CHICAGO – The junk-rated Chicago Board of Education approved an amended $5.4 billion fiscal 2017 budget that trims spending, to plug about half of a $215 million gap left after Gov. Bruce Rauner vetoed teachers' pension funding aid.

The $104 million in reduced spending will come from four furlough days with savings of $35 million, $5 million in central administrative cuts, a $46 million reduction in individual school budgets, and $18 million in charter school funding cuts.

That leaves Chicago Public Schools with a $111 million hole still to fill. The district is still hoping the state will come through with additional funding or it must undertake further "savings initiatives," according to a presentation made at the board's Wednesday meeting.

The school cuts were met with protests from angry students and parents. They also prompted the resignation of 16 of 18 members on a CPS Latino Advisory Committee, including a former CPS board member upset over the impact on schools with a high Latino enrollment.

"When it's a midyear cut there are no good solutions, there are no solutions that aren't painful," said Ronald DeNard, CPS vice president of finance. Schools can appeal the cuts.

The district's original budget counted on $345 million in additional state funding from a $130 million hike in poverty grants and $215 million to help cover a $733 million payment due in late June to the teachers' pension fund. Gov. Bruce Rauner and lawmakers agreed to the increased aid as part of a stopgap state budget package in late June as they remained locked in a stalemate over a long term state spending plan.

The pension help was contingent on later passage of state pension reforms. As the impasse continued and reforms languished, Rauner vetoed the $215 million appropriation late last year. Recent sniping between Rauner and CPS Chief Executive Officer Forrest Claypool over the budget cuts culminated in the district's filing last week of a lawsuit accusing the state of discriminatory practices in aid distribution that violates state civil rights laws.

A proposed state Senate budget fix known as the "Grand Bargain" would resurrect the pension aid but its fate is uncertain. Several bills that make up the package were approved but key votes remain on the most controversial pieces of the plan including tax hikes and workers' compensation changes. If approved, it's unclear how the package will fare in the House and whether Rauner will sign it if changes he outlined in his recent budget address are not made.

The Senate's session resumes next week and the Republican co-sponsor, Minority Leader Christine Radogno, recently said she is aiming for passage by March 1.

In a disclosure filing earlier this year, the district reported it expects the fiscal 2018 teachers' pension contribution to rise by only $16.6 million based on the fund's fiscal 2016 performance. The system's funded ratio rose slightly to 52.41% from 51.85%.

The board's agenda also included the abatement of the ad valorem property tax levy pledged to repayment of much of the district's $6 billion of general obligation alternate revenue bonds to reflect the required by Feb. 15 deposit of debt service. The district prefunds debt service owed on June 1 and Dec. 1 -- which totals about $400 million – with the February payment.

The board has primarily pledged state aid to repayment of its GO/alternate revenue bonds. If the deposit is not made with dedicated state aid or other legally available revenue then the property tax is not abated and the levy is triggered.

In its latest financial report, CPS warns of more red ink to come this year and "difficult" decisions next year without additional state help which is crucial to help keep the district afloat. CPS closed the books on fiscal 2016 with an operating deficit of $537 million, has drained most reserves, and relies heavily on short term credit lines to operate.

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.

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