Chicago Public Schools Fiscal Year 2015 Budget

How to use this site

Users will be able to find documents and use interactive tools to help them better understand the proposed CPS budget for fiscal year 2015. The interactive features allow users to easily click through the budget, drilling into specific budget line details or staying at a high level overview of the District.

Users can view a number of areas of the budget including revenue and debt while also looking at every CPS school and department. Each interactive report generates graphs and charts which will make budget comparisons visual and easier to understand.

Check out our Reader's Guide for more information.

Download your own copy of the FY15 Budget Book Summary.

CPS received the GFOA Distinguished Budget Presentation Award for our FY2014 online budget site.

Overview

 

Over the last several years, CPS has grappled with an ever-growing budget deficit that is due in part to the State being last in the nation in education funding and CPS being the only district in the state to face escalating pension costs.

 

We have taken steps to address the deficit:  we have made every effort to keep cuts away from the classroom by identifying ways to cut spending from central office, administration and operations. With the additional $55 million in cuts we will make in FY15, CPS has cut $740 million cumulatively since FY11 in these areas to ensure that every dollar possible is helping improve outcomes in the classroom.

 

Despite these challenges, we continue to invest in areas that drive student achievement.  Over the past three budgets we have: 

 

  • Moved to a Full School Day, providing students the time they need to learn.
  • Prepared our youngest students to succeed by implementing Full Day Kindergarten for all students and expanded Pre-K programs through the Chicago: Ready to Learn! initiative.
  • Successfully expanded Safe Passage so that students can focus on their studies and not their safety. 
  • Strengthened neighborhood schools with further investments in high quality STEM and IB programs, adding 19 new IB programs serving 6,000 students and 16 new STEM programs serving 8,300.
  • Invested in Arts, launching the first-ever Arts Education plan.
  • Committed to Physical Education and recess every day for every student.

 

Our new approach to safety and security has been particularly successful. We have expanded Safe Passage so that it now serves 53,227 students at 94 schools. We have added security cameras at 93 schools and integrated them with the 911 center. Our focus on improving the school climate has led to implementation of restorative justice, social/emotional supports, and anti-bullying curricula in schools. We have also expanded out-of-school-time supports, including expanding Safe Haven, which now serves over 10,000 students in 110 sites for after-school and between semester programs.

 

Our strategic safety investments have been highly successful. New data shows the most recent school year was the safest on record since CPS started tracking student safety data in 2007. The progress is being driven by the City’s comprehensive school-based strategy, which is founded on reforming school discipline to a more restorative approach, implementing intensive mentoring and tutoring for students, reengaging with disconnected youth, and a strong partnership between CPS and Chicago Police.

 

Leading indicators of student safety, school climate and academic achievement show significant gains over the past three school years. Compared to the 2010-2011 school year, the recently completed 2013-2014 school year saw:

 

  • Over 27,000 fewer out of school suspensions—a 33 percent drop in out of school suspension rate
  • Nearly 1,300 fewer CPS students referred for expulsion—a 37 percent drop in referral for expulsion rate
  • More than 1,000 fewer in-school arrests of CPS students—a 35 percent drop in the in-school arrest rate
  • 49 fewer CPS students who were victims of shooting—a 25 percent drop in the CPS student shooting victimization rate
  • A 12 percent drop in the number of students who were victims of homicides, including a 50 percent drop over the prior school year

 

The FY15 budget continues and builds on these investments by focusing resources on the pillars of success outlined in  “The Next Generation: Chicago’s Children,” the District’s 2013 – 2018 Action Plan to achieve our vision of students 100 percent college ready and 100 percent college bound. 

 

Our financial situation will remain precarious until we achieve pension reform. Each year we have balanced the budget with short-term strategies, buying time until we can achieve pension reform. Yet again, in the spring 2014 legislative session, there was no action to reform Chicago teacher pensions, leaving no solution to the structural budget gap in sight. 

