Chicago Public Schools Fiscal Year 2017 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 2016. 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 FY17 Budget Book.

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CPS received the GFOA Distinguished Budget Presentation Award for our FY2016 online budget site.


Organization Chart

Budget Overview

Thanks to Chicago taxpayers, Springfield leaders and management reform at Chicago Public Schools, the District’s FY17 budget establishes a new foundation for greater fiscal stability.  The budget positions the District to improve educational results and operational efficiency while directing as much funding as possible to classrooms. Above all, this budget allows CPS and our families to assure our students’ continued academic growth, achievement and post-secondary success.

In addition to presenting a stable, balanced budget for the coming year, this budget also provides a roadmap for longer-term stability. In the coming year, CPS will continue to harness the energy and enthusiasm of school communities that pushed for education funding reform, along with our partners in downstate, suburban and rural districts who educate students in poverty.

There are several important developments in this budget proposal that stabilize the District’s finances and improve on the FY16 budget:

  • This budget does not rely on gimmicks or operational borrowing to balance.
  • This budget significantly reduces expenditures within the District’s control, with an operating budget that is $232 million less than the FY16 operating budget, even as pension contributions and health care continue to skyrocket.
  • This budget includes a landmark “Equity Grant” from the State of Illinois, which acknowledges that the State needs to improve how it funds the education of students in poverty.
  • This budget includes a $215 million commitment from the State for the normal costs of CPS teachers’ pensions – a major step toward pension equity with other teachers in Illinois.
  • This budget allows Chicagoans to play a greater role in protecting classrooms, by restoring a property tax levy of $250 million for teachers’ pensions – ensuring other funding remains in the classroom.
  • This budget includes major administrative streamlining efforts – including $200 million in cost-savings measures that have already been realized, with tens of millions more in projected savings – that reduce the District’s footprint to direct funds toward the classrooms.

All told, the new funding for FY17, combined with a year of administrative cuts and management reforms, narrowed the District’s starting budget gap of $1.14 billion in August 2015 to $300 million.

The District is closing the remaining gap with anticipated savings from a labor agreement with the Chicago Teachers Union, eliminating vacant positions, centralizing and streamlining schools’ financial and other functions, making additional grant reallocations, reforming procurement, savings from teacher retirements (thanks to a wage differential), scheduling and transportation efficiencies, enhancing revenue collections and proportional administrative reductions in charter schools.

 

Investing in Students’ Futures

Even in a challenging year and with challenges ahead, CPS continues to invest in areas that drive student achievement.  Over the past five fiscal years, CPS has:

  • Invested heavily in dual credit/dual enrollment options, expanding access to college credit and exposing students to a rigorous academic environment to prepare them for college. CPS has expanded these programs from 15 to 60 schools to serve more than 4,200 students.
  • Became the first school district in the country to elevate computer science as a core high school requirement by creating a computer science graduation requirement.
  • Moved to a Full School Day and Full School Year for all students, providing students the critical time they need to learn. Elementary students gained 75 minutes in the school day for a 7-hour day while high school students gained 30 minutes to create a 7.25-hour day. Students gained a total of 10 instructional days.
  • 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.
  • Increased the number of full day pre-K classrooms to 239 – a 134 percent increase – across the district.
  • Expanded Safe Passage by 105 schools since 2011, serving 75,000 children who can focus on their studies and not their safety. There have been no major incidents involving students on Safe Passage routes during the program’s operational hours.
  • Strengthened neighborhood schools with further investments in high quality STEM and IB programs, expanding IB by more than half so that CPS now has the largest IB network in the nation. With the added IB programs, CPS now serves 13,000 students. New STEM programs serve 8,300.
  • Beginning in 2015, opened five parent universities to engage and support parents. These efforts build on the successful 46 Parent Engagement Centers established since the Mayor took office. 
  • Invested in Arts Education, launching the first-ever Arts Education plan.
  • Committed to Physical Education and recess every day for every student.

