Chicago Public Schools Fiscal Year 2014 Budget

Budget Overview

Budget Overview

 

Chicago Public Schools’ last two budgets have described the fiscal challenges facing the district, and have looked forward with trepidation to FY2014: we have known since FY2011 that we would face an enormous pension cliff in FY2014, and that it would be impossible to absorb without pain.  For the past year, we knew we faced a $1 billion deficit in FY2014, in large part driven by the dramatically higher pension expense. We knew we needed state action to address the pension cliff and to provide financial stability to the district. 

And now, with no state action, that pension cliff and enormous deficit are upon us.  We must present a balanced FY2014 budget that still strives to fulfill our vision for every student in every neighborhood to be engaged in a rigorous, well-rounded instructional program to graduate prepared for success in college, career and life.   To do this, we will continue to change the way we operate to focus our resources, cut non-essential spending, and streamline non-classroom departments.  We will use reserves to close the budget gap, but even with that, we cannot balance the budget without a reduction to schools.  We know that this is painful and we have done what we can to minimize it, but there were no other options. 

 

Despite these challenges, we must continue to invest our dollars in our strategic priorities.  The FY2014 budget provides a solid foundation of support for “The Next Generation: Chicago’s Children,” the district’s 2013 – 2018 Action Plan to achieve our vision.  The Plan includes a detailed Framework for Success, which is built on five pillars.  Investments in these pillars will ensure we achieve our vision.

 

THE NEXT GENERATION: CHICAGO’S CHILDREN

 

Pillar 1:  High standards, Rigorous Curriculum and Powerful Instruction for all students

  • Invest $15 million and Establish Full Day Kindergarten as District-wide Policy.  In the past, full day kindergarten was not available to every child.  Some schools chose to offer it, some schools received extra funding to support it, but there was no consistency.  In February, CEO Byrd-Bennett announced that starting in the Fall 2013, Full Day Kindergarten would be available district-wide to all 30,400 kindergarten-age children.  This represents an investment of $15 million. In addition, the district also allocated another $15.4 million from the FY 13 Supplemental Capital Budget to upgrade or add space for full day kindergarten classrooms.
  • Add $7 million investment in Magnet, Gifted, and Talented Programs.  The FY 14 budget includes $60 million in total to provide specialized programming for 45,460 students.  We added $7 million to provide 18 new Science, Technology, Engineering, and Math (STEM) and International Baccalaureate (IB) programs in Welcoming Schools.
  • Launch “Chicago: Ready to Learn!” Pre-K Initiative.  To better meet the early education needs of young children in Chicago, CPS and the Chicago Department of Family and Support Services launched Chicago: Ready to Learn!, aimed at ensuring that Chicago is investing in high-quality programs for young children, birth to age five. Through this initiative, quality early childhood programs will be available across the city to meet the unique needs of all communities.  An additional $2 million was added to the existing Early Childhood budget to support program expansion in FY2014, which will provide access for an additional 700 children.

 

Pillar 2: System of Supports that Meet Students’ Needs.

  • Expand Safe Passage by $9 million to further support students’ safety as they travel to and from school.   Safe Passage is a proven effective program which uses community workers and Parent Patrol volunteers to ensure routes to and from school are safe.  In FY2014, approximately 61,000 students will be in schools served by Safe Passage, an increase of over 30,500.  The expansion will serve students attending Welcoming Schools.
  • Promote good attendance through $5.4 million in supports.  Each school will be required to organize a team to identify chronically absent students and provide interventions, such as counseling or academic support.  Schools with attendance rates below 95% will create attendance plans that reflect community partnerships to provide additional services to students.  Schools with the highest absentee rates will be targeted for further services.  An additional $5.4 million is provided in FY 14 to support this work.
  • Add $13.9 million to fund 11 more Options schools to re-engage drop-outs and provide a path to a high school diploma.   Historically, the district has referred to these types of schools as “alternative” schools, but we recognize that these programs provide quality “options” for students who need a different setting to achieve their potential.  To that end, we are investing $13.9 million to add 2,692 seats. 
  • Create new Office of Strategic School Supports with $20 million investment.  This new department will provide high-need, academically struggling schools with comprehensive and coherent support services and resources required to dramatically improve and sustain student achievement.  The Office will support 22 district schools in addition to the 15 schools that will receive $34.5 million in state School Improvement Grants in FY2014.   An additional $32.5 million was included in the FY2013 Supplemental Capital budget to provide IT upgrades, air conditioning, ADA improvements, building and cosmetic repairs.

