The Chicago Public Schools are considering an $80 million property-tax increase as they try to close a budget deficit now estimated at $820 million, and they may have to lay off more than 2,000 teachers and increase class sizes without it, according to internal documents obtained by the Chicago News Cooperative.
In documents distributed to Mayor Richard M. Daley’s office and Mayor-elect Rahm Emanuel’s transition team, the district outlines plans to seek a 2.7 percent tax increase. Without the increase and other measures, class sizes could grow to 36 students, the documents say.
The district’s contract with the Chicago Teachers Union currently caps grade school class sizes at 29 students and high school core classes at 28, although space constraints often lead to larger numbers.
The district proposal, which sources said had backing from the interim schools chief, Terry Mazany, comes as the district struggles to meet its obligation for a 4 percent wage increase beginning July 1. The increase is required under the Board of Education’s contract with the union.
The push for a property tax increase could jeopardize Mr. Daley’s effort to leave office without raising taxes and also highlights the precarious fiscal situation at Chicago Public Schools as Mr. Emanuel prepares to assume control of the nation’s third-largest school district. The projected $820 million deficit — $100 million higher than the district’s previous estimates — will present an early challenge for Mr. Emanuel, who frequently said on the campaign trail he would not seek a property tax increase to help close the city’s budget deficit.
The school system has its own budget and taxing authority but has been intertwined with the mayor’s office since Mr. Daley seized control of the district in 1995. Like all schools chiefs since then, Mr. Mazany is a mayoral appointee.
Mr. Emanuel has not yet indicated whom he will name as the schools’ chief executive or as members of the Board of Education, which governs the district and sets its tax rate.
Mr. Mazany agreed in November to lead the district temporarily after Ron Huberman stepped down from the job following Mr. Daley’s announcement that he would not seek another term as mayor. Mr. Mazany has said that a priority will be addressing the district’s budget shortfall.
Mr. Mazany did not reply to requests for comment. A spokeswoman for the district, Monique Bond, said the district had not made a formal proposal to the Board of Education, which must approve a budget by August.
“The budget process is a very fluid process,” Ms. Bond said, “and the numbers will fluctuate.”
Tarrah Cooper, a spokeswoman for Mr. Emanuel, e-mailed a statement saying, “C.P.S.’s new leadership will review the department’s financial situation and will re-evaluate the budget to see how we can best serve Chicago’s children.”
Addressing taxes in his victory speech in February, Mr. Emanuel said, “We need to confront the budget deficit that threatens our future, not by burdening Chicagoans and Chicago families with more taxes they cannot afford, but by reinventing city government so city government works for the taxpayers.”
After Mr. Emanuel is sworn in on May 16, the Board of Education will have 30 days to vote on whether the district can afford the 4 percent salary increase. If it were to reject the increase, the union would have the right to strike, though a bill introduced in Springfield this week would require support from 75 percent of membership before any walkout.
The district estimated that a property tax increase would bring in almost enough money to pay for the teachers’ wage increase, which is projected to cost $100 million, according to the documents shared between Chicago Public Schools, the mayor’s office and Mr. Emanuel’s team.
Jackson Potter, chief of staff to the Chicago Teachers Union president, Karen Lewis, said the union would prefer that the district not raise taxes. “We’d be against it, because what ends up happening is all the residents of the city of Chicago are told: you’ll have to pay through the nose,” he said. Using money from the city’s tax-increment financing districts might help, Mr. Potter added.
Laurence Msall, the president of the Civic Federation, a budget policy group that analyzes the district’s budgets, said Chicago Public Schools already received more than half the money collected in property taxes.
Mr. Mazany needs to show that the district has taken other measures to trim the deficit before asking taxpayers for help, Mr. Msall said. “He’s going to have to present evidence that they have done everything necessary to balance the budget and that as a last resort, they’re raising the property tax,” he said.
On the contractual wage increase for teachers, Mr. Msall said, “At a time of great financial distress for the city and all the surrounding governments, everything has to be on the table.”
The school district has increased its levy eight times in the last decade. As a cost-saving measure, Mr. Mazany last month proposed closing eight schools and phasing out another. But the district backed off closing two of those schools after parents and elected officials objected.
Much of the schools’ deficit arises because the district has not been able to replace federal stimulus money that helped it meet its budget last year. The state also owes Chicago Public Schools $291 million in back payments, Ms. Bond said.