Chicago Public Schools Fiscal Year 2013 Amended Budget

Revenue

Revenue

As Amended November 14, 2012

CPS receives revenue from local, state, and federal sources, as outlined in the table below. Each of the different sources is described in the sections that follow, along with the assumptions used in our budget projections and a justification for our estimates.

The budget was amended in October, 2012to reflect the impact that additional costs of collective bargaining agreement with the Chicago Teachers' Union. To cover the additional costs, CPS has capitalized interest on recent bonds, has planned a bond restructuring for later in FY2013, and will sell surplus property. These plans, which are discussed fully in the Debt Management chapter have the effect of freeing resources that would otherwise have gone to debt service. The table below reflects the anticipated $15 million in revenue from the sale of surplus property. The other plans do not impact CPS' All Fund Revenue. Ashley Richardson anrichardson3@cps.edu

All Funds by Revenue Source (in Millions)

 

FY2011
Actual

FY2012
Budget

FY2012
Estimated End of Year

FY2013
Budget

FY2013 vs. FY2012 Estimated

Local Revenues:

 

 

 

 

 

         Property Tax

$1,936.7

$2,089.9

$2,106.0

$2,106.0

$0.0

   PPRT
         Other Local

197.8
431.0

158.7
279.7

175.5
290.0

163.4
286.0

(12.1)
(4.0)

         Total Local

State Revenues:
    GSA
    Block Grants
    Capital
    Other State

         Total State

   Federal:

2,565.3

 

1,147.1
687.2
29.7
85.8

1,949.8

 

1,144.9

2,528.3

 

1,117.9
621.2
169.1
43.0

1,951.1

 

1,004.2

2,571.5

 

1,120.2
617.8
62.1
51.8

1,852.0

 

827.5

2,555.4

 

1,076.0
610.2
115.0
50.2

1,851.4

 

937.7

(16.1)

 

(44.2)
(7.6)
52.9
(1.6)

(0.6)

 

110.2

Total Revenue

5,660.1

$5,483.6

$5,251.0

$5,344.5

93.5

As discussed more fully in the Budget Overview chapter, some of the revenues CPS receives are dedicated to debt service and others for capital. What remains is available for the day-to-day operations of CPS. While FY2013 total revenues are approximately $5.3 billion, only $4.8 billion is available for operations.

FY2013 Revenue Sources Allocated for Debt, Capital and Operating Funds

FY2013 Revenue Source
($ in millions)

Total

Amount for Debt Service

Amount for Capital

Balance for Operating Budget

Local Revenue

 

 

 

 

    Property Taxes

2,106.0

53.2

 

2,052.8

    Personal Property Replacement Tax

163.4

57.7

 

105.7

    Other Local Revenue

281.5

107.1

40.0

134.4

State Revenue

 

 

 

 

    General State Aid

1,076.0

143.2

 

932.8

    State Capital Reimbursement

115.0

54.1

60.9

0

    All Other Revenues

660.4

 

 

660.4

Federal Revenue

937.7

26.8

 

910.9

Interest Income

4.5

 

1.0

3.5

TOTAL REVENUES

5,344.5

442.1

101.9

4,800.5

Analysis of Operating Revenues

After the changes reflected in this Amended budget, revenues available for operating expenses are projected to increase by $39 million in FY2013.

Looking at the aggregate revenue picture can be misleading because of two reasons, explained in further detail below: (i) carryover funds from FY 2012 federal appropriations; and (ii) the revised debt service plan, including capitalized interest, restructuring bonds to be issue later in FY 2013, and proceeds from sale of real estate.

Revenues from the State of Illinois, which make up nearly 30 percent of our operating revenues, are expected to decline by over $50 million. While this impact is still considerable, it is $70 million less than what was expected in the budget adopted by the Board in August 2012 because of the changes made in this Amended budget, $70 million in General State Aid is freed up from debt service and can be used for operating purposes. This $ 70 million will be covered by three streams of revenue: (i) Proceeds obtained from sale of restructuring bonds to be issued during FY 2013 ($ 42 million); (ii) proceeds obtained from sale of real estate ($ 15 million); and (iii) capitalized interests from bonds issued earlier this fiscal year ($ 13 million).

As discussed more fully below, property taxes and replacement taxes are down from the prior year. As in FY2012, CPS will receive Tax Increment Financing (TIF) surplus revenue from the City of Chicago.

While total federal revenues are projected to increase from FY2012 Estimated End of Year, this is the result of using one-time carryover funds in FY2013. For example, CPS' allocation of Title I, its major federal revenue source, is declining in FY2013 to $287 million from $296 million in FY2012. However, CPS has historically carried over federal funding from one year to the next. In FY2013, $33 million of these carryover funds will be used, making the Title I revenue estimate $320 million. Thus, the use of carryover funds masks an actual decline in the amount of federal revenue CPS is receiving. These carryover amounts are detailed in the specific revenue discussions below.

In total, given debt revised debt management strategy and proceeds from sale of real estate, CPS will have more revenue for operating expenses in FY2013 than it did in the prior year to cover the cost of the new collective bargaining agreement.

FY2013 Operating Revenues Compared to FY2012

Revenue

FY2012 Budget

FY2012 Estimated End of Year

FY2013 Amended Budget

FY2013 v. FY2012 Budget

Local

 

 

 

 

    Property Tax

2,038.0

2,053.4

2,052.8

(0.6)

    Replacement Tax

103.6

116.9

105.7

(11.2)

    TIF

16.0

16.0

30.0

14.0

    Other Local

112.9

101.3

104.3

3.1

    Interest

2.1

2.1

3.5

1.4

State

 

 

 

 

    General State Aid

955.1

970.8

932.8

(388.0)

    Early Childhood Education (Block Grant)

120.3

120.3

111.1

(9.2)

    Other State

543.8

552.8

549.3

(3.5)

Federal

977.3

827.5

910.8

83.3

Total Revenue

4,869.1

4,761.1

4,800.3

39.2

Local Revenues

Property Taxes
The FY2013 budget recommends that the Board extend property taxes up to the 1.5 percent tax cap and capture all growth from new property. Despite these increases, property tax revenues are projected to be flat at $2,106 million for FY2013 due to the difference between the fiscal year and the calendar year and the lower tax cap for tax year 2012. Property taxes support the General Fund, Tort Fund and Debt Service Funds.

The tax levy for the General Fund is constrained by the availability of property tax cap, statutory property tax rates, and the use of the prior-year EAV. Specifically, the General Fund tax levy cannot exceed $4.00 per $100 of EAV. The property tax rate for the Workers' & Unemployment Compensation/Tort Immunity Fund is not limited by law, but is subject to the tax cap.

Property tax revenues in the budget are equal to the estimated property tax cash collections from August through the end of July in each fiscal year (the one-month lag or difference tour fiscal year-end of June 30th is due to our revenue recognition policy of allowing cash receipts received in July to be included in revenue). These fiscal-year collections are different from calendar-year property tax extensions because tax extensions are the total amount of property tax bills sent to taxpayers each calendar year. Allocations of the revenues are as follows: General Fund: $1,995.1 million; Worker's & Unemployment Compensation Tort Immunity Fund: $57.7 million; and PBC rental lease payment: $53.2 million.

Personal Property Replacement Taxes (PPRT)
PPRT is expected to decline from $175.5 million in FY2012 to $163.4 million in FY2013 as a result of weakening corporate profits and several legislative changes that shifted certain costs to PPRT.

PPRT includes an additional state income tax on corporations and partnerships, a tax on businesses that sell gas or water, a 0.5percent fee on all gross charges for telecommunications services excluding wireless services, and a per-kilowatt tax on electricity distributors. The primary driver of PPRT is corporate income-tax receipts, which are closely tied to corporate profits.

The state collects and distributes PPRT to local taxing districts. Taxing districts in Cook County receive 51.7 percent of collections, which is divided among the County's taxing bodies based on each district's share of personal property collections in 1976. CPS receives 27.1 percent of the total Cook County share, which is equivalent to 14 percent of the statewide total.

Other Local Revenues
Other local revenues are budgeted at $286 million for FY2013, a decrease of $4 million from the FY2012 year-end estimate.

The pension payment made by the City of Chicago on behalf of CPS employees in the Municipal Employees pension fund (discussed in the Pension chapter) is estimated at $53 million for FY2013. It is recorded as revenue as required by the governmental accounting standards board. Another $132.1 million for capital and debt-service funds, including various intergovernmental agreements with the city, is also included in this item.

In addition, "other local revenues" include $30 million for TIF surplus, $10 million for school internal account funds, $10 million in facilities fees from charter schools at CPS-owned buildings, $14.9 million of private foundation grants and donations, $5 million of daycare fee receipts, $6.1 million of food sale revenues, with the remaining $9.9 of other miscellaneous revenues. This Amended budget also includes $15 million from the sale of surplus real estate.

State Revenues

General State Aid (GSA)
GSA represents the major type of state support that all public school districts receive. GSA consists of regular GSA and a poverty grant. Regular GSA utilizes many factors in its allocation formula, such as average daily attendance, a specified annual foundation level, available local resources and tax rates. The poverty grant is allocated based on the concentration of low-income students that utilize Medicaid, food stamps and Temporary Assistance for Needy Families (TANF).

Although the per pupil "foundation level" is set at $6,119 for FY2013, the same as in the past three years, the statewide appropriation is insufficient to pay for the foundation level. Therefore, all school districts will receive 89.1percent of their GSA. As a result, GSA is estimated to decrease from $1,120.2 million in FY2012 to $1,076 million for FY2013.

In addition, CPS requests adjustments on prior-year GSA allocations based on property values that were subsequently reduced after the taxpayer filed a successful property tax appeal. CPS expects to receive $16.3 million for FY2013. Combined, this will total $1,092.3 million.

The allocation to schools of Supplemental General State Aid (poverty grant) will stay at $261 million, consistent with statute. Debt service requires $143.2 million and the balance of $932.8 million will go to the General Fund.

General Education and Educational Services Block Grants
CPS receives two block grants: General Education Block Grant (GEBG) and Educational Services Block Grant (ESBG). The grant amounts are computed by multiplying the State appropriation for the programs included in the grant by the Board's percentage share of those programs in FY1995. Although the formula didn't change, the GEBG became categorical in FY2012 and the Bilingual Education grant became a separate categorical grant in FY2011. These amounts are shown under the same categories for historical comparison.

The FY2013 budget for block grants totals $610.2 million, which represents a decrease of $7.6 million from the estimated receipts of $617.8 million in FY2012.

Because of fiscal constraints, the State has delayed payment of two block grants and other miscellaneous grants since FY2009. GASB 33 and the Board revenue-recognition rule require CPS to record receivables as revenues as long as they come in within 30 days after a fiscal year ends. The table below shows the history of the state delays.

Year Ending

July 30, 2009

July 30, 2010

July 30, 2011

July 30, 2012 (estimated)

Balance Owed
($ in millions)

$164.8

$227.9

$167.1

$159.0

Our budget assumes that we will receive the balance of the FY2012 revenue owed plus nine months of the FY2013 revenue allocated by the State.

Other State Revenues
Other state funding includes capital funds and small categorical state grants that are not accounted for anywhere else.

  • State reimbursement to CPS for educational services to children residing in state foster care, residential treatment or juvenile justice facilities is estimated at $3.6 million
  • Reimbursement for driver education will decrease to $3.1 million
  • Funding for the Career and Technical Education programs will total $4.9 million
  • Alternative education will decline to $1 million in FY2013, which will provide academic, counseling and community service to students who are transferred to alternative schools
  • The State will contribute $10.9 million for the statutorily required teacher-pension contribution.

State Contribution for Capital
In FY2010, the state adopted a major new capital program, including funding for P-12 capital programs. CPS expects to receive $446 million over six years. The FY2013 budget includes $115 million for capital and $10 million for school maintenance grants (show in Other State Revenue at the beginning of this chapter).

  • School Construction Program:
    CPS receives 20percent of the statewide $1.5 billion total ($300 million) over six years. The Capital Development Board (CDB) administers capital improvement programs for local school districts. CPS received $60.9 million from this program in FY2012; The allocation for FY2013 is estimated at $115 million
  • School Maintenance Program: CPS' share is $20 million over six years; the budget assumes an allocation of $10 million for FY2013
  • School Energy Efficiency Program: CPS received $4 million for FY2012; no new funds are assumed for FY2013
  • Early Childhood Construction Program: The full $9 million state allocation to CPS was appropriated in the FY2012 Capital Budget; no further state funding is anticipated
  • CPS Vocational Schools: $75 million was authorized for Chicago Vocational Career Academy and appropriated in the FY2012 Capital Budget
  • Capital Grants for Specific CPS Schools: $12.4 million was released in FY2011 and FY2012
  • Illinois EPA: $1 million is anticipated for green projects

Federal Revenues

Most federal grants require the Board to provide supplementary educational services for children from low-income or non-English speaking families or for neglected and delinquent children, from preschool through 12th grade. These grants are dedicated to specific purposes and cannot supplant local programs. Medicaid reimbursement and Impact Aid are the only federal funding that is without any restriction.

Elementary and Secondary Education Act (ESEA) (also referred to as No Child Left Behind)
Total ESEA grants available for the current budget are projected to slightly increase from $435.6 million in FY2012 to $438.3 million in FY2013. The increase results primarily from the School Improvement Grants, which will see a growth of $12.8 million over the FY2012 budgeted level.

  • Title I-A: Low Income: Allocated based on a district's poverty count, this is the largest grant received under the No Child Left Behind Act. The grant allows the district to provide supplemental programs to improve the academic achievement of low-performing students. CPS anticipates a reduction in the formula-based Title I amount to $286.6 million for FY2013 due to a decline in Chicago's poverty count relative to the rest of the United States. The total grant available for FY2013 is $320 million, which includes carryover of $33.4 million from prior years.
  • Title I-A: School Improvement Grant 1003(a): This grant provides services for underperforming Title I schools to improve the overall academic achievement of their students. The State utilizes Title I funds to carry out its system of technical assistance and support for local educational agencies. Because of program changes by the state, the current award will decrease to $7.2 million for FY2013.
  • Title I-A: School Improvement Grants 1003(g): School Improvement Grants help ensure that all students are reading and doing math at grade level by 2014. Eight transformation high schools will receive $2 million each in FY2013; four high schools will receive $2 million each for turnaround efforts; and eight new high schools are expected to get $2 million each for transformation. The total amount available for FY2013 is $40 million under these grants.
  • Title I-D: Neglected/Delinquent: This grant targets the improvement of educational services for neglected or delinquent children and youth in local and state institutions to assist them in attaining State academic achievement standards. Programs include academic tutoring, counseling and other curricular activities. The current-year allocation for FY2013 will remain flat at $1.4 million and the anticipated carryover is estimated at $0.4 million.
  • Title II-A: Improving Teacher Quality: Class size reduction, recruitment and training, mentoring and other support services to improve teacher quality are funded through this grant. The current year award is estimated to stay flat at $35.7 million in FY2013. Including the estimated carryover of $12.3 million, the total award available for FY2013 is $48 million.
  • Title III-A: Language Acquisition: Support is provided to students with limited English proficiency who meet eligibility requirements. The total funding available for the Language Acquisition grant is budgeted at $12.6 million for FY2013, which comprises the estimated current-year allocation of $8.6 million and carryover of $4 million.
  • Title IV-A: Safe and Drug-Free: This grant supports violence prevention, safety and security, conflict resolution and a host of other programs. Congress eliminated the entitlement funding for this grant in FY2011 and converted the rest to competitive grants. CPS anticipates $500,000 in competitive grant awards for FY2013.
  • Title IV-B: 21st Century Community Learning Centers: These grants provide opportunities for communities to establish schools as community learning centers and provide activities after-school and evening hours. For FY2013, CPS estimates a grant award of $8 million, a slight increase over $7.5 million for FY2012.
  • Title VII-A: Indian Education: Funds from this grant are used to meet educational and culturally-related academic needs of American Indian and Alaska Native students. Funds for FY2013 are expected to remain level at $164,000.
  • Title VIII: Impact Aid: This grant offsets lost revenue from federal acquisition of real property. The Impact Aid is expected to stay flat at $100,000 in FY2013, based on the declining number of students from public housing in Chicago.

Individuals with Disabilities Education Act (IDEA)
IDEA grants provide supplemental funds for special education and related services to all children with disabilities from ages 3-21.

The IDEA grants include a number of programs. Part B flow-through is the largest IDEA grant, which is allocated based on a formula established by the State. The estimated award for the flow-through formula grant totals $96 million, which consists of $91.5 million of current-year funding and $4.5 million of carry-overs. Room and board reimbursement for students attending special facilities outside of Chicago is estimated at $1.5 million. The Part B Preschool grant offers both formula and competitive grants for special education programs for children ages 3-5 with disabilities. These preschool programs are expected to have $1.6 million from the formula grant ($1.2 million of FY2013 allocation plus $400,000 of carry-over) and $500,000 from a competitive grant for FY2013. Including small competitive grants and carryovers from the previous year, total IDEA funding equals $100.4 million for FY2013.

Meal Reimbursement for National School Lunch Programs
CPS offers breakfasts, lunches and dinners for children during the school year and serves lunches in summer. The federal government provides reimbursement for free, reduced-price and paid lunches and breakfasts under the National School Lunch Program. In addition, the federal government reimburses costs for the dinner program under the Child Care and Adult Food Program and provides free surplus commodities based on the number of meals served. CPS's universal school breakfast programs provide breakfast in the classroom when school starts in the morning rather than in the cafeteria before school starts, easing participation for children.

As a result of ten more pupil attendance days for FY2013, federal reimbursements are projected to increase from $182.5 million in FY2012 to $197.7 million in FY2013. These revenues include:

  • $131.2 million from school lunches
  • $48.9 million from breakfast programs
  • $12.7 million of donated food from the U.S. Department of Agriculture
  • $4.9 million from after-school dinner programs

These reimbursement revenues are not sufficient to fully support the program; thus, an additional $31 million will be provided from local revenues for FY2013.

Medicaid Reimbursement
CPS provides a variety of medical services to students with disabilities such as speech therapy, physical therapy, occupational therapy, mental health service and special transportation. CPS qualifies for Medicaid reimbursement for these covered medical services and the costs of administrative outreach activities provided to eligible students.

Effective FY2009, the Illinois Department of Healthcare and Family Services started applying cost-based rates to Medicaid reimbursement. As these new rates are retroactive to FY2004, CPS saw temporary increases in Medicaid reimbursement through FY2012. The FY2012 revenues of $83.7 million reflect receipts of retroactive rate adjustments to previous claims. Starting FY2013, Medicaid revenues are expected to decline to the normal level of $57 million in FY2013.

Other Federal Grants
Other Federal Grants include competitive grants for other specific purposes. Below is a brief description of major grants under this category:

  • Head Start: The United States Department of Health and Human Services provides funds for the Head Start program, which focuses on educating children from birth to 5 years old who are in low-income families. The program provides comprehensive education, health, nutrition and parent involvement services to these children. CPS Head Start programs are funded through the City of Chicago. The FY2013 award for Head Start stays flat at $42.7 million.
  • Carl D. Perkins: This grant was established to develop academic and technical skills for career opportunities, specific job training and occupational retraining. This grant targets students in secondary and post-secondary education. The Perkins formula grant is anticipated to decline to $6.1 million as a result of decreased poverty rates. With the estimated $2 million carryover, the total grant will provide $8.1 million for the program.
  • Race-to-the Top: The FY2013 allocation of $10.4 million will allow CPS to integrate and analyze data collection; create science, technology, engineering and math programs; and train teachers on the CPS framework for teaching.
  • Smaller Learning Community Grants: The grants are used to implement smaller high schools to improve academic achievement, graduation rates and the learning climate and culture. Congress eliminated this grant; the total award remaining for the last year of the grant is $2.9 million.
  • E-Rate Subsidy. $14 million is included from this program, which provides discounts to assist schools and libraries to obtain affordable telecommunications and Internet access.

Federal Interest Subsidy under Qualified School Construction Bonds (QSCBs) and Build America Bonds (BABs)

CPS elected to receive a direct subsidy payment of $26.8 million in FY2013 from the federal government for these two types of federally-subsidized bonds. This is discussed more fully in the Debt Management chapter.

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Page Last Modified on Wednesday, August 27, 2014