The Chicago Board of Education passed an amended fiscal year 2027 budget Thursday that assumes $150 million in additional funding from the state, $50 million of that in grants and $100 million from higher evidence-based funding (EBF) than the state budget allocated.
The $9.96 billion financial plan Chicago Public Schools finance officials presented to the board already represented an increase from
State law requires that about a quarter of any TIF surplus goes to the city and over half to CPS. The city declared
The package voted on Thursday was made up of four related resolutions: the FY2027 budget, the $600 million FY'27 capital improvement plan, the FY'27 property tax levy and the authorization of $1.65 billion of tax anticipation notes.
The FY'27 capital budget is mainly funded by issuance of general obligation bonds.
The district has about $9.1 billion of outstanding debt, according to its FY'27 budget book.
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Bills brought during that session require a three-fifths majority to pass, and any funding for CPS in fiscal year 2027 would require the state to amend its budget.
There were two glaring omissions at the board meeting, said Joe Ferguson, president of the Civic Federation, a Chicago-based fiscal watchdog.
First is "possible consequences" of passing a budget that relies on unrealized revenue from the state, he said. "The other is that the word 'children' was seldom mentioned."
Ferguson pointed to the assumption of an additional $100 million in EBF. "You can't increase it for one school without increasing it commensurately for all the districts across the state," he said. "That $100 million would translate into $400 to $500 million. That is a pretty substantial amendment that would be required to the state budget."
Another concern is that while Welch has signaled a desire to come up with the money, "he appears to have done so without obtaining buy-in from the broader caucus," Ferguson said, noting "a strong disinclination right now by the body as a whole" to do something that primarily helps Chicago.
The amended fiscal plan also dispels the proposed budget's "down payment on the notion of CPS as (committed to) responsible budgeting," he said.
CPS will likely figure out a way to secure the funding to make September payroll, he said. But it's "almost inevitable that there will be a premium tacked on in the form of higher interest" due to contingencies baked into the amended budget.
The CPS budget also didn't include the often-disputed Municipal Employees' Annuity and Benefit Fund payment. And "a TIF sweep could not be large enough this coming year to pay for that as well," Ferguson said.
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"Somewhere in all of this, the rating agencies are going to have to take an assessment and factor in what all this political instability actually means for the fiscal soundness of the district overall," he added.
The amended budget demonstrates "CPS continues to face a structural deficit," S&P Global Ratings managing director and sector lead Jane Ridley said in an emailed statement.
"Including $150 million in unconfirmed revenue from the state to close the budget gap does not address the district's underlying structural imbalance, and it also opens up the possibility of midyear spending cuts if that funding doesn't materialize," Ridley said.
KBRA declined comment. Moody's Ratings and Fitch Ratings did not immediately respond to requests for comment.
The vote on the amended budget broke down almost entirely along the lines of elected board members versus those appointed by Mayor Brandon Johnson, as noted in a
The board has 10 elected and 11 appointed members. The seven no votes and one abstention all came from elected board members. Elected members Ebony DeBerry and Jitu Brown voted for the amended budget.
"This budget vote was akin to setting the district's house on fire and hoping insurance pays out," Berg wrote Sunday. He pointed out that staffing grew 26.4% in the district from FY2019 to FY2026, and the budget increased 71.4%, even as enrollment shrank 12.5%.
Schools CEO Macquline "King's restraint makes sense in a district that is currently a national leader in empty schools and junk bonds," he said.
Moody's assigns CPS an issuer rating and general obligation unlimited tax debt rating of speculative-grade Ba1. The outlook is stable after a downward outlook revision in November. S&P rates the district's bonds BB-plus with a stable outlook.
Fitch rates the district's unlimited tax general obligation bonds BB-plus with a negative outlook. KBRA rates the district's bonds BBB-minus, except for bonds with a legal opinion from the board regarding the property taxes securing them, which it rates BBB. KBRA's outlook is negative.
King said the district added over 1,000 positions to support students with disabilities and increased support for bilingual programs.
"In addition to these critical investments, this budget includes structural changes to close our $732 million budget gap and to put the district on stronger financial footing," King said.
"Over the past seven years, CPS added more than 10,000 staff while the district lost 45,000 students," King told the board. "And even with this year's reduction, we still have close to 9,000 more staff today than we did seven years ago."
"In our opinion, an amended budget that included new state revenues could not be considered balanced," acting Chief Budget Officer Emila Zoko told the board. "(This is) the standard required by state law. If we used unrealized state revenue to balance the budget, this would put the district in immediate and long-term financial jeopardy."
She also pointed to the district's conversations with lenders. "It's clear that while they're comfortable with the $285 million TIF assumption … they would not look favorably on the addition of anticipated new revenue from the state," she said.
"I have relationships now that I've cultivated with three lenders," acting CFO Walter Stock told the board. "There's still lenders that won't talk to us ... There's only a few that we can go to. If any of those lenders drop out, then we run the risk that we can't even get all of the short-term financing that we need and we'll have to do something else."
Some board members, such as Ellen Rosenfeld, Angel Gutierrez and Carlos Rivas, Jr., raised the question of the board's legal liability for passing an unbalanced budget. Rivas quoted Illinois school code provisions that say any board member who violates the requirement to pass a balanced budget may be fined up to $10,000, removed from office and held liable for any loss suffered.
"I've never said I wouldn't go to the state," board member Che "Rhymefest" Smith said. "All I'm saying is that this is not an either/or. This is a both-and. And if we're going to be really honest with ourselves, when we saw Speaker Welch yesterday, he specifically said in November … and from what we're seeing, we wouldn't get that money until next year."
Other board members cross-examined the CPS finance officials.
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"Gov. Pritzker has been in office for eight years and owes the state's students $6.4 billion dollars. … CPS is owed $2 billion," the union said. Without the funding, the union claims, there will be layoffs, furloughs and freezes midyear.
"Back in 2017, CPS's budget made an assumption that didn't come through when the governor vetoed the legislation. CPS was forced to make devastating decisions, devastating mid-year cuts. … We will continue to advocate at all levels of government for the funding that our students (deserve)," King said. "We also need to learn from our mistakes instead of repeating them."
"We tried this exact move nearly a decade ago and the results were catastrophic," board member Jessica Biggs said. "I don't understand why we're proposing the same thing that Rahm Emanuel and Forrest Claypool did and expecting a different outcome. This amendment is delusional at best … (It) will result in twice as many layoffs as are in the current budget."