 

These investments are leading to remarkable academic gains:

  • According to a University of Chicago study, roughly 42 percent of CPS graduates enroll in a 4-year college or university – quickly approaching the national average of a 44 percent college enrollment rate.
  • Earlier this summer, U.S. News and World Report heralded seven CPS high schools among top ten schools in Illinois – up from six last year. Four of those schools were also ranked nationally.
  • According to the National Assessment of Educational Progress (NAEP) – the nation’s academic report card – CPS students were in the top three nationally for gains for both 8th grade math and 4th grade reading on the national benchmark assessment. Furthermore, according to NAEP, Chicago’s improvements were among the strongest in the nation amongst all other large city school districts and Chicago students significantly outpaced state and national trends.
  • The District’s most recent average ACT score reached a record high of 18.2 for graduating seniors.
  • The District’s most recent 5-year cohort graduation rate was 69.9 percent – again, this is the highest measure on record at CPS.  In 2011, just over half of CPS students were earning a high school diploma.
  • More than 80 percent of our freshman and sophomores are on track to graduate high school.
  • Last year, more than a third of graduating seniors received college credit or career credential at no additional cost their family.

 

In FY17, we will make the following investments:

  • Invest at least $338 million in needed capital improvements to schools, including repair, modernization and overcrowding relief in neighborhoods throughout the city. CPS expects to issue a supplemental capital budget in the fall, and is holding community hearings in August to hear the public’s input.
  • Programmatic investment to enhance the academic experience at Brown (new STEM program), Dunbar (new CTE program) and Dyett (new Arts program).
  • Continue expansion of full day pre-K throughout high-need community areas, offering 53 new classrooms over last year, a 22 percent increase.
  • Adding five schools to the Dual Language program, for a total of 20 schools where students can develop literacy skills and fluency in English and Spanish.
  • Increasing IB enrollment by more than 20 percent by SY 2017-18. The District will expand enrollment for existing IB schools next year from 13,310 students to 15,198 students, and continuing expansion to 16,338 students in SY18.
  • Expanding on the success and growth of Parent Universities, and serve more families across the city by adding 15 new Parent Engagement Centers by the end of 2016. 
  • Expanding SAGA, a math tutoring program designed to improve academic outcomes for at-risk students, by doubling the number of students being served to 1,600 youth across 13 high schools, up from 600 students in 2013.
  • Expanding the number of students who will graduate from CPS with college credits already earned to 50 percent of graduates.

 

Addressing the Budget Gap

In FY16, CPS took significant steps to reduce costs and improve organizational effectiveness, which allowed the District to spend $225 million less than initially budgeted in FY16:

  • Streamlined the central bureaucracy by cutting 433 positions and saving $45 million in annualized costs.  While the savings were critical for protecting classroom spending, the reorganization also improved CPS’ operational effectiveness. Going forward, CPS will continue to improve its focus on field operations that directly service schools and school improvement.
  • Student-Based Budgeting (SBB) Reduction: CPS took the painful step of adjusting school budgets mid-year to reduce SBB allocations by $120 million in annualized cuts, $85 million of which were realized in FY 2016. Further, CPS directed principals to do everything possible to prevent teacher layoffs once budgets were adjusted mid-year. Thanks to the ingenuity of district principals, only 16 teachers lost their jobs as a result of the reductions.
  • Grant Reallocation: The impact on schools due to the mid-year SBB reduction was mitigated by an infusion of reallocated grant funds.  CPS worked with the state to reallocate funds to support school operations.  CPS was able to direct $50 million to schools to partially offset the SBB reductions.
  • Expense Control: By holding the line on expense in central office and in schools, CPS reduced the deficit by $66 million in FY2016. 
  • Increase in Employee Health Care Contribution: By requiring non-union employees to pay a greater share of their health care, CPS saved $1.6 million in FY16 and $3.1 annually.  Salary-based premium contributions now range from 2.8% for employee-only coverage to 5.0% for families.
  • Phase-out of the Pension Pick-up for Non-Union Employees: CPS reduced the deficit by $2.9 million in FY16 by decreasing the amount the administration pays for non-union employee pensions.  Previously, the District paid 7 percent of the 9 percent employee contribution.  In FY16, the pick-up decreased from 7 to 5 percent.  By FY18, there will be no pick-up and non-union employees will contribute the full 9 percent.
  • Furlough Days: In the second half of FY16, all CPS employees were required to take three days off without pay for a savings of $30 million. 
  • Streamlining of capital consultant costs: CPS tightened its management of capital consultants and decreased spending for the second half of FY2016 by $1.6 million.  Savings will be higher in FY17 as the district improves its capital project oversight procedures.
  • Procurement: The District generated $30 million in savings FY16 by developing strategic sourcing in educational good and services and operational needs. These includes a District-wide RFP for math curriculum, nursing consolidation and scheduling optimization, reduced costs for centralized IT services, and revised bond requirements for various trades to increase competition.
  • Internal Controls: CPS began tightening its control environment to better detect and prevent fraud, waste and abuse through a series of District-wide, top-to-bottom audits. As part of this work, the audit department performed comprehensive reviews of both school-based financial systems and supplemental payment systems providing management with recommendations to increase internal controls, oversight and transparency. As a direct result of increased controls and oversight, year-over-year spending was reduced by nearly $2 million across a large sample of schools. Supplemental payment system and school-based internal account reviews led to standardization of account/program structures to reduce errors and better track expenditures. CPS also reduced cost associated with food expenditures, travel, and non-required training which lead to a nearly $1 million reduction in year-over-year spend.

 

In the past year, these actions decreased the deficit by $250 million on an annualized basis, and this administration continue to work every day on reducing costs further that do not impact the classroom.

 

Closing the Remaining $300 Million Deficit

After action from Springfield, Chicago taxpayers and CPS’ FY16 management efficiencies are applied to the budget, CPS was left with a $300 million budget gap.

The chart below illustrates the steps that CPS took and will take to balance its budget.

 

Table 1: Closing the Remaining $300 Million Deficit

Savings Initiative

Savings, in millions

Beginning Deficit

$1.14 Billion

FY2016 Cost Savings Initiatives

$173

GSA Poverty Grant

$102

GSA Hold Harmless

$74

Early Childhood Grant

$29

Chicago Pension Property Tax

$250

State Pension Contribution

$215

Sweep Vacancy Savings for Deficit Reduction

$58

Reprogramming Grants to Classrooms

$35

Centralized Purchasing Savings

$35

Anticipated Labor Savings

$31

Phase-In of Shared Services

$26

Charter School Share of Central Efficiencies

$20

Reduction End Non-School Based Employees(since Jan.)

$17

Savings from Teacher Retirements & Resignations

$17

New TIF Revenue

$15

Scheduling Efficiencies

$15

Improved Medicaid Collections

$12

Additional Central Office Streamlining

$10

Additional Revenue

$6

Central Summer Program Reductions

$3

 

Management Reforms and Efficiencies Reflected in the FY17 Budget

CPS must continue to streamline its administrative functions and operations to reduce its costs and ensure our classrooms are funded to the maximum extent possible. After listening to and working with Network Chiefs and many school principals, the District will launch several field-tested, innovative initiatives this school year.  These new initiatives will not only help improve educational outcomes, they will lower the overall cost structure to deliver high-quality educational services. In some instances, these reforms will result in direct deficit reduction; in others, the changes will allow schools to re-program funds from administration and inefficient practices directly into their classrooms.

