DALLAS-- Chicago Public Schools will see an additional $450 million in state aid as a result of the new spending package lawmakers approved this week.
The package, which Gov. Bruce Rauner is expected to sign on Thursday, delivers about $150 million more than district officials wrote into their spending plan for the year.
The school district earlier this week approved a $5.7 billion budget that was tailored around $300 million of additional state aid.
CPS officials said the district will receive $221 million in new state support for pensions.
CPS officials also said that the under the legislative package, the state will provide approximately $76 million more through the state aid formula than the district received through the formula in fiscal 2017; it will receive $18.5 million additional for early childhood education and $13 million additional for bilingual education; and lose $4 million from other programs under a variety of changes approved as part of the state budget.
In addition to the state funding, the Chicago Board of Education received the authority to increase CPS’ dedicated property tax pension levy to raise $125 million for the district to help cover contributions to the Chicago Teachers' Pension Fund.
Chicago Mayor Rahm Emanuel said that the state deal now puts CPS in a situation where it can continue to invest in the classroom and meet its obligations to teachers.
“The city of Chicago had a 12 year pension holiday where they paid nothing into the pension, the state of Illinois took a seventy plus year pension holiday and the teachers starting in 1983 basically also took one too,” said Emanuel. “That is what created this problem and we have now averted that crisis and train wreck because everyone in the past, because of politics, kicked the can down the road.”
The state legislative deal resolved a dispute over Senate Bill 1, which overhauled school funding by shifting to a so-called evidence-based model.
The plan, hammered out by legislative leaders in closed-door meetings over recent days, acquiesces to Republican demands to include a $75 million tax credit program for donations made to private schools. The Chicago Teachers Union has labeled the tax credit nothing more than a voucher program that would harm public schools.
CPS’ $5.75 billion fiscal 2018 budget, which was approved on Monday, assumed it would receive $300 million in new aid and teachers’ pension help from the state and $269 million in unidentified city help.
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.
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.