When the Chicago Board of Education meets Wednesday to vote on a scheduled 4 percent raise for teachers, one figure will be crucial to the debate: The $724 million deficit the Emanuel administration says Chicago Public Schools is facing for the upcoming year.
Mayor Rahm Emanuel and CPS CEO Jean-Claude Brizard have repeatedly cited the almost $720 million deficit, and Emanuel mentioned it again Monday when he called on the state to give CPS the roughly $300 million it is owed in back payments. But a Chicago News Cooperative review of the district’s funding sources shows that the calculations are inconsistent and CPS’s actual deficit is still unclear.
There is no question CPS is in a large financial hole. The extent of the deficit, however, depends primarily on how much federal stimulus money the district has available and whether late payments from the state are taken into account.
CPS has come to rely on hundreds of millions of dollars in federal stimulus funds, which are drying up. In the administration’s most recent budget presentation, in March, officials said CPS will have exhausted $260 million from the American Recovery and Reinvestment Act (ARRA) and $104 million from the federal Education Jobs Fund.
Yet state records show the district has spent just $29 million of its Education Jobs Fund money and has $75 million remaining. CPS last drew from the fund in late April, according to Illinois State Board of Education records. The district also still had $100 million of ARRA money available as of April 30, state records show.
CPS spokeswoman Becky Carroll said the remaining ARRA money has been allocated to CPS programs for fiscal year 2011 and would be spent in the next two weeks. She did not specify what programs will receive the funds.
Carroll said of the Education Jobs Fund money that it is “entirely possible that not all of it will be spent” by the end of the fiscal year and that, “some of that money could still end up on the ledger next year.”
At the March board meeting, district officials said they reached the $724 million estimated by deficit by calculating a $554 million loss that could be compounded by $170 million in additional costs.
The $554 million loss includes the end of $260 million in ARRA funds; $104 million from the Education Jobs Fund and a $190 million draw-down of general fund balance reserves used to plug the fiscal year 2011 deficit.
The $170 million in additional costs include $100 million if the teachers’ pay raise is approved; $35 million for step salary hikes to various staff and $35 million for increased healthcare and pension obligations.
Those numbers do not include the almost $300 million the state owes CPS in back payments. Though Emanuel has repeatedly said that those funds are part of the $720 million deficit, Carroll said Monday that they are not.
In April, the Chicago News Cooperative obtained documents circulated by the previous CPS administration that estimated the deficit at $820 million due to a $96 million increase in operational costs. Carroll said she did not know why the former administration included an additional $96 million in the deficit, though she said that “there could very well be additional operational increases adding to the deficit.”
The documents, which were distributed to Emanuel’s transition team, showed officials were considering pushing for a property tax increase to help offset the deficit.
Carroll would not say whether a property tax increase is still on the table. Emanuel frequently said on the campaign trail that he would not seek a property tax hike to help close the city’s budget deficit.
“We do not know what, if anything, can be used outside our existing revenue sources,” Carroll said. The district’s existing revenue sources include the property tax.
The state budget sitting on Gov. Pat Quinn’s desk reduces funding to CPS by 4 percent, approximately $77 million. That drop was all but neutralized earlier this month when Emanuel and Brizard announced almost $75 million in cuts to the district’s central office.
Daunting budget deficits are not new at CPS. Last year, as the district prepared its budget, then-CEO Ron Huberman warned that the district’s deficit could balloon to more than $1 billion.
With federal funds, the passage of a pension payment relief bill in Springfield and a series of internal austerity measures, the deficit was reduced to $370 million. The savings came partly from cutting programs, employee furloughs and canceling central office raises. Though Huberman pushed for teachers to forgo their 4 percent raise, it was granted and included in the budget.
Individual school budgets released by Brizard earlier this month did not increase class sizes and maintained funding for magnet, world language and culture of calm positions as well as early childhood education programming that was cut by the state. Those budgets did not include the 4 percent salary increases.
Both Brizard and Emanuel have said they are leaving the decision regarding the teachers’ 4 percent raise entirely up to the board.
“That’s why you have a board and a new management team,” Emanuel said Monday.
Chicago Public Schools need a forensic audit!