The initiatives include:

  • Efficient scheduling initiative. Through new and rigorous standards and  a dedicated training effort,  CPS is ensuring that often complex school schedules meet all curricular needs while efficiently planning class times and personnel matches. This effort formalizes guiding principles, procedures, policies and training around appropriate class schedules. By more effectively scheduling, schools can collectively save millions of dollars to reinvest in classrooms.
  • Instead of Title I and II grant funds being held in reserve or controlled by CPS central office staff for programmatic purposes, CPS will continue the practice of reprogramming and directing those funds to schools, which particularly helps those with the highest proportion of low-income students.
  • Centralization of Non-Educational Functions: The district can better leverage its size and scale to reduce inefficiencies in certain administrative and operational functions.  By assuming financial accounting and other services from schools, CPS can – through economies of scale and concentrated expertise – save tens of millions of dollars. This will assist principals in monitoring their schools’ financial conditions and ease their administrative burdens so principals can focus on their core mission: educational improvement.  
  • Further Streamlining of Central Office.  In addition to the District’s central office reorganization in January, which yielded approximately $45 million in annualized savings, CPS continues to reduce its administrative footprint, with an additional 175 fewer non-school based employees since the January layoffs. CPS is also reducing the cost of other services. Together with proportional savings from reduced spend on charter school administration, these changes save an additional $70 million.
  • Procurement Reform. CPS will use its economy of scale to save tens of millions by centralizing and concentrating the district’s purchasing power to reduce the cost of goods and services ordered by schools.
  • Better Management of Medicaid in Special Education. Millions of dollars in federally reimbursable funds are lost annually through lack of training of staff and lack of documentation of eligible hours.  Through a combination of technology, improved processes, management and training, CPS will capture approximately $10 million in additional federal funds.  CPS has asked the State to adopt the federal rules allowing for such reimbursements.
  • Further Transportation Efficiencies.   Working with principals, CPS will save millions of dollars through a series of 15 minute adjustments in bell times, strategically coordinated to maximize the efficiency of bus routes. CPS will share a portion of the savings with participating schools.

 

Additional Financial Context

While CPS will continue to tighten its belt in FY17, the District is also taking the steps it can to increase its revenue, including a major advocacy effort to reform education funding, and instituting a dedicated $250 million property tax increase on Chicago property owners.

The State of Illinois, in a major victory for CPS and other districts with students in poverty, took an important step toward addressing inequity in June. The State’s steps forward this year are a major commitment, and CPS will work with our partners in Springfield to transform these initial steps into a long-term solution. 

Without a long-term solution, however, the impact to CPS students will be devastating. CPS has taken nearly $2 billion out of the classroom to cover pension payments in the past three years alone. In coming years, CPS pension costs continue to rise, hitting $721 million in FY17 and well over $800 million in 2021 and more than $1.5 billion in 2059.

 

Chart 1: Annual Pension Contribution

Chart 1: Annual Pension Contribution ($ in Millions)

 

In addition to skyrocketing pension costs, revenue is declining. In the years before FY17, the State had reduced CPS’ funding by nearly 10 percent, or $560 million. At the same time, the State’s spending on other districts – particularly on other teachers’ pensions – increased by more than 40 percent.

Part of this inequity stems from the fact that Illinois has one pension system for Chicago teachers and another for teachers statewide. The Chicago Teachers’ Pension Fund is nearly exclusively funded by CPS, using tax revenue from Chicago residents. The Teachers’ Retirement System is funded entirely by the State, including tax dollars from Chicago residents. Creating an equitable approach to pensions will be a key focus of reforming education funding.

Just as critical will be reforming the education funding system so that it equitably funds children in poverty throughout Illinois. CPS partnered with districts throughout the state to advocate for equitable funding because Illinois ranks last in the country on this key measure. We will continue those efforts to secure long-term reform for FY18 and beyond.

Educational equality is the civil rights issue of our generation and a system that treats students differently cannot stand. This is why CPS is so encouraged that state leaders are moving forward with efforts to reform education funding, and we will continue to work with them to realize this important goal.

 

FY17 Overview

The FY17 budget of $5,459.9 million is $231.9 million below the FY16 budget of $5,691.8 million.  This is despite a $45 million increase in teacher pension payments to $733 million for FY17.  In fact, pensions have been such a significant driver of our expenses that if CPS removes these pension payments from the budget, the FY17 budget would be $81 million below the FY13 budget.  

Not only does the FY17 budget reduce elements within the District’s control – particularly the $232 million drop in the operating budget – but it also is balanced without relying on one-time gimmicks.

