How much will Chicago Public Schools disentangle from the city cost?

Chicagoans will be able to elect their school board members starting in 2024. But a report released this week suggests that could come at a cost.

The report, prepared by the district with the assistance of a consulting firm, lists expenses currently supported by other city agencies that Chicago public schools may incur as they transition to an elected school board for the first time in the city’s history. These include water bills, rent, summer programs and increased pension contributionsamong other costs, which can reach tens of millions of dollars per year.

These financial benefits could be relatively modest for a district with a budget of 9.5 billion dollars. But, according to the report, it could add uncertainty to an already “fragile” financial outlook for the district.

The city doesn’t have to cut the school district because it’s moving away from the mayor’s control. Some current school board members and the Chicago Teachers Union have criticized the city for already passing on some costs it has traditionally borne.

For example, in recent years, the CPS has begun paying school police officers, school crossing guards, and a larger share of contribution to a city-run pension fund that covers some district employees – all costs previously borne by the city. This year, the total cost of these new expenditures for the district is approximately $200 million.

The school district has had stable budgets in recent years, but after a major influx of federal COVID relief dollars is exhausted, the report estimates the district could be $628 million in the red by 2026.

“The CPS could find itself in a similar position by the end of this decade as it was in the middle of the last decade: having to rely on one-off budget tricks and dipping into fund balances to avoid major cuts to education services. “, said the warnings report.

The upcoming change in mayoral control would bring Chicago Public Schools closer to other school districts, where district and city finances are completely separate.

In July 2021, Governor JB Pritzker signed a bill that phase into an elected school board with 21 members for Chicago Public Schools by 2027. In November 2024, the people of Chicago will elect 10 members while the mayor will continue to appoint 11 members. In 2026, the people of Chicago will be able to elect the 21 members.

Pritzker signed another law in December 2021 that required the Chicago Board of Education to commission an independent financial review report assessing district funding and detailing financial arrangements between the City of Chicago and Chicago Public Schools. This law clarified that the report must be sent to the governor’s office, the Illinois school board, the Chicago school board, the general assembly and the mayor’s office by October 31, 2022.

The report includes some hypothetical costs

The neighborhood’s ties to the city run deep after more than 30 years of municipal stewardship. The new report acknowledges that it likely does not offer a full list of the two entities’ financial ties.

One possible cost change noted in the report is that the city charges the school district for water use. He says the city could technically start charging the school district about $12 million in annual water, sewer and permit fees. Currently, these fees are waived for the city’s schools and other public and nonprofit entities, such as its community college system.

The city also helped the district cover the costs of some of its long-term debt, incurred to pay the bill for building schools and building projects. Those payments, which bring in about $142 million a year through a municipal tax, are expected to continue through 2029.

The district already assumes certain expenses to which the city has historically contributed. Chicago Public Schools has contributed an increasing amount to the City Employees Pension and Benefit Fund, a city-run retirement program that covers district support staff and other employees. The city managed these costs until recent years, although it did not fully cover them as they went along. This year, the district has increased its contribution to $175 million, over the objections of some school board and teachers’ union members.

Last year, the district also took over from the city the cost of school resource officers and its school crossing guard program, which the CPS has budgeted $16.6 million for this year.

The report notes that some of the uncertainty surrounding these entanglements complicates the district’s broader financial outlook.

The district — serving a significantly higher than average proportion of students with disabilities, homelessness or learning English — now receives about $1 billion less from the state than is considered “adequate” funding based on Illinois’ own calculations. It also diverts hundreds of thousands of dollars in public funding to cover debt payments for past school construction and other borrowings.

The district’s main source of funding is revenue from the local property tax, but it is somewhat limited in raising these taxes.

Supporters call cost transfer retaliation

In a statement on the report, the district said it will continue to advocate with lawmakers and state officials to fully fund the district and address the fiscal challenges that come with the district’s unique position: It is the only state district that covers its own teacher retirement costs.

“We will work with the state to develop a thoughtful process for disentangling the CPS from its historic relationships with the city and other public agencies in Chicago, as well as a process to end the extraordinary federal support of the era pandemic to avoid a threat to the structure. budget balance,” the statement read.

Chicago Public Schools officials have sounded the alarm about the district’s long-term financial situation in recent months, saying they don’t want an elected school board to inherit money troubles. CEO Pedro Martinez lamented that unlike other districts in Illinois, Chicago’s public schools are limited to asking residents to raise their own taxes to fund district operations and construction costs.

Chicago advocates pushed for an elected school board after years of dissatisfaction with a mayor-controlled school board. This advocacy intensified after the administration of former mayor Rahm Emanuel closed more than 50 schools on the south and west sides of the city, largely affecting families of color.

As a candidate, Mayor Lori Lightfoot supported an elected school board. But after taking office, Lightfoot came to strongly oppose the change, arguing that special interests would dominate races for board seats.

During the Spring 2021 legislative session, she joined forces with Senator Kim Lightford, D-Maywood, to propose a bill on hybrid school boards. The bill hasn’t budged far, but the mayor has made it clear that she strongly opposes the 21-person elected school board. Now some advocates who lobbied for the bill fear the city is trying to undermine the school board.

Pavlyn Jankov, a researcher for the Chicago Teachers Union, said the city is retaliating against the district for its transition to an elected school board by transferring those costs to CPS.

School districts and cities “are supposed to fund their schools and work together through government agreements to generate revenue for their constituents,” Jankov said. “Chicago Public Schools schools serve the same residents and have the same borders as the city.”

The report was prepared by the district with assistance from Columbia Capital Management, a financial advisory firm that works with the city, district and other Illinois government agencies.

The state board of education is required to review the report and provide recommendations to the General Assembly by July 1, 2023 on the district’s ability to operate on its own budget.

Rep. Delia Ramirez, D-Chicago, who sponsored the elected school board bill that passed, said the House is waiting to consider and discuss the CPS report.

“The goal here remains to ensure that every student has access to a high-quality public education, and our review over the next few months will focus on that,” Ramirez said.

Mila Koumpilova is Chalkbeat Chicago’s senior reporter covering Chicago’s public schools. Contact Mila at [email protected].

Samantha Smylie is the state education reporter for Chalkbeat Chicago, covering state school districts, legislation, special education, and the state Board of Education. Contact Samantha at s[email protected].

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