 

Pillar 3: Engaged and Empowered Families and Communities

  • Create five new Parent Engagement Centers to help address parents’ school-related needs.  We have invested $700,000 to establish five collaborative-based Parent Engagement Centers, where parents can access resources (e.g. technology, early childhood guidance, college planning guidance/financial aid support, CPS applications, etc.) as well as Parent University programming and Parent Support services to ensure parents receive the support they need.
  • Expand Safe Haven program.  Currently 60 churches provide programming for students during school breaks and after school.  An additional $290,000 will add 40 more churches to the program and provide 1,500 more children with access to these services.  

 

Pillar 4: Committed and Effective Teachers, Leaders and Staff

  • Provide $4.2 million to support the new teacher and principal evaluation systems.   The new REACH (Recognizing Educators Advancing Chicago students) teacher and principal evaluation system will be implemented this year.  These new evaluation systems require employees to deliver results and will also support their professional growth. 
  • Invest an additional $3.6 million to develop aspiring principal candidates.  Through the Chicago Leadership Collaborative (CLC), we have partnered with four of the nation’s strongest principal preparation programs to develop a pool of aspiring principal candidates.  Candidates will receive intensive coaching, mentoring and training and will be evaluated regularly.  With the new FY2014 investment, CPS will budget $8.7 million to provide opportunities for principal interns.
  • Invest an additional $3.5 million to develop and train current school leaders.  The Chicago Executive Leadership Academy (CELA) contains a systemic curriculum for current school leaders, including induction, on-boarding and coaching of new principals; supporting “rising” principals in accelerating their student growth; and finally, working with experienced, successful principals to expand their impact through career advancement opportunities.  In total, we will provide $6.4 million for these academies to provide professional development for principals.

 

Pillar 5: Sound Fiscal, Operational and Accountability Systems

  • Released draft 10-year educational facilities master plan.  Being developed in partnership with the community, this plan will allow us to invest in the types of specialty schools and programs that residents want and to maintain the optimal number of seats to serve students efficiently.  The draft plan has helped guide the FY2014 – FY2018 Capital Plan.  In FY 2014, we will invest $308 million in repair, renovation, and improvements in our schools, with an estimated investment of $150 million per year for FY2015 – FY2018.  The complete capital plan is described in the Capital chapter.  Detail on the overall plan and each project is available on the Capital plan website, www.cps.edu/capitalplan
  • Invest $68 million to support students’ transition to Welcoming Schools.   During FY2013, CPS closed 49 schools and one program, and began the process of transitioning those students to their new Welcoming Schools.  This effort will help the district serve students more efficiently and effectively, and allow us to focus our limited resources in fewer schools to provide a better education experience.  Students in Welcoming Schools will benefit from investments in additional libraries and art rooms, increased access to technology such as iPads and expanded internet bandwidth, air conditioning, and the launch of new IB, STEM, and fine arts programs, as well as have access to additional academic and social and emotional supports to ensure a smooth transition.  In total, $155 million in capital investments started in FY2013 plus $78 million in program and support investments ($10 million in FY2013) will support Welcoming Schools.
  • Launched new Student Based Budgeting system to provide more flexibility for principals to meet student needs.  In the past, schools have been given rigid guidelines about how district dollars needed to be allocated in their school budgets.  Much more of a school’s budget was defined by central office rather than by principals who know their students best.  The new Student Based Budgeting system provides core instructional funding on a per student basis, that principals can spend on staff, materials, technology or other resources that best meet the needs of their students.   This model has been successfully implemented in many other large school districts, and is described more fully in the Schools chapter.