FY17 Budget Protects Classrooms
Table I shows the major changes between the FY16 and FY17 budget.

 

Table 2: FY17 Proposed Operating Budget


($ in millions) Changes: Favorable/(Unfavorable)

FY 16 Budget

 

FY 17 Budget

FY 17 v. FY 16 Budget

Revenue

 

Property Tax

2,307.8

 

2,607.8

300.0

Replacement Tax

207.8

 

188.8

(19.0)

Replacement Tax for Debt Service

(58.3)

 

(58.3)

-

TIF surplus*

87.2

 

32.5

(54.7)

All Other Local

158.1

 

175.7

17.6

Total Local

2,702.6

 

2,946.5

243.9

State Pension Funding Equity

-

 

215.2

215.2

GSA

952.2

 

1,059.9

107.7

GSA for Debt Service

(297.5)

 

(373.4)

(75.9)

Savings from Debt Restructuring, One Time Debt Funds

254.6

 

-

(254.6)

All Other State

668.0

 

701.0

33.0

Total State

1,577.3

 

1,602.7

25.4

Federal

852.6

 

829.8

(22.8)

Unrealized Revenues

480.0

 

-

(480.0)

Investment Income

0.1

 

-

(0.1)

Reserves

79.2

 

80.8

1.6

Total Resources

5,691.8

 

5,459.8

(232.0)

Expenditures

5,691.8

 

5,459.8

(232.0)

*Note that the TIF surplus is an estimate, and the final amount will be known in the fall.

 

Local Revenues

Property taxes will increase as a result of the state budget deal allowing the Board of Education to raise property taxes by $250 million for the district.  

Replacement taxes are tied to state corporate income taxes and our projections are based on state data.  However, due to a State overpayment of prior year personal property replacement tax (PPRT) distributions, FY17 replacement taxes are budgeted below FY16 levels due to the reflection of actual annual PPRT levels going forward and the State reducing its distributions to local taxing districts, including CPS.

In addition, a portion of the Replacement Tax revenue CPS receives is dedicated to pay debt service and therefore is an offset to our operating revenue, as is General State Aid.   The growing pressure of debt service on our operating budget is discussed more fully below and in the Debt Management chapter.

CPS has received more than $1 billion in TIF funds for capital investments in schools throughout the city over the past decade. On top of capital expenditures, Mayor Emanuel is also committed to declaring a surplus of TIF funds each year.  Each year’s TIF surplus provides a one-time boost to CPS operating revenue; this means that while the annual TIF surplus is a helpful source of additional funding, it does not represent a lasting, structural solution to the CPS budget. This is why TIF funds are traditionally used for capital investments.

In July 2015, the Mayor announced a freeze on new spending in downtown TIF districts, which will create an estimated $250 million in additional TIF surplus over five years, half of which will go to CPS. In FY16, CPS received a spike in TIF funding because the surplus was greater than expected and some FY15 payments were received in FY16. The City will analyze available TIF surplus revenue as part of its budget process, which takes place in the fall. In the FY17 budget, CPS includes an estimated TIF surplus of $32.5 million, which is more in line with other recent years. The final TIF surplus amount may differ from this estimate.

 

State Revenues

CPS’s main source of state operating revenue, General State Aid (GSA), had been reduced each year since FY09 and had been a major driver of the structural deficit. With the action taken by Springfield in FY17, CPS will see its first increase in state funding since FY09, due to GSA being held harmless, $215 million of new state pension funding, a $29 million increase in early childhood funding, and the inclusion of a new “equity grant” which will provide CPS with an additional $102 million.

While the increase in State revenue is vital to avoid additional cuts, the new funding is the equivalent of the loss in one-time savings from FY16 debt restructuring and the increase in debt service, which diverts General State Aid away from the operating budget.

 

Federal Revenues

Federal revenues remain nearly level year-over-year and reflect formula-driven reimbursement for supplemental services provided to students.

