to make decisions at the local level.
• Under SBB, about half of school money is allocated
to schools on a per-pupil basis rather than on a
staffing formula.
• The other half (e.g. Special Education, SGSA) is
allocated under the old formula.
19
The Latest Cut:
School Based Budgeting
• Despite rhetoric of local empowerment, the SBB rollout
was accompanied by two major types of budget cuts.
1. School budgets were categorically cut.
2. School enrollment projections were shorted,
thereby further restricting funds.
• The impact has been more than 2100 layoffs of teachers,
paraprofessionals, and school support staff. Overall, CPS
projects 1400 fewer teaching positions than last year.
• Raise Your Hand surveyed about 25% of schools and
found nearly $100 million in budget cuts. The district
claims “only” $68 million in cuts to schools.
20
The Latest Cut:
School Based Budgeting
• SBB has two further impacts.
1. SBB marks veteran teachers as too expensive.
2. SBB provides a path to increased per pupil
expenditures at charter schools.
1. 83% of public school units received a budget
cut.
2. 72% of charter schools saw budget increases.
21
The Latest Cut:
School Based Budgeting
• A sampling of school budget cuts from the Board’s own data:
• Curie HS: $4 million and 60.5 positions
• Kelly HS: $4 million and 47 positions
• Turnaround schools included too –
• Fenger HS: $3.4 million and 47 positions
• Phillips HS: $3.4 million and 46 positions
• Harper HS: $3.1 million and 24 positions
• Marshall HS: $3 million and 40.5 positions
• Charters receive more:
• Noble Street HS: $1.2 million increase
• CICS Longwood: $1.2 million increase
• UNO Octavio Paz: $1.2 million increase
22
The Issue of Reserves
• CPS claimed to drain all of its reserves in FY2013,
but had more than $500 million available in the
FY2014 budget.
• The district is making the same claim again this
year.
• More responsible approach would be to raise
additional revenue and then use past surpluses
to proactively pay pension obligations, thereby
avoiding the major “cliff”.
23
THE ROLE OF ILLINOIS STATE
GOVERNMENT
24
Origins: 1995 Amendatory Act
• Passed by Republican governor and Republican
majorities in both chambers.
• Provided mayoral control of schools in Chicago.
• Eliminated dedicated property tax levy for Chicago
Teachers’ Pension Fund and folded the money into
CPS operations. CPS then made zero pension
contributions for the next 10 years.
• This amendatory act is the reason for contentious
Springfield battles over Chicago school policy.
25
State Revenues for CPS
• Three forms
• GSA
• Block Grants
• Pension contributions
• Block grants vs. pension cost shift?
• Limits to state revenues: GSA proration, block grant
cuts and payment delays, much lower pension
contributions
26
State Revenue to CPS, 2003 - 12
2,000,000
1,800,000
1,600,000
1,400,000
Dollars (in 000s)
1,200,000
GSA
Pension
1,000,000
"Other"
Total
800,000
600,000
400,000
200,000
27
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Illinois Block Grant and Pension Funding to CPS
FY08-FY13
800
700
Funding (in millions of $)
600
500
Block Grant
400
Pension
Total
300
200
28
100
0
FY08
FY09
FY10
FY11
FY12
FY13
State Funding of TRS vs. CTPF, FY08-FY12
3000
2500
Funding (in millions of $)
2000
State TRS Contribution
State CTPF Contribution
1500
Old CTPF Formula*
Illinois Block Grant Funding
1000
500
29
0
FY08
FY09
FY10
FY11
FY12
Way Forward?
• CTU supports Senator Manar’s school
finance task force (SJR 32) and eagerly
awaits the outcomes of their work.
• Significant education funding inequities
across the state must be addressed.
30
THE ROLE OF CHICAGO MUNICIPAL
GOVERNMENT
31
Chicago Property Tax
Rates
• According to a Civic Federation analysis,
Chicago has the lowest effective property tax
rates in Cook County and is 2nd only to Oak
Brook in metro area.
• CPS cut itself by not taxing to the property tax
cap in FY2009 and FY2010. Those decisions
cost the district at least $100 million per year.
• Property tax increases have been driven by
property value gains and the effects of
programs like TIF.
32
33
Source: Cook County Clerk
34
Source: Cook County Clerk
TIF Impact
• Development is not the problem. The problem is
the way development is done.
• Connected developers and corporations in
wealthy areas benefit at the expense of truly
blighted areas.
• TIF money to CPS has been distributed more to
selective schools than to neighborhood schools
and concentrated in the northern half of the city.
• Declare a TIF surplus and return money to taxing
bodies. There is currently more than $1.7 billion
unallocated in TIF accounts. City claims $1.5 billion
restricted. No clear projects, though.
35
RECOMMENDED SOLUTIONS
36
Legislative Action
1. Support revenue generation.
2. Change budget priorities: focus less on
flavor-of-the-month education reform
schemes and more on the process of
teaching and learning.
3. Move beyond logic that cuts will solve
our budget challenges. Austerity
prosperity.
37
The Expert’s View…
• “The idea that governance changes are going to magically
improve achievement or equity is unlikely to get us there.
We’ve got to focus on what happens inside of schools—the
quality of teaching, the quality of curriculum, the supports
that are there for kids—and move beyond a governance-only
conversation.”
• “We are right down there in the basement of the state
rankings on educational outcomes. That happened because of
tremendous disinvestment in the public system, including
Proposition 13, which restricted tax revenues, and all the
things that followed. The state really went into a testingwithout-investing modality.”
• Linda Darling-Hammond, Stanford University Professor and
education advisor for the State of California
38
Sustainable and Fair Revenue
Sources
1.
2.
3.
4.
5.
6.
Fair Tax
Sales Tax Base Expansion
Close corporate loopholes
Renegotiate interest rate swaps
TIF policies like HB 197 (Mayfield)
Financial Transaction Tax
39