 

FY2014 BUDGET: THE CRISIS THAT COULD HAVE BEEN AVOIDED

 

As we noted at the outset, we have known for years that the combination of inadequate and declining state funding with a growing and unfair pension burden would create a fiscal crisis.  It first threatened the district in 2010, when the pension contribution was nearly $330 million and growing.  At that time, action in Springfield staved off the doomsday scenario by reducing and limiting the pension payment to about $200 million per year.  But since that time, structural changes that would have provided financial stability—through pension reform and full state education funding—have not occurred.  As a result, CPS is faced with a $1 billion deficit, driven in large part by a $405 million increase in pension contributions. In FY2014, CPS will be required to pay $613 million to the pension fund, or 11% of our operating budget.  The pension costs will continue to grow into the future. By 2032, CPS will be spending over $1 billion to support pensions.  But it doesn’t take until 2032 to realize that pensions are crowding out spending on instruction and supports for students:  that is our reality now.   

 

Chart 1: CPS Contribution (This reflects the gross contribution set out in the actuarial report. It does not reflect the offset permitted in statute for any state contribution.) to the Chicago Teachers Pension Fund Increases Every Year

 

Before we describe in more detail the challenges and solutions for FY2014, we begin with an update on FY2013 performance.

 

FY2013 Projected Results: Better than Budget, but Still a Deficit

CPS expects to end FY2013 with a substantial deficit, even though our performance was better than budget.  The FY2013 budget anticipated a $431.8 million shortfall, which was closed  with reserves.   We expect to end the year with a $272.6 million shortfall, which, similarly, will be filled with reserves.

 

Table 1: FY2013 Results

 

FY 13 Amended Budget

FY 13 Estimated

FY 13 Change

Revenue

 

 

 

Property Tax

2,052.8

      2,052.8

                -  

Replacement Tax

          105.7

          128.3

            22.6

All Other Local

          134.4

          134.4

                -  

Total Local

       2,292.9

      2,315.5

            22.6

State

       1,593.2

      1,645.2

            52.0

Federal

          910.8

          891.7

         (19.1)

Investment Income

               3.5

              3.5

                -  

Total Revenue

       4,800.4

      4,855.9

            55.5

 

 

 

 

Total Expenses

       5,232.2

      5,128.5

       (103.7)

 

 

 

 

Net Surplus/(Deficit)

(431.8)

(272.6)

159.2

 

 

 

 

Use of Reserves

 

 

 

General Unrestricted

          348.9

          229.8

 

SGSA

            57.8

            17.8

 

Tort

            25.0

            25.0

 

Total Reserves Appropriated

          431.8

          272.6

 

 

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.  The state received a windfall in Corporate Income Tax as a result of one-time changes at the federal level, which then translated to additional Replacement Tax for CPS.  Since the increase was the result of a one-time change at the federal level, we do not anticipate Replacement Tax revenues to continue at the higher level. 
  • State caught up on past due payments.  In July, the state made an additional $50 million payment for money owed on various block grants.  For several years, as detailed in the Revenue and Fund Balance chapters, the state has had a backlog of payments owed to CPS.  The budget assumed that the state would maintain the same backlog, neither fall further behind or catch up.  Because the state caught up, we will end FY2013 better than budget.
  • Disciplined  management reduced expenditures.  We expect lower than budgeted costs in utilities, food, health care, and transportation due to new procurement and other savings initiatives.  We also expect salary costs 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 onto discretionary 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 (This process and methodology is described more fully in the Schools chapter).  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 FY2013, we estimated the amount in the reserve would be $57.8 million and appropriated that amount to schools to spend.  However, at the end of FY13, we are estimating that they will have spent only $17.8 million.  This means that schools will have that $40 million to spend in FY2014 but that FY2013 spending is $40 million below budget.