 

Pension Burden Accelerates in FY17

Pensions continue to be the single largest driver of CPS’s structural deficit. The CPS required contribution to the Chicago Teachers Pension Fund (CTPF) jumps to $733 million in FY17, from $688 million in FY16. CPS’ contribution is the equivalent to over $1,700 per student, or over 13 percent of the operating budget. CPS has paid nearly $2 billion towards pensions over the last three years, money that could have gone to our classrooms.  The State recently passed $215 million in support to fund the normal cost of the District’s teacher pension obligation, acknowledging the need to equitably fund teachers’ pensions across the state.

 

Chart 2:  CPS’s Required Employer Contributions to CTPF Grows Significantly ($ in millions)

Chart 2: CPS Required  Employer Contributions to CTPF Grows Significantly ($ in millions)

Note: Chart above assumes $215M FY17 State normal cost contribution continues into future years

 

Chart 3: State Pension Inequity Remains Dramatic

Chart 3: State Pension  Inequity Remains Dramatic

 

CPS was encouraged that Springfield has acknowledged the need for pension parity for the first time. In June, Springfield agreed to supplement the district’s pension payment by $215 million in June 2017. Although the measure is contingent on approval of broader pension reforms, the State’s leaders committed to providing this funding, and if it were not included in CPS’ budget, would result in painful cuts to classrooms.

We will continue to work with our partners in Springfield to achieve pension parity and education funding reform.

 

Capital Budget Overview

Under the leadership of Mayor Rahm Emanuel, CPS and the Board of Education have provided over $1.7 billion since FY12 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 has been done to ensure students have a high quality learning environment to support their education.

Earlier this year, the fiscal uncertainty CPS faced precluded the District from releasing a comprehensive capital plan. Since then, however, support from Springfield has given CPS the ability to balance its operating budget and put forth a capital plan that addresses many of the District’s needs.

In FY17, CPS will be making much-needed investments in schools’ infrastructure and capital needs. The FY17 budget for Chicago Public Schools includes a capital plan totaling $338 million for school repair, improvement, modernization, and overcrowding relief.

This year’s capital budget includes $266 million of funding provided by CPS through bond financing, and $72 million from the City of Chicago and Federal E-Rate funding. The $266 million of CPS funding represents a significant increase from the $90 million proposed for FY17 in last year’s 5-year plan. This increase is due primarily to the new Capital Improvement Tax levy approved by the Board and passed by the City Council in 2015.

Later this fall, the District will return to the market to secure funding for additional projects that will not only address overcrowding and deferred maintenance, but also complete the District’s efforts to modernize schools’ online infrastructure, air conditioning projects and playlots for every child in the city. The District anticipates announcing this supplemental capital plan later this fall.

The Capital Improvement Tax (CIT) levy ­­­­is an annual property tax levy dedicated exclusively to school construction projects. In 2003, the Illinois legislature in Springfield gave Chicago the right to levy a $45 million special property tax, or Capital Improvement Tax levy, to help with school modernization. However, in all those intervening years, the City never followed through. Last fall, Mayor Emanuel and the Chicago City Council passed this Capital Improvement Tax levy for CPS, and it will generate approximately $45 million a year in revenue. The District will seek to maximize this new revenue stream beginning in FY17.

As of the FY17 budget release, CPS is working to determine the total amount of bond proceeds that can be raised against the CIT levy. As such, this capital budget includes only $233 million in CIT-bond funded projects. (An additional $33 million from CPS’ July bond issuance will be used to fund FY17 capital projects.) CPS expects to issue a supplemental capital budget in the fall to account for the remainder of the proceeds. This will give CPS additional time to receive community input and further prioritize the projects funded by bond proceeds.

 

Debt Budget Overview

CPS Bonds Pay for Majority of Capital Program

In addition to seeking outside funding to support the capital plan, CPS has also made an annual commitment of its own resources to these long-term projects by issuing bonds, which are paid back over time. CPS currently has $6.9 billion of outstanding long-term debt and the FY17 budget includes appropriations of $563 million for debt service. 