 

To present a balanced budget for FY15 and to ensure that we are continuing to invest in the areas that drive student achievement, CPS turned to an accounting change. This extraordinary move only helps us this one year and does nothing to address our structural deficit. Only with state action on pension reform for CPS and increased education funding levels will we be on stable, sustainable financial footing.     

 

FY15 OVERVIEW

 

Most Spending is at Schools 
Our dollars are invested in schools and the classroom. With 11 percent of the budget (nearly $1,600 per student) set aside to pay pension costs, 97 percent of all positions and 84 percent of all spending are at schools; 4.5 percent is spent on central office services, while 0.5 percent is spent at the Networks. 

 

Chart 1: Most CPS Spending is at Schools

 

Similarly, salaries and benefits (including pension costs) to support the 39,206 positions make up 68 percent of the budget (with more in practice, when charter, early childhood and other program spending is taken into account). 

 

Chart 2: Salaries and Benefits Make Up 68% of the Budget

 

Chart 3: Of the 39,206 Positions 97% Directly Support Schools

 

FY15 Budget Invests in the Classroom, Continues to Make Central Office and Operations Cuts, Yet Relies Significantly on One-Time Resources as Pension Costs Continue to Grow

The FY15 budget is $5,756.3 million, an increase of $164 million from the FY14 budget of $5,592.3 million. The increase is largely due to approximately $86 million in salary increases primarily as the result of collective bargaining agreements, a $34 million increase in pension payment, nearly $16 million for the first year of the multi-year commitment to Arts and PE teachers, and $2 million for the addition of the five new elementary International Baccalaureate programs. Other programmatic investments are offset by the reductions described later in this Chapter.

 

Table 1: FY15 Proposed Budget

 

FY14 Budget

FY14 Estimate

FY15 Budget Book

FY15 Change

Revenue

 

 

 

 

Property Tax

2,141.4

2,145.0

2,178.5

33.5

Replacement Tax

   105.5

125.0

   132.7

7.7

TIF surplus

20.0

20.0

25.0

5.0

All Other Local

149.6

117.0

186.2

69.2

Total Local

2,416.5

  2,407.0

2,522.4

    115.4

State

1,621.5

1,608.2

1,507.7

(100.5)

Federal

   908.4

865.1

   863.6

(1.5)

Investment Income

        3.1

2.4

        0.1

(2.3)

Total Revenue

4,949.5

  4,882.7

4,893.9

11.1

 

 

 

 

 

Expenditures

5,592.3

  5,312.2

5,756.3

        

 

 

 

 

 

Net Surplus/(Deficit)

(642.8)

(429.5)

(862.3)

 

 

Minimal Growth in Operating Revenues 
As discussed in the Revenue chapter, CPS has little control over the revenue we receive. Our major sources of federal funding are driven by formula and we have seen our allocations decrease over time. 

 

State funding is also driven by formula and CPS experienced a year-over-year decline of $50 million in state aid. Without significant new investment from the state, CPS continues to receive state support below FY08 levels. As described more fully in the Revenue chapter, state funding available for the operating budget declines even more, as increasing use of bonds to support the capital program draws more state aid to service the debt.

 

Local revenue is increasing as a result of growth in the Replacement Tax, additional TIF surplus declared by the Mayor, tax levels at the cap, capturing expiring TIFs and new property, and changes in the way we reflect charter school fees. As discussed more fully in the Schools chapter, CPS is moving away from a model of deducting an administrative fee and showing a “net” amount as the payment to charters. Starting in FY15 we will distribute the total allocation as a “gross” amount and charge charter schools a per pupil administrative fee based on their specific circumstances. In addition, this is the second year of implementation of the charter payment for contributions to the Chicago Teacher Pension Fund. We distribute an equitable share of pension funding to charter schools, and those charters whose teachers are part of the Chicago Teachers Pension Fund are required to pay the employer contribution. Because CPS statutorily makes the contribution, the charters will remit the payment to CPS, where it will be counted as revenue, but it is essentially a pass-through to the pension fund.

