CHICAGO — The Chicago Public Schools announced plans to cut more than 1,000 employees in a move that comes ahead of the district's release of a fiscal 2015 budget that must close a nearly $1 billion budget gap.
The district released a fact sheet Friday that said the layoffs include 550 teacher positions and 600 others. The district attributed the cuts to declining enrollment.
The administration said the number is about half the number cut last year and stressed that many would be rehired to fill open positions at other schools. "The teacher impacts announced today represent the lowest number of annual teacher impacts in the last five years," the fact sheet read.
Chicago Teachers Union president Karen Lewis slammed the move. "The situation serves to underscore the unacceptably low level of funding that Chicago's neighborhood schools receive," she said.
CPS chief executive officer Barbara Byrd-Bennett's administration must close a nearly $1 billion deficit in the fiscal 2015 budget it is crafting for approval by the Board of Education this summer.
Officials are attempting to negotiate a pension overhaul. CPS' teachers' pension fund has $6.8 billion of unfunded liabilities for a funded ratio of 59.9%. Contentious contract talks loom as the union is unlikely to exercise its option for a fourth year on the contract signed in 2012.
The board last year adopted a $6.6 billion budget that closed its deficit through a property tax increase, spending cuts and the use of $700 million in unrestricted and restricted reserves, including a first time draw on a debt service account.
The use of reserves, a non-recurring revenue source, left the district with a structural imbalance and projected $900 million gaps again in fiscal 2015 and 2016. The district's reliance on one-shots like reserves and debt restructuring to balance recent budgets has driven several rounds of credit downgrades.
As part of its effort to rein in costs, the district announced last year the closing of nearly 50 schools. A report released by the in recent days by the Illinois General Assembly's Chicago Educational Facilities Task Force raised concerns over the district's 10-year master facilities plan and handling of the closings. It questioned the district's planning process and impact on students and noted put a price tag on the closings of $263 million. The district dismissed the report as inaccurate.
Moody's Investors Service last year downgraded the board's rating on the $6.3 billion of debt one notch to A3 and left a negative outlook on the credit. In March Moody's lowered the rating to Baa1 and assigned a negative outlook.
A downgrade below the mid-triple-B level by any two rating agencies would trigger swap terminations.
Standard & Poor's rates the board A-plus and stable. Fitch Ratings downgraded the board in September, lowering it to A-minus with a negative outlook.
The district last month announced plans to increase its capital spending in 2015 to $423 million to fund the installation of air conditioning in schools, build a new selective enrollment high school named for President Obama, and finance other upgrades. The district intends to cover about $266 million of the 2015 plan with borrowing.