 

Property Tax Revenues are Volatile.  While we are projecting results to be better than budget, we still anticipate ending FY2013 with a deficit and having to draw down reserves.   One other factor could significantly change our projected end-of-year results: the timing of property tax receipts.  In 2012, Cook County changed the due date for the second installment of property taxes from late in the calendar year to August 1.  That meant that CPS began receiving property tax receipts much earlier in the year than had been true for the past 30 years.   This created a reporting challenge, because CPS recognizes revenues received through July 30 as received within the fiscal year ending June 30.  Therefore, depending on when tax payments are made, an August 1 due date can shift hundreds of millions of dollars of revenues between CPS fiscal years. 

 

In 2012, it meant that $244 million of property tax revenues that had been budgeted in FY2013 were received during the FY2012 revenue recognition period.   Significantly, $185 million was received on July 31, 2012, just one day past our revenue recognition period.  Had those receipts come in just one day earlier, our FY2012 surplus would have been even greater.  Similarly, $113 million came in on July 27.  Had those come 5 days later, they would not have been recorded in FY2012.  With only one year of experience with the new due date, this volatility poses significant challenges for projecting property tax receipts for FY2013.  Our budget is projecting receipts on par with July 2012.

 

FY2014 Budget Takes Steps to Close $1 Billion Deficit, But Pension Cliff Increases Reliance on Reserves

The FY2014 budget includes appropriations of approximately $5,592.3 million, compared to the $5,128.5 million we expect to spend in FY2013—a $463.8 million increase that can be explained almost entirely by the increase in pension costs and collective bargaining costs.  Revenues are budgeted to be up by $94 million next year, but this increase is dwarfed by the amount of the pension cost increase. 

 

Table 2: FY2014 Proposed Budget

 

FY 13 Estimated

FY 14 Budget

FY 14 Change

Revenue

 

 

 

Property Tax

      2,052.8

            2,141.4

88.6

Replacement Tax

          128.3

               105.5

(22.8)

All Other Local

          134.4

               169.7

35.3

Total Local

      2,315.5

            2,416.6

101.1

State

       1,645.2

            1,621.5

(23.7)

Federal

          891.7

               908.4

16.7

Investment Income

              3.5

                   3.1

(0.4)

Total Revenue

      4,855.9

            4,949.6

93.7

 

 

 

 

Total Expenses

      5,128.5

            5,592.3

          463.8

 

 

 

 

Net Surplus/(Deficit)

(272.6)

(642.7)

 

 

 

 

 

Use of Reserves

 

 

 

General Unrestricted

          229.8

               562.6

 

SGSA

            17.8

                 41.3

 

Tort

            25.0

                 38.8

 

Total Reserves Appropriated

          272.6

               642.7

 

 

Nearly $700 Million in Cuts Away from the Classroom Since FY2011

In FY2011 – FY2013, we made nearly $600 million in cuts away from the classroom, as shown in Table 3.    We have reduced custodial and engineering expenses by 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.

 

Table 3: Cuts Away from the Classroom

 

FY11

FY12

FY13

FY14

TOTAL

Administration

17.2

107.0

12.0

33.7

169.9

Operations

14.1

127.0

116.0

59.5

316.6

Programs

0.0

87.0

49.0

18.4

154.4

Debt Obligations

44.0

--

--

--

44.0

TOTAL

75.3

321.0

177.0

111.6

684.9

 

The FY2014 budget continues the pattern and makes an additional $112 million in cuts, increasing the total to nearly $700 million.  We are again reducing the costs to maintain our facilities, have restructured lunchroom staff to reflect industry standards, and reduced food costs through more competitive pricing.  Our efforts to improve transportation efficiency have continued, with increased use of less-costly para-transit vans, and central management of bus aide staff.  We are reducing the number of central office staff in areas such as Accounting, Information Technology (IT), and Talent.  We are also saving money by reducing costly consultants in areas such as Facilities Operations and IT and adding CPS staff.  Central office program reductions reduce administrative positions and also continue efforts to rationalize distribution of funds.

