Chicago Public Schools approves budget without $200 million loan
The Chicago Board of Education approved the CHICAGO public school budget in 2025-2026 without contracting a high interest loan of $ 200 million, following advice from senior district officials not to do so in the midst of an already tense financial situation.
While a budgetary proposal of $ 10.25 billion was presented to the board of directors by district leaders earlier this month, several members appointed Johnson had openly rejected it because of its lack of commitment to cover a payment of pension of $ 175 million or allowed borrowed, a request for mayor Brandon Johnson and categorically rejected by the former district chief. The former school board resigned for the dispute and Martinez was dismissed in December.
The voting of 12-7 of Thursday, with abstention, took place in the context of a deficit of $ 734 million and only a few days after Johnson appointed the new member of the board of directors Ángel Vélez – a decision which arrived at a pivotal moment for the board of directors of the hybrid, which is now partially elected and partially appointed. The addition of Vélez gave the Board of Directors a majority group aligned with the mayor, hypothetically securing