The largest source of revenue we use for debt service on bonds is General State Aid, also a key source of funding for our operating budget. As we continue to borrow money to make capital investments in our schools, debt service will take an increasing share of GSA. Even if the state provided just enough funding to keep GSA level, instead of the steady decline we have seen since FY09, debt service will consume 44% of unrestricted GSA by FY21.  This path of unsustainable borrowing must be addressed through equitable, growing state funding on which CPS can rely.

 

Chart 4: Debt Service will Consume 44% of GSA by FY21

Chart 4: Debt Service will  Consume 44% of GSA by FY21

 

Conclusion

​As a result of the June compromise in Springfield, CPS management efficiencies and participation from Chicago taxpayers, CPS is able ensure classrooms have the resources to build on the tremendous academic gains of recent years, and do not introduce new per­pupil funding cuts.

CPS will continue to do its part to make reductions away from the classroom, and will work with our leaders in Springfield on a long-term solution that will end pension inequity and reform the state education funding formula.

Appendix I: FY16 Operating Budget Financial Performance
FY16 Projected Results: Very Little Gap Remains Between Budget and Spending

CPS projects that it will end FY16 spending $5,467 million, or 96 percent of the $5,691 million budget.  

 

Appendix I Table 1: FY16 End-of-Year Estimates

($ in millions) Changes: Favorable/(Unfavorable)

FY 16 Budget

FY 16 Estimate

Change FY 16 Est v. Bud

Revenue

Property Tax

2,307.8

2,307.8

0.0

Replacement Tax

207.8

185.1

(22.7)

Replacement Tax for Debt Service

(58.3)

(58.3)

0.0

TIF surplus

87.2

103.5

16.3

All Other Local

158.1

155.4

(2.6)

Total Local

2,702.6

2,693.5

(9.0)

GSA

952.2

952.2

0.0

GSA for Debt Service

(297.5)

(297.5)

0.0

One Time Debt Funds

254.6

254.6

0.0

All Other State

668.0

666.3

(1.7)

Total State

1,577.3

1,575.6

(1.7)

Federal

852.6

830.7

(29.1)

Unrealized Pension Revenues

480.0

0.0

(480.0)

Investment Income

0.1

0.2

0.1

Reserves

79.2

185.2

106.0

Total Resources

5,691.8

5,285.2

(406.6)

 

 

 

Expenditures

5,691.8

5,467.2

(224.6)

General Funds

4,373.4

4,300.0

73.4

School-Retained Funds

351.1

307.2

43.9

Grant Funds

967.3

860.0

107.3

 

 

 

Net Surplus/(Deficit)

0.0

(182.0)

(182.0)

 

 

 

 

 

Revenues

In total, FY16 revenues are $407 million below budget.  This is explained by the budgeted pension revenues of $480 million that did not materialize, as well as lower than expected replacement taxes and federal revenues, slightly offset by higher than expected TIF revenues.

 

Local Revenue Below Budget

Local revenues are expected to come in $9 million below budget, as higher than expected TIF revenues were not able to fully offset the decline in Replacement Taxes.

The Replacement Tax (PPRT), based on state Corporate Income Taxes, came in significantly below budget as a result of an error in the State calculation impacting distributions since 2014.  The State has been distributing PPRT at incorrect levels, which resulted in an FY16 budget based on inaccurate information. The State corrected the error in FY16, and as a result our actual PPRT revenue was revised lower to account for the correct distribution amounts.

TIF surplus was budgeted at $87 million but will come in at nearly $104 million, $16 million above budget. CPS received a spike in TIF funding because the surplus was greater than expected and some FY15 payments were received in FY16.

 

Unrealized Pension Revenue

CPS budgeted $480 million in projected revenue associated with State pension equity. While the revenue was not received in FY16, the State committed to holding the CPS GSA allocation flat in FY17, as well as providing over $100 million in a new equity grant, an increase in Early Childhood funding of $29 million and $215 million in pension support.

 

Expenditures

CPS expects to end FY 16 spending $225 million below budget as a result of the multiple savings initiatives in FY16.

  • $33 million in central office personnel reductions, which annualizes to $45 million in FY17
  • $85 million in SBB reductions ($120 million annually), with nearly $50 million mitigated by the reprioritization of grant funds
  • $30 million in savings through three District-wide furlough days, and
  • $45 million in end-of-year spend reductions

 

Appendix II: FY17 Summary Charts

Salaries and benefits (including pension costs) to support the positions make up nearly 67 percent of the budget (with more in practice, when charter, early childhood and other program spending is taken into account). 

 

Appendix II Chart 1: Salaries and Benefits Make Up 67% of the Budget

Appendix II Chart 1: Salaries  and Benefits Make Up 67% of the Budget

*CPS is the only district in the state required to pay its own teacher pension costs

 

Appendix II Chart 2: Of the 37,091 Positions, over 97% Directly Support Schools

 Appendix II Chart 2: Of the 37,091  Positions, over 97% Directly Support Schools

 

Appendix III: Major Changes from FY16 Projected Expenditures to FY17 Budget


Account

FY2015 Expenditures

FY2016 Projected Expenditures

FY2017 Proposed Budget

Salary

$2,578,509,151

$2,588,428,026

$2,349,877,067

Benefits

1,354,344,716

1,341,095,431

1,361,217,718

Contracts

1,233,613,396

1,147,644,957

1,129,333,634

Commodities

265,934,729

250,984,377

248,866,792

Equipment

43,574,489

36,610,543

24,450,509

Transportation

103,188,443

93,671,468

98,438,806

Contingencies

2,697,266

8,726,535

247,687,718

Others

4,369

10,135

1,000

Grand Total

$5,581,866,559

$5,467,171,473

$5,459,873,245

 

Salaries and Benefits. 67 percent of CPS’s budget is spent on salaries and benefits. Charter schools, which also spend the majority of their budget on salaries and benefits, are funded through the “Contracts” accounts in the CPS budget. Taking all spending into account, salaries and benefit costs drive the CPS budget. The reduction to the FY16 salary budget reflects the closure over 400 central office positions as well as budgeted savings related to vacant positions and an anticipated CTU contract, while the growth in benefits is driven by a $45 million increase in pension obligations, partially offset by the reduction in non-union pension pickup.

Contracts. This category includes tuition for charter schools and private therapeutic schools and payments for clinicians - such as physical therapists and nurses - that are not CPS staff. This category also includes early childhood education programs provided by community partners. In addition, this category includes repair contracts, legal services, waste removal janitorial services, and other services. The reduction to the FY17 budget is due to continued district-wide cost reductions in department budgets for items such as professional development and other professional services.

Commodities. Commodities include spending on items such as food and utilities, with these two categories making up the largest share, as well as instructional supplies such as textbooks and software, and other supplies, such as postage, paper, and the like. The FY17 budget is down slightly from FY16 expenditures as schools transfer funds into these accounts throughout the year.

Equipment. Equipment pays for the cost of furniture, computers, and similar other non-consumable items. The equipment budget is down from FY16 as, like commodities, schools transfer funds in equipment account for purchases throughout the school year. 

Transportation. The cost of bus service is the vast majority of the Transportation budget, but it also includes costs for CTA passes and reimbursement that we are legally required to provide. Transportation costs are up slightly from FY16 expenditures as bus route optimization is not fully able to offset inflationary pressures and contractual increases.

Contingencies. This account includes three categories of items. The first represents funding that has been budgeted but not yet allocated to the account or unit where it will be spent. Under the SBB system, schools are not required to allocate all of their funds, but can hold some in contingency while they determine how they want to spend it. Similarly, we centrally hold grant funds in contingency, particularly if the grant is not yet confirmed. Spending should rarely take place from contingency accounts, which is why the budget is significantly higher than the actual expenditures. If these funds are spent at all, they are transferred to other budget lines first. Lastly, interest expense related to our operating line of credit is included in this category, and expected to grow to $34 million in FY17.

 

 

 

Page Last Modified on Monday, August 22, 2016