 

Table 4: FY2014 Make Additional Cuts Away from the Classroom


Reduction

Amount
($ millions)

Operations Total

$59.5

Identify new approach to facilities management (cleaning, etc.)

$10.0

Continue to reduce engineers and outside spending on maintenance

$22.0

Reduce lunchroom staff based on industry standards and observations

$11.0

RFP for new food provider(s)

$10.0

Paratransit vans for routes with few riders

$1.8

Bus aide rationalization

$4.7

Administration Total

$33.7

Reduce  staffing in Accounting and Treasury

$1.5

Reduce total headcount by 28, and convert 50 consultants to employees to reduce cost

$3.7

Various central admin consolidation moves

$7.5

Reduce number of networks and staff to support

$1.6

Programs Total

$18.4

Central office streamlining/move, improved supplier mgmt, etc.

$19.4

Consistent staffing of 1 supplemental magnet cluster position  per school; completes rationalization started in FY13, with two-year phase in.

$8.6

Reduce limited number of selective enrollment positions for schools with large SBB increases

$0.7

Reduce school allocation  behavioral intervention supports

$1.5

Schools pay for athletic director

$1.3

Move LPN Program to school-based model,  eliminate career service unit ; Reduce training on classroom management; shift funding for counselors, slow expansion of dual credit, dual enrollment services

$1.6

In Early Childhood department, shift funds for teen parenting program; reduce central office staff by 8  and spending on Professional Development

$1.8

Various other reductions in central office positions and non-personnel costs

$2.9

 

Continue to Reduce Headcount Outside the Classroom. 
The FY2014 budget continues the pattern of reducing staff outside the classroom to free up resources.  Since FY2009, we have reduced Central Office headcount by 34%. 

 

Chart 2: Central Office Headcount Continues Pattern of Decline

 

Limited Opportunities for Increased Resources.  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.  The increase shown in the FY2014 budget is solely due to funds carried forward from the prior year.  Our base funding has declined. 

 

State funding is also driven by formula. In FY2014, the state stopped its pattern of year-over-year cuts in education funding and held it flat.  That helped the deficit from growing even larger, but state funding is still below FY2008 funding levels.

 

As discussed above, Replacement Tax increased in FY2013 due to a one-time event that will not recur in FY2014; therefore, we see a decline in Replacement Tax revenue. 

 

Our other local sources of revenue appear to be increasing, but this is misleading because those sources are increasing in areas that are not available for general use.  School-generated revenue is increasing; this is money that the schools generate and spend for their own purposes.  It remains at the school level.  As discussed in the Schools chapter, we have changed the way pensions are paid for charter schools.  We are now distributing 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.

 

To help address the budget gap, we have turned to the only revenue source that we have ability to impact, although even that is limited: property taxes.  The FY2014 budget proposes raising the property tax to the cap, which will generate $89 million additional dollars.  The average homeowner of a $213,000 house will pay approximately $51 more per year. 

 

School Budget Reductions Were Necessary.   As much as we have worked to streamline operations, cut administration, and improve our revenues, with a $405 million increase in pensions, we had no alternative but to make some reductions in school budgets.  Overall, we reduced core instruction budgets—the funding allocated through Student Based Budgeting (SBB)-- by about 3.5%. This reduced school funding by $68 million.   We have tried to mitigate the impact, by releasing SGSA funds earlier than ever before (a budget process improvement that will be permanent), and providing some funding where the transition to SBB was particularly problematic (described more fully in the School Funding Formula appendix).  Yet, we recognize that the reductions to schools are real but unavoidable.

 

Maximized use of one-time resources to minimize impact to schools.  As outlined earlier, we expect to have greater than expected reserves in FY2013 as a result of changes that occurred during the year to increase our revenues and decrease expenses.  We also have unexpected reserves because of the property tax timing adjustment and state catch-up payments that occurred in FY2012.  Because these revenues were captured in the FY2012 budget after spending had been completed, they contributed to an increase in reserves.  Thus, for FY2014 we have available $563 million in general unrestricted reserves.  We will also draw down on other reserves, including the Tort fund reserve (as we did in FY2013).  Finally, we are tapping into our Debt Service Reserve for the first time ever to cover the cost of increasing debt service, so that we do not have to dedicate as much General State Aid to debt costs this year. 