 

ADDRESSING THE BUDGET GAP

 

$740 Million in Cuts Away from the Classroom Since FY11
Between FY11 and FY14, we made nearly $700 million in cuts away from the classroom, as shown in Table 2. We have reduced food service, custodial, and engineering expenses by streamlining work processes and restructuring how services are performed. Transportation costs have been reduced by better routing of buses.  We improved our procurement process to secure more favorable rates on services and items we purchase.  We eliminated programs that were not effective or efficient, and where the principles for funding allocation were unclear, we have rationalized those allocation models.

 

The FY15 budget continues the pattern and makes an additional $55 million in cuts, increasing the total to nearly $740 million.

 

Table 2: Cuts Away from the Classroom Every Year

 

FY11

FY12

FY13

FY14

FY15

TOTAL

Administration/ Operations

31.3

234.0

128.0

93.2

39.8

526.3

Programs

0.0

87.0

49.0

18.4

15.3

169.7

Debt Obligations

44.0

--

--

--

--

44.0

TOTAL

75.3

321.0

177.0

111.6

55.1

740.0

 

In FY15 we are again reducing the costs to maintain our facilities by implementing a new Facilities Management contract that saves over $17 million. We restructured lunchroom staff to reflect industry standards, and reduced food costs through more competitive pricing, initiatives started last year with nearly $3 million in benefits that continue into FY15. Our efforts to improve transportation efficiency have continued as a result of central management of bus aide staff and optimization of bus routes, saving nearly $6 million. We are eliminating 37 central office positions in areas such as Finance, Information Technology, and Accountability. Central office program reductions include reducing programs that consistently underspend, use of outside training vendors, and administrative positions that will save $15 million.  In total, we are making $53 million in cuts away from the classroom.

 

Pensions Continue to be an Increasing Burden in FY15
Pensions continue to be the single largest driver of CPS’s structural deficit. The CPS contribution to the Chicago Teachers Pension Fund (CTPF) jumps another $84 million in FY15, to $697 million. Fortunately, the recently-passed state budget includes a $50 million state contribution to CTPF, decreasing the amount that CPS will have to pay by $50 million. Still, at $634 million, CPS’s contribution is the equivalent to about $1,600 per student, or 11 percent of the operating budget. 

 

CPS will continue to work with the General Assembly, the union, and others to achieve meaningful pension reform.

 

Chart 4:  CPS’s Required Employer Contributions to CTPF Grows Dramatically 1
($ in millions)

 

To Address Volatility of Property Tax Revenues, CPS Will Change Revenue Recognition Period for FY15
As was the case in FY12, FY13, and FY14, the volatility of property tax receipts at the end of the fiscal year reporting period makes projecting revenue difficult—our estimate of property tax revenue could shift by hundreds of millions of dollars if it comes in a few days earlier or later. 

 

  • Change in property tax due date led to volatility. For decades, until 2012, second installment property taxes in Cook County were due in November or December. In 2012, however, the County met the statutory due date of August 1, which shifted hundreds of millions of dollars in property tax receipts to the July/August period, as most property taxes are received right before or after the due date.

     

    Under CPS’s current revenue recognition period, property tax revenues are recognized as current revenues as long as they are available within 30 days after a fiscal year ends, or through July 30. That makes the timeframe around the end of the revenue recognition period particularly volatile, as it coincides with the property tax due date. In FY12 and FY13, hundreds of millions of dollars in property tax receipts shifted across fiscal years simply because of a shift of a day or two in receipt. Budgeting revenues in the fiscal year becomes extremely difficult because of this volatility and therefore meeting balanced budget and fund balance requirements becomes more challenging.

