CHICAGO – Junk-rated Chicago Public Schools froze $46 million in discretionary funds it distributes to schools and more than $5 million in administrative spending as the district struggles to close a gap left by Gov. Bruce Rauner's veto of $215 million in state aid for teachers' pensions.
Schools chief Forrest Claypool blamed Rauner.
"Gov. Rauner did not create this unjust system, but he has chosen to perpetuate it, violating the civil rights of hundreds of thousands of Chicago schoolchildren and threatening their futures," Claypool said in a statement Monday announcing the cuts.
CPS told its principals Monday that it was freezing the remainder of schools' non-salary funds, including money that covers new textbooks, technology investments, field trips and non-salaried staff. About half of schools' remaining funds will be frozen, to save $46 million.
CPS also is eliminating funds for professional development that are part of central office's management for an additional $5 million in savings. Several million dollars in additional savings will come from more streamlining and layoffs in the central office.
The more than $50 million in savings from the latest cuts joins $35 million in savings expected from previously announced furlough days ordered by the district and an additional $18 million in matching cuts might be made in charter school spending in the coming months.
CPS is working to "preserve as much cash as possible to make a June 30 $733 million pension payment that no other school district in the state is required to make," its statement said. It borrowed $200 million to help cover its 2016 payment. Its debt service payment is due this month.
The state could still restore the $215 million in aid recently Rauner vetoed after lawmakers failed to make headway on the passage of state pension reforms.
The aid approved in late June as part of a the state's stopgap spending plan was contingent on passage of a pension reform package. Rauner did not wait for the legislature's lame-duck session, instead vetoing the measure after the Senate's Democratic leader suggested the two were not necessarily linked.
Senate leaders' so-called "Grand Bargain" bipartisan budget fix would restore the $215 million in aid and will include an overhaul of education funding. Whether it will make it to Rauner's desk is unclear.
"Rather than cutting services and pointing fingers, we should all be working together to pass this comprehensive pension reform agreement immediately," the Rauner administration said in a statement.
CPS is hoping it will benefit from changes to the state aid formula with a greater focus on helping low income districts because 86% of its student population meets the threshold. CPS also argues that the funding system is not equitable because it has 20% of the state's student enrollment but receives 15% of total funding.
The district also receives just $12 million toward its teachers' pension contribution while the state doles out $4 billion in support for all other districts. CPS has long been excluded from the pension aid but has received a higher level of grant funding.
In its latest financial report, CPS warns of more red ink to come this year and "difficult" decisions next year without additional state help. State pension funding help and pension reforms are crucial to help keep the district afloat. Coupled with district cuts and other cost saving initiatives CPS says it can return to the black, according to its comprehensive annual financial report for fiscal 2016, which ended June 30.
CPS closed the books on fiscal 2016 with an operating deficit of $537 million, down from a gap of $710 million in fiscal 2015. CPS' GOs are rated junk by Fitch Ratings, Moody's Investors Service, and S&P Global Ratings while Kroll Bond Rating Agency rates the district's GOs in the triple-B category.