 

Table 5: Available Reserves Tapped to Balance FY2014 Budget


Reserve Detail

 EOY FY 12

 Used in FY 13

 EOY FY 13

 Available for FY 14

General Unrestricted

           792.5

          229.8

               562.7

          562.7

Tort Fund Balance

             92.7

            25.0

                 67.7

             38.8

SGSA

             59.1

            17.8

                 41.3

             41.3

Not Available for Gap Closing

          124.5

               -  

               124.5

                -  

Operating Reserve Total

        1,068.8

          272.6

               796.2

          642.8

Debt Service Reserve Total

           255.0

              6.0

               249.0

             53.8

Total Reserves

        1,323.8

          278.6

            1,045.2

          696.6

 

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 FY2015 and FY2016 show that deficits in the range of $1 billion will continue, even assuming funding from the state and federal government remains flat and spending growth is modest.

 

Table 6: Future Financial Outlook Grim

 

FY 14 Budget

 

FY 15 Projection

FY 15 Change

 

FY 16 Projection

FY 16 Change

Revenue

 

 

 

 

 

 

 

Property Tax

       2,141.4

 

      2,157.4

16.0

 

    2,229.4

72.0

Replacement Tax

          105.5

 

         105.5

0.0

 

       105.5

0.0

All Other Local

          169.7

 

         151.7

(18.0)

 

       151.7

 

Total Local

       2,416.6

 

      2,414.6

(2.0)

 

    2,486.6

72.0

State

       1,621.5

 

      1,461.5

(160.0)

 

    1,453.5

(8.0)

Federal

          908.4

 

         908.4

 

 

       908.4

 

Investment Income

              3.1

 

             3.1

 

 

           3.1

 

Total Revenue

       4,949.6

 

      4,787.6

(162.0)

 

    4,851.6

        64.0

 

 

 

 

 

 

 

 

Appropriations Base

       5,592.3

 

      5,592.3

 

 

    5,685.1

 

 

 

 

 

 

 

 

 

Net Surplus/(Deficit)

(642.7)

 

(804.7)

 

 

(833.5)

 

 

 

 

 

 

 

 

 

Cost Increases

 

 

 

 

 

 

 

Pension Increase

 

 

18.8

 

 

19.4

 

Salary Increases

 

 

93.8

 

 

114.9

 

Health Care inflation@3%

 

 

11.0

 

 

11.0

 

School action savings (net)

 

 

(30.8)

 

 

(2.0)

 

Total Cost Changes

 

 

92.8

 

 

143.3

 

Revised Appropriation

5,592.3

 

5,685.1

 

 

5,828.4

 

Net Surplus/(Deficit)

 

 

(897.5)

 

 

(976.8)

 

 

FY2014 SUMMARY INFORMATION

Detailed information about the FY2014 budget is available in the various chapters of this document and on the website (www.cps.edu/budget).  Here, we provide a high level overview of the budget detail. 

 

Budgets by Department

Table 7 provides a high-level spending overview by the top level organization for FY2013 and FY2014.    As described in the Organizational Overview chapter and shown in the organization chart, these units represent the top level of the organization; all other areas report up through these units. 