  • Federal revenue also misses the revenue recognition window. Due to changes in state rules, CPS receives federal and state revenue as a reimbursement after expenses have been paid.  This leads to a lag between expenditures and when the revenue is received.  For claims made at the end of the year, this can mean shifting tens of millions of dollars across fiscal years if the revenue is not received by July 30. 
  • Most school districts in Cook County and other large urban districts across the U.S. have 60 day revenue recognition periods. Most school districts in Cook County and large school districts such as New York, Los Angeles, Philadelphia, and Miami recognize revenue if it comes in within 60 days of the end of the fiscal year. The City of Chicago also has a 60 day recognition period at the end of its fiscal year.

 

CPS Will Change to 60 Day Revenue Recognition Period
To correct these two issues—volatility in revenue collections and matching of revenues and expenditures within fiscal years—and to be more consistent with the practices of other school districts and the City, CPS has changed the revenue recognition period to 60 days, through August 29, for FY15 and future years.  

 

Change in Revenue Recognition Period Increases Reserves That Will Balance FY15 Budget
We are projecting that by changing the revenue recognition period to 60 days for the FY15 budget we will see an increase of approximately $654 million in reserves, based on August collections. 

We recognize that this helps us balance the FY15 budget but does not generate any additional revenue.  It is simply a timing change that will help us provide a bridge for the FY15 budget until the time when we achieve financial stability through pension reform.

 

Chart 5: Significant Use of Reserves to Balance Budget

 

Once Again Turn to Reserves to Maintain and Improve School Funding
CPS will use more in reserves in the FY15 budget than in the FY14 budget, as we continue to dedicate more funding to the classroom. With the reserves available from changing the revenue recognition period and those created as a result of better-than-expected performance in FY13 and FY14, CPS will balance the budget using $862.3 million in reserves. This has allowed us to increase per pupil funding by $250, as described more fully in the Schools chapter, and make other key investments described below.

 

Table 3: Available Reserves Tapped to Balance FY15 Budget


Fund Balance by Type

FY14 Beginning of Year Balance

FY14 Estimated Use

FY14 Estimated End of Year Balance

FY15 Budgeted Use

FY15 End of Year Balance

Revenue Recognition

 

 

648.0

 

 

General Fund

713.2

404.3

308.9

797.7

159.2

Workers’ Comp/Tort Fund2

65.0

37.6

33.4

0.0

33.4

Supp’l General State Aid (SGSA)3 and Other Special Revenue Funds

63.5

(12.4)

75.9

64.6

4.2

Not Available for Appropriation4

107.4

0.0

107.4

0.0

107.4

Total Operating Fund

949.1

429.5

1,173.6

862.3

304.2

Debt Service Stabilization Fund5

269.2

53.8

219.4

54.0

145.8

 

FY15 INVESTMENTS
THE NEXT GENERATION: CHICAGO’S CHILDREN
100% College Ready; 100% College Bound

 

The five pillars of the District’s action plan, The Next Generation: Chicago’s Children, released in 2013, continue to provide the framework for our FY15 budget investments and choices.

 

Pillar 1:  High Standards, Rigorous Curriculum and Powerful Instruction for All Students

