August 5, 2011
CPS CEO Jean-Claude Brizard announced today a proposed FY12 budget for the Chicago Public Schools that makes the difficult choices needed to close the $712 million budget gap while maintaining and investing new funding for academic programs that can boost student achievement and drive the district’s mission to create a world-class education for all children and graduate students college and career ready.
When the new CPS leadership team started in late May, they took immediate steps to identify cuts in Central Office administrative and non-classroom spending while laying out key budget priorities that invest in children, including the maintaining of classroom size and funding for magnet schools, school-based Culture of Calm, World Language Programs and Early Childhood Education.
Since then, CPS leadership and the Chicago Board of Education have announced a series of spending reductions, cost-saving initiatives and organizational efficiencies that help close the $712 million deficit while investing new dollars in students.
The new budget cuts include $320.7 million in reductions and $75 million in Central Office cuts we announced in June which reflect nearly $400 million in cuts that the new administration has approved.
Most recently, CPS announced a series of new investments in students above and beyond the commitment to core budget priorities announced in June. They included:
- Expanding All-Day Kindergarten for 6,000 more students
- Expanding Magnet School Programs for an additional 2,300 students
- Adding new state of the art security systems to 14 schools
CPS is also increasing AUSL teaching academies by 35% in order to help train teachers to work within the lowest performing schools where the greatest demands would be made on their time and resources. AUSL has a track record of improving student performance and serving our most challenging schools.
“Despite these challenging fiscal times, our children can’t afford to wait any longer for the world class education they deserve. We had to make some very difficult, but necessary choices in order to keep cuts as far away from the classroom as possible to ensure we are protecting investments we are making in our students to help make them college and career ready,” Brizard said.
This year, CPS faced a serious fiscal crisis as federal, state and local revenues all declined while expenses, including healthcare costs, teacher salary increases and debt service payments have been on the rise. Given the state’s financial status, CPS also anticipates that payments for state block grants will continue to be paid behind schedule. In addition, hundreds of millions in federal stimulus funding (ARRA) will no longer be available to help CPS fill budget gaps and fund important programs.
The CPS FY12 operating budget is expected to be $5.11 billion, up from $4.94 billion in FY11, an increase of $163 million dollars at a time when revenues are declining. Total appropriations will be $5.911 billion, which includes $391.1 million for capital expenditures and $409.9 million for debt service.
The ongoing deficit drivers include:
- $25.5 million jump in healthcare costs
- $35.5 million in step/lane salary increases for teachers
- $6 million in pension costs
The new CPS leadership team took immediate steps to address this deficit shortly after taking office in early June by making $75 million in cuts to Central Office administrative and non-classroom spending. Central Office and non-union staff will receive no salary increases for the third year in a row, in addition to having taken 21 furlough days in the last two years. Principals will also forego salary increases this year. The CPS leadership team took additional steps to cut spending and utilize revenues to reduce the $712 million deficit by $471 million.
The proposed budget includes an additional $107 million in cuts to Central Office and administrative functions. Among those reductions is $50 million in cuts to the Chief Education Office by consolidating departments and programs as well as eliminating duplicated resources across multiple departments responsible for academic programs and school supports. For example, five offices currently provide support services for summer learning programs and by consolidating these services CPS can reduce costs without impacting students. An additional $32 million in reductions will be made to the Network Offices. Over the next 60 days CPS will be taking the steps necessary to implement these cuts.
In the last three years, CPS has made significant reductions in Central Office spending and headcount. After the additional cuts in the FY2012 budget, the total Central Office spending now represents only 3 percent of the total CPS budget.
Another $100 million was reduced when the Chicago Board of Education elected to eliminate the 4% pay increase for collective bargaining units because of the district’s financial state. However, step and lane increases were maintained which ensured that approximately 75% of teachers would receive a raise this coming school year.
The deficit was further closed by raising property taxes to the cap. In December, the Chicago Board of Education filed notice with the County Clerk’s Office of its intent to raise property taxes to the cap in anticipation of continued declining revenues and increased expenses. The property tax increase will add $84 to the average home-owner’s bill each year and will provide CPS with over $150.3 million in funding to save critical academic programs impacting students throughout the district from being cut in order to close the deficit.
Without the $150 million in property tax revenue, CPS would need to make deep cuts to core programs and the negative impact on student academic success would be unavoidable. The district would be forced to make significant reductions in the following critical areas:
- Increase Class Size to 31 Students: 330,000 students impacted; $41 million cut
- Eliminate Supplemental Full-Day Kindergarten: 11,000 students impacted; $19 million cut
- 20% Reduction of Early Childhood Programs: 12,000 students impacted; $40 million cut
- Reduction Magnet School Supplemental Positions: 50,000 students impacted; $10 million cut
- 5% Reduction in Charter/Contract School Per Pupil Rate: 50,000 students impacted; $17 million cut
- 40% Reduction in Violence Prevention Initiatives: 40,000 students impacted; $13 million cut
- Approximately 945 teachers and full-time employees would be laid off or moved to part-time positions as a result of all cuts listed above.
Even with additional tax revenues, CPS leadership was still faced with making difficult program reductions of $86.7 million which the leadership team chose to do in areas that did not impact core priorities or that could be continued through school-based funding. These include programs for which costs could potentially be absorbed by school discretionary funding or eligible federal funds. Additional programs will continue to serve the same number of students but the student to counselor ratio will increase. Other operational efficiencies saved the district an additional $27 million.
After making the difficult reductions in spending needed to draw down the deficit by $471 million, the senior leadership team was still faced with making cuts to student learning and core programs within schools. By law CPS must establish a balanced budget that shows how it will close its deficit and end the fiscal year debt-free, making the choice a necessary one.
Rather than close the remaining $241 million gap by cutting essential programs that could impact the academic success of students for years to come, the leadership team has opted to bridge that gap by utilizing the Stabilization Fund. Although CPS will use its reserves to fund a portion of the coming year’s expenses, it will still maintain the required balance equal to 5% of expenses—this is the first time in two years that CPS has been able to maintain the Board of Education required reserve fund balance.
“We must continue to invest and protect funding for programs that help prepare them for success in college and a career. This is a critical mission for us and we have been very thoughtful about the choices we made in this budget to ensure that we can continue to support our schools in the vital work they do to drive our students toward academic success,” Brizard added. “We look forward to hearing from all of our parents, teachers, principals and community members as we continue to consider this budget in the coming weeks.”
CPS will be holding public hearings August 10-12 on the North, West and South Sides to hear from key stakeholders. Registration for each hearing takes place one hour before the hearing begins. The public hearings include:
- August 10th at 7PM: Lane Tech High School, 2501 W. Addision St.
- August 11th at 7PM: Westinghouse High School, 3223 W. Franklin Blvd.
- August 12th at 7PM: Simeon High School, 8147 S. Vincennes Ave.
Copies of the budget are available to review on the cps.edu website and hard copies are available for review within the Chicago Board of Education Office at 125 S. Clark. The district saved $15,000 in printing costs by making the proposed budget book available online this year, rather than printing additional copies.
After consideration of community and stakeholder feedback, the final budget will be presented to the Board of Education for a vote on August 24th.
Chicago Public Schools serves 409,279 students in 675 schools. It is the nation’s third-largest school district.