 

Table 7: Comparison of FY2012 – FY2014 by Major Department


Name

FY 2012 Expenditures

FY 2013 Expenditures as of 6/30/2013

FY 2014 Proposed Budget

Accountability Total

14,846,732

14,332,120

14,474,409

Board of Trustees

1,234,907

1,061,821

1,154,854

Chief Administrative Office Total

557,010,546

620,051,486

816,268,908

Chief Executive Officer

845,548

364,901

312,547

Chief Teaching & Learning Office Total

267,208,777

241,861,753

262,187,987

Chief of Staff Total

2,236,728

3,194,567

4,464,653

Communications Office Total

1,632,284

2,033,444

1,849,690

Diverse Learner Supports & Services Total

192,029,191

225,185,107

249,193,492

Family & Community Engagement Office Total

5,239,814

5,847,408

8,861,575

Innovation and Incubation Total

6,592,466

28,248,443

50,406,758

Inspector General

1,500,461

1,788,452

1,801,854

Law Office Total

11,984,012

11,499,065

11,736,267

Network Offices Total

27,573,476

30,650,980

21,999,576

Network Support

1,964,408

2,183,104

1,084,025

Pensions and District-Wide Set-Asides Total

77,609,780

84,798,628

588,328,630

Public and Community Relations Total

1,082,230

1,310,387

2,182,329

School Collaboratives Total

3,617,261,371

3,777,322,623

3,448,889,375

Strategic School Supports Services Total

3,703,016

5,521,124

19,183,273

Strategy Management Office

0

6,255,291

19,333,028

Talent Office Total

35,942,996

34,972,423

68,560,746

Grand Total

4,827,498,745

5,098,483,127

5,592,273,976

 

There are several areas that warrant further explanation:

 

School Collaboratives:  This is the total for all funds that are budgeted at schools.  But we must immediately caution against generalizations based on a quick review of the high level data.   Reorganizations, school closings, and budget changes all impact the year-to-year comparison.

 

  • Lunchroom workers and bus aides are no longer shown in school budgets.  These positions have been moved under central departments.  Bus aides will be managed centrally and will no longer be reflected in school budgets.  This accounts for approximately $20 million and over 930 positions.   Lunchroom workers are temporarily budgeted under the Nutrition department.  This means 2,400 positions and  $100 million that in the past would appear in school budgets are no longer reflected there.  This accounts for an apparent decline in school budgets, but is really just a transfer elsewhere.
  • Closed schools do not have FY2014 budgets.   This may seem obvious, but it affects the FY2013 to FY2014 comparisons.  The school budgets and spending for FY2013 are reflected, but are shown as zero for FY2014.  The funds from these schools have been reinvested in Welcoming Schools.  Some of these investments appear in Welcoming School budgets, but many do not because they are shown centrally, such as the increase for Safe Passage.  Therefore, school budget reductions overall are overstated and don’t reflect all the activity and support that schools receive.

 

Chief Administrative Office (CAO).  This area is responsible for major operational departments, such as Facilities Operations and Maintenance, Nutrition Support Services, Transportation, Safety and Security, Finance, among others.  While it appears that this area has a significant budget increase, in fact,  the budget decreases but reorganizations and transfers again make the year-to-year comparisons misleading.

 

  • Lunchroom workers and bus aides are shown in CAO departments now.  As discussed above, bus aide positions (over 930 and $20 million) and lunchroom workers (2,400 positions and $100 million) previously were budgeted and reported at schools.  For FY2014 we have budgeted these expenses at the department level. 
  • Safety and Security increases for Safe Passage.  An additional $8.3 million is being invested in Safe Passage this year in both Welcoming Schools and other schools.
  • Facilities, IT, Payroll, Finance and other department costs are down.  The number of positions are down as are other costs, for a net reduction.  Although not apparent from this table, the Corporate Accounting department appears to have a large increase.  This again is a transfer of the budget from one area to another.  Corporate Accounting has and continues to manage the School-Generated revenues, which are budgeted centrally at the beginning of the year and then provided to schools during the year.  Previously, this allocation was included under District-wide Set Asides.  It is being moved this year  to Corporate Accounting to facilitate the work in providing the dollars quickly and efficiently to schools.

 

Public and Community Relations.

 

  • Competitive grant unit moved.  The budget for Public and Community Relations appears to be increasing, but it reflects the department’s new responsibility for securing competitive grants for the district.  Seven staff positions and associated costs were transferred into this unit and account for the apparent increase.

 

Chief of Staff

 

  • New responsibilities for the Back-to School Campaign added.  The Chief of Staff budget reflects a $405,000 increase as a result of taking on responsibility for the district’s back-to-school efforts.  This responsibility was previously part of the Communications Office.  The campaign budget also increased by $200,000 in FY2014. 
  • New costs from Chicago Teachers Union contract.  The new CTU contract called for the establishment of several new committees, including the Class Size Supervisory and Special Education Workload Reduction committees.  The contract also provided for funding for each of the committees, for a total of $1.0 million.  These costs are reflected in the Chief of Staff budget and are new expenses in FY2014. 

 

Budget by Account

Chart 3 and Table 8, below summarize what CPS spends its money on, showing actual expenditures for FY2012, expenditures through June 30, 2013 for FY2013, and budget for FY2014.

 

Chart 3: FY2014 Budget and FY2013 Expenditures by Account

 

Table 8: FY2012 – FY2014 Budget and Expenditures by Account


Account

FY 2012 Expenditures

FY 2013 Expenditures as of 6/30/2013

FY 2014 Proposed Budget

Salary

2,624,637,266

2,706,843,165

2,558,032,047

Benefits

837,484,251

883,051,361

1,248,406,981

Contracts

954,113,153

1,032,015,998

1,101,273,272

Commodities

288,187,152

298,430,939

257,035,106

Equipment

39,531,500

67,251,463

37,564,891

Transportation

108,961,125

109,945,899

111,776,198

Contingencies

33,440

938,066

278,185,481

Others

0

6,236

0

Grand Total

4,852,947,886

5,098,483,127

5,592,273,976

 

Salaries and Benefits.  The vast majority of CPS’s budget is spent on salaries and benefits—68%.  Charter schools, which also spend the majority of their budget on salaries and benefits, are funded through the “Contracts” line in the CPS budget.  Therefore, taking all spending into account, salaries and benefit costs drive the CPS budget.  The benefits line for FY2014 shows the $404 million pension payment increase.

 

Contracts.  This category includes tuition for both 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 the early childhood education programs that are provided by community partners.  In addition, this category includes repair contracts, legal services, waste removal janitorial services, and other services.

 

Commodities.  Commodities includes 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, janitorial supplies, and the like.  Commodities costs are going down year-over-year because of savings in food costs and utilities as a result of more competitive pricing and negotiations.

 

Equipment. Equipment pays for the cost of furniture, computers, and similar other non-consumable items.  The equipment budget is down substantially from FY2013 because it appears that schools have budgeted less for equipment than they spent last year.  This could be a result of the new principal discretion provided under Student Based Budgeting.

 

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 increasing slightly.

 

Contingencies.  This account includes two 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 new 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.  Perhaps they are waiting to confirm enrollment at the start of school or still deciding how best to use the dollars.  Similarly, we centrally hold grant funds in contingency, particularly if the grant is not yet confirmed or if the department that manages the grant has not yet determined which school or program will receive the grant.  Career and Technical Education grants are an example where the department allocates the grant funds for equipment, but not until after school starts.  Another example is the appropriation based on school-generated revenue, which was described above in the CAO section.  This is held in contingency until the revenue is verified and then will be released to the school.  No spending should take place from contingency accounts, which is why the budget is higher than the actual expenditures.  If it is spent at all, it is transferred to other budget lines first.

 

CONCLUSION

 

The FY2014 budget represents the best solution to a staggering financial challenge:  how to absorb a $404 million pension contribution increase with capped, flat or declining revenues at the same time we must invest in improving student outcomes.  We have made tremendous changes since FY2011 to cut costs away from the classroom.  We have used reserves to the maximum extent possible to keep reductions from the classroom.  But CPS cannot continue to absorb financial shocks like in FY2014.  We need parents, teachers, principals, community leaders and lawmakers to be our partners in finding lasting solutions -- including pension reform -- that will allow us to meet our financial challenges while maintaining critical investments for students.

 

Page Last Modified on Thursday, August 28, 2014