  • Add $70 million and increase core instruction funding per student $250. In FY14, the district moved to a new, student-based budgeting (SBB) model that gives principals unprecedented autonomy and flexibility to make choices to best meet their students’ needs. Building on the successful first year implementation, the FY15 budget increases the amount principals have been allocated per student by $250. CPS added an additional $70 million to the SBB allocation and ensures that funding follows the student.
  • Fund 168 new Art and PE teachers at 171 schools. Through the Mayor’s commitment of $25 million in TIF surplus funds, schools received 168 new Art and PE teachers. Principals submitted applications, and selected schools received a multi-year commitment to matching funding to add these new positions. This funding will help implement the City’s first-ever Arts Education Plan and help ensure that every child has access to physical education every day.
  • Add five new International Baccalaureate (IB) elementary feeder schools. International Baccalaureate (IB) programs have proven to be among the most successful. In the past three years, CPS has added 19 new IB programs serving 6,000. In FY15, we have added $2 million in operating support and $8 million in capital construction to add five new elementary IB programs at Seward, Agassiz, Ebinger, Moos, and Peirce. These schools will provide an educational continuum for students entering high school IB programs at Back of the Yards, Clemente, Hyde Park, Morgan Park, Lincoln Park, Senn, and Taft high schools. 
  • Add 15 high schools to dual credit/dual enrollment program to serve 4,700 students. Dual credit/dual enrollment is a partnership with the City Colleges that helps students earn college credit while they are still in high school. The Dual Enrollment program allows students to take courses at any of the seven City College campuses, while the Dual Credit program provides college-level courses taught by qualified CPS teachers at high schools. In FY15, 15 additional high schools will be added to the partnership, bringing the total number of schools to 45 and the number of students enrolled to 4,700, an increase from 300 students in FY11. Each year, City Colleges provides 700 tuition-free seats to Chicago high school students.
  • Initiate “Computer Science for All.” As part of the Mayor’s effort to expand access to STEM education, 46 schools in FY15 will participate in the pilot of the District’s new computer science curriculum. This program will equip students with skills necessary for the 21st century, creating a pipeline for foundational computer science skills in elementary schools, expanding computer science classes to every high school, and elevating computer science to a core subject. The FY15 budget includes $300,000 to support this initiative.

 

Pillar 2: System of Supports that Meet Students’ Needs

 

  • Expand Safe Passage by $1 million. The FY15 budget includes $1 million to expand the successful Safe Passage program. New data shows the most recent school year was the safest on record since CPS started tracking student safety data in 2007. The progress is being driven by the City’s comprehensive school-based strategy, which is founded on reforming school discipline to a more restorative approach, implementing intensive mentoring and tutoring for students, reengaging with disconnected youth, and a strong partnership between CPS and Chicago Police.
  • Support social emotional learning. Fourteen social/emotional learning specialists ($1.7 million) have been added to support each network in coaching and training schools on behavioral supports, school climate, intervention models, and student adjudication processes.
  • Establish re-entry pilot for 200 students. Students returning from the juvenile justice system are at high-risk for dropping out without the appropriate supports. With a two-year $500,000 Department of Justice grant, we will provide 200 students per year with re-entry services.
  • Focus on college summer transition. Many students graduate and are enrolled in college for the fall following their graduation, yet fail to show up. A $500,000 matching pool will encourage high schools to develop an approach to supporting students over the summer as they prepare for the transition to college.
  • Support transition to high school. A $475,000 matching pool will be available to high schools to support freshmen orientation programs and ensure that students are off to a solid start in high school. In addition, $160,000 will be invested in two fairs for students and their families to learn about high school options. Over 9,000 8th graders are expected to attend.
  • Add Career and Technical Education programming for overage students. In FY15, we will initiate a portfolio of CTE programming for up to 100 students who are overage for their grade and lacking high school credits. This will includes a “senior-year bridge” program to link students to post-secondary opportunities or other paths for career-focused, certifications.
  • Add $4.5 million to fund seven new Options programs to re-engage out-of-school students and provide a path to a high school diploma. Seven new Alternative Learning Options Programs (ALOP) will be added in FY15, adding 1,725 seats for students who would otherwise not be enrolled in schools. These schools are in addition to the six new programs opened in FY14, which enrolled over 1,100 students.
  • Add new SAFE school. In FY15, CPS will add $1.4 million to fund a new SAFE school to serve an additional 150 seats, an educational option for students who have been expelled from another CPS school due to violence.

 

Pillar 3: Engaged and Empowered Families and Communities

 

  • Create two new Parent Universities. These sites will enhance parent engagement and provide resources and services that help parents to better support their students from the cradle to college. Services may include early childhood guidance, special needs support, and help with the college application process. 

 

Pillar 4: Committed and Effective Teachers, Leaders and Staff

 

  • Provide salary increases for teachers. The FY15 budget provides approximately $83 million to cover the cost of collectively bargained salary increases of 2 percent plus step and lane adjustments for CPS teachers.
  • Provide salary increase for principals and assistant principals. The FY15 budget includes approximately $3.1 million to cover the cost of a 2 percent increase for principals and assistant principals.
  • Invest over $2.7 million for consulting teachers. Rooted in the CPS - CTU labor contract, this program will provide one-on-one professional development to tenured teachers. Teachers who are achieving success in the classroom will provide professional development and instructional support for tenured teachers who are experiencing some challenges. The REACH evaluation system provides the foundation for the identification of teachers who require additional support and those well-prepared to support.
  • Invest an additional $1.7 million to develop candidates preparing to become principals. Through the Chicago Leadership Collaborative (CLC), we have partnered with four of the nation’s strongest principal preparation programs to develop a pool of potential principal candidates. The expansion will provide additional Residencies to ensure that these prospective school leaders have experiences while in training that mirror those that they will experience on-the-job. 
  • Expand CTU Quest Partnership to encourage National Board Certified Teachers. The FY15 budget adds $500,000 to expand the partnership with the CTU Quest Center to support candidates seeking National Board Certification. Based upon the success of the current partnership, these funds help prepare for an expansion and scale-up to ensure that the maximum number of teachers interested in pursuing National Board Certification are supported.

 

Pillar 5: Sound Fiscal, Operational and Accountability Systems

 

  • New Five-Year Capital Plan continues district priorities.  Since FY12, under the Mayor’s leadership, the Board and CEO have provided over $1.1 billion to build new schools, provide playgrounds and air conditioning, improve access to technology with new computers and expanded bandwidth, expand academic programs (career and technical education programs, for example), and make core investments in our facilities to repair roofs, fix chimneys, and replace or repair boilers and other mechanical systems. This is all done to ensure students have a high quality learning environment to support a high quality education.

 

The FY15 budget provides an additional $510 million in capital projects to provide access to quality education programs, repair and modernize buildings, and relieve overcrowding. A description of the capital plan is included in the Capital chapter, while full details are available at the Capital Plan website, www.cps.edu/capitalplan.

 

FUTURE OUTLOOK SHOWS NO RELIEF

 

As long as CPS is burdened by an unfunded pension cost and flat or declining state and federal revenues, the financial picture will continue to be grim. Preliminary projections for FY16 and FY17 show that deficits over $1 billion will continue.

 

 Table 4: Future Financial Outlook Grim

 

FY15 Budget Book

FY16 Projection

FY16 Change

FY17 Projection

FY17 Change

Revenue

 

 

 

 

 

Property Tax

2,178.5

  2,178.5

0.0

   2,178.5

0.0

Replacement Tax

  132.7

       132.7

0.0

         132.7

0.0

TIF surplus

     25.0

         25.0

0.0

         25.0

0.0

All Other Local

   186.2

       173.1

(13.1)

      196.7

23.6

Total Local

2,522.5

    2,509.3

(13.1)

    2,532.9

23.6

State

1,507.7

    1,449.7

(58.0)

    1,323.5

(126.2)

Federal

   863.6

        838.6

(25.0)

       813.6

(25.0)

Investment Income

      0.1

           0.1

0.0

             0.1

0.0

Total Revenue

4,893.9

    4,797.7

(96.2)

   4,670.1

(127.6)

 

 

 

 

 

 

Expenditures before cost increases

5,756.2

    5,756.2

 

    5,938.6

 

Cost Increases

 

 

 

 

 

Pension Increase

 

69.3

 

20.1

 

Salary Increases

 

103.9

 

82.8

 

Healthcare Inflation

 

10.2

 

10.5

 

Savings from CO consolidation

 

(1.0)

 

 

 

Total Cost Increases

 

182.4

 

113.4

 

Revised Expenditures

 

5,938.6

 

6,052.1

 

Net Surplus/(Deficit)

(862.3)

(1,140.9)

 

(1,382.0)

 

 

CAPITAL BUDGET OVERVIEW

 

In addition to the operating budget, the FY15 budget includes revenues and appropriations for capital projects to modernize classrooms across the city to provide a high quality education that will prepare students to be 100 percent college ready and 100 percent college bound. 

 

Since Fiscal Year 2012 (FY12), under the Mayor’s leadership, the Board and CEO have provided over $1.1 billion to build new schools, provide playgrounds and air conditioning, improve access to technology with new computers and expanded bandwidth, expand academic programs (career and technical education programs, for example), and make core investments in facilities to repair roofs, fix chimneys, and replace or repair boilers and other mechanical systems. This is all done to ensure students have a high quality learning environment to support a high quality education.

 

Today, there are over $500 million in capital projects underway at 65 schools, each supporting this vision of expanding high quality academic options to parents and students across the city.

 

The FY15 budget provides an additional $510 million in capital projects to provide access to quality education programs, repair and modernize buildings, and relieve overcrowding. Highlights of the plan are included in a separate Capital chapter; full details are available at the dedicated Capital Plan website, www.cps.edu/capitalplan.

 

DEBT BUDGET OVERVIEW

 

CPS Bonds Pay for Portion of Capital Program
While CPS works hard to secure outside funding to support the capital plan, it also dedicates its own resources, issuing bonds and paying them back over time. CPS currently has $6.4 billion of outstanding debt and the FY15 budget includes appropriations of $525.7 million for annual debt service. It also includes $78.1 million from reserves (discussed more below).  In total the budget includes $603.8 million in debt service fund appropriations. 

 

Debt service costs are supported by a few major revenue sources, including General State Aid, Replacement Tax, Property Tax, state School Construction funds, local intergovernmental agreements, and federal interest subsidies for certain types of bonds. Details describing these revenues are included in the Revenue chapter.

 

Whenever possible, CPS secures outside funding to pay for capital projects or debt service. Intergovernmental Agreements and state School Construction funds are such outside resources. Certain bonds issued by the Public Building Commission in the mid-1990s are paid by a dedicated property tax levy. Others issued under the Build America Bond Act are subsidized by the federal government. 

 

The remaining bonds CPS issues are funded either through Replacement Tax or General State Aid. In FY15, $191 million of General State Aid will be dedicated to debt service, as will $56 million of Replacement Tax.

 

Debt Service Also Creates Long-Term Fiscal Challenges
General State Aid (GSA) and Replacement Tax revenues also support the operating budget, as discussed above and in the Revenue chapter, and thus have competing demands to fund debt service and to fund the classroom.

 

In the near term, these challenges get even worse. GSA and Replacement Tax revenues needed to fund debt increase significantly – from $247 million in FY15 to $434 million by FY17, staying at approximately that level through 2030.

 

The graph below shows this growth in debt service payments for currently outstanding bonds only; this graph does not show the impact of any future bonds required to support future capital budgets and highlights another pressure on the budget.

 

Chart 6: Debt Service Creates Long-Term Fiscal Challenges

*Does not include future capital project bond financings

 

CONCLUSION

 

The FY15 budget makes very clear choices: we will continue to invest in our classrooms to ensure that students are 100 percent college ready and 100 percent college bound. We will streamline our operations and make cuts in areas that allow us to maintain the investments in schools. Yet, we cannot accomplish our goals until we address the underlying structural deficit through pension reform and increased state revenue. Unfortunately, this is a refrain we have had to continue to repeat every year.

 

APPENDIX: FY14 OPERATING BUDGET FINANCIAL PERFORMANCE

 

FY14 Projected Results: Better than Budget, but Still a Deficit
CPS expects to end FY14 with a substantial operating deficit, even though our performance was better than budget. The FY14 budget anticipated a $642.8 million shortfall, which was closed with reserves. Instead, we expect to end the year with a $429.5 million shortfall.

 

Table 7: FY14 Results

 

FY14 Budget

FY14 Estimate

Difference from Budget

Revenue

 

 

 

Property Tax

2,141.4

2,145.0

3.6

Replacement Tax

 105.5

125.0

19.5

TIF surplus

20.0

20.0

0.0

All Other Local

149.6

117.0

(32.6)

Total Local

2,416.5

2,407.0

(9.5)

State

1,621.5

1,608.2

(13.3)

Federal

908.4

865.1

(43.3)

Investment Income

3.1

2.4

(0.7)

Total Revenue

4,949.5

4,882.7

(66.8)

 

 

 

 

Expenditure

5,592.3

5,312.2

280.1

 

 

 

 

Net Surplus/(Deficit)

(642.8)

(429.5)

213.3

 

Several factors account for the change from budget. 

 

  • Replacement Tax anticipated to be above budget. As described more fully in the Revenue chapter, Replacement Tax is linked to state Corporate Income Tax and CPS relies on the state’s estimates to project our revenue. For FY14, we underestimated the amount the state would collect, and we now estimate CPS will collect $19 million more than was budgeted.
  • Lower state and federal revenue. At the time the budget was prepared, CPS relied on preliminary estimates from the Illinois State Board of Education (ISBE) of the amount of General State Aid (GSA) we would receive. The final calculation ended up being $5 million lower than we budgeted. Additionally, the State Charter Commission approved in 2013 two new charter schools. According to statute, the funding for those charters is taken directly from CPS’s GSA. Since it was the first year of operation for these charters, CPS did not include an estimate for the reduction. By the end of FY14 we project that $6.9 million of CPS’s GSA will be directed by the state to the new state-approved charters.

     

    During FY14, CPS learned that the federal government was changing the eRate program, which supported technology and telecommunication for schools, and CPS would not receive any funding in FY14, an impact of $14 million. Federal revenue is lower as well because grant expenditures are lower than budget (as described below). Because federal funds are reimbursed based on actual expenses paid, lower spending or even delay in payment after the reporting period means less revenue.

  • Disciplined management reduced expenditures. We expect lower than budgeted costs in food, transportation, supplies, and contractual service due to more disciplined focus and monthly review of spending. Salary costs are also projected to be below budget as a result of more stringent review and hiring requirements for Central Office staff, as well as staff turnover.
  • Schools held on to funds. Each year, CPS is required to distribute $261 million directly to schools from Supplemental General State Aid (SGSA). Schools use these funds to provide supplemental educational services for students. If those resources are not spent, we return the funding to the school the next year.6 We then must budget the full amount from the prior year in the next year’s budget. That amount comes out of the SGSA reserve.  In FY2014, we estimated the amount in the reserve would be $41.3 million and appropriated that amount to schools to spend. However, at the end of FY14, we are estimating that they will have spent only $1.4 million of that, leaving approximately $40 million. This means that schools will have that $40 million to spend in FY15 but that FY14 spending is $40 million below budget.

 

Schools also generate money through grants, auditorium rental, and similar means.  We included an estimate of $50 million in the budget for these revenues and expenditures; however, schools only spent only $20 million.

 


1 Chart reflects total employer contributions to CTPF. From 2011 on, it reflects CPS’s contribution after the statutorily authorized offset for state contributions.

2 FY14 End of Year includes $6 million due to revenue recognition

3 The uncommitted portion of this fund balance must by statute be re-appropriated to the schools in the budget year where it was unspent in the current year.  Approximately $7 million is projected to pay for open purchase orders and will not be available to reappropriate.

4 This includes funds set aside to pay for open purchase orders, services/goods received but not yet paid, and non-spendable fund balance, including endowments and prepaid assets.

5 Debt Service Stabilization Fund includes other FY14 activities not reflected here.

6 This process and methodology is described more fully in the Schools chapter.

 

Page Last Modified on Thursday, August 28, 2014