DALLAS --The Chicago Board of Education on Monday approved a new budget for Chicago Public Schools that relies on as much as $570 million in uncertain state and city funding.
The adopted budget is unchanged from the plan released earlier this month, according to Emily Bittner, a CPS spokesperson.
The $5.75 billion fiscal year 2018 spending plan released then by CPS' chief executive officer, Forrest Claypool, relies on $300 million of additional state aid that was slated to be voted on by legislators on Monday. The budget is also built around $269 million of unidentified new “city resources.”
The additional state aid has been in limbo due to Gov. Bruce Rauner’s amendatory veto of Senate Bill 1, which overhauls distribution formulas. The Senate recently overrode the veto, but the House delayed a vote amid ongoing talks among legislative leaders reach a compromise. A vote was expected later Monday.
The Chicago Teachers Union is critical of both the proposed budget and the potential deal in Springfield.
“The Board is poised to pass a phantom budget that is short almost $300 million in revenue with no specific plan in place to increase funding for schools,” the CTU said in a press release on Monday. “Today’s vote sets the stage for more payday loan borrowing by the Board, which is paying nearly a quarter of a million dollars per day in interest expenses on its short-term line of credit.”
Even if the state comes through with funding, CPS still needs city help. Mayor Rahm Emanuel has declined to say in what form the $269 million of city help might take.
Past reports have suggested the city was considering freeing up more tax-increment financing assistance or levying a new tax on high net worth individuals or downtown businesses.
The state aid negotiations, combined with plans for Chicago to transfer additional monies to CPS, should fuel further tightening in both Chicago and CPS credits, according to a Municipal Market Analytics report.
“In the same way, a weakened governor Rauner suggests somewhat more predictable Illinois financial operations and decision making, further reducing negative momentum in the state credit ratings and facilitating higher, but not much higher, bond prices,” the MMA report stated.
Moody’s Investors Service has the school district’s B3 rating on review for a downgrade as it grapples with late state aid and other strains. Only Kroll Bond Rating Agency rates CPS in investment grade territory.
The district has whittled down a structural imbalance of more than $1 billion with new property tax revenue and spending cuts. On expenses, it’s facing an additional $99 million for teacher salaries and benefits and a $52 million increase in its fiscal 2017 $733 million teachers’ pension payment.
The district is also relying on $71 million in additional property taxes by raising its levy by the maximum allowed by the state and $22.3 million from the city’s now annual declaration of a TIF surplus.
The capital budget totals just $136 million, down sharply from $938 million. Short-term interest costs are expected to rise to $79 million from $35 million.
CPS issued $1.55 billion of tax anticipation notes in fiscal 2017 that are to be fully retired by December. It can borrow TANs up to its statutory cap of 85% of its fiscal 2017 tax levy of $2.37 billion. The district also recently issued nearly $400 million of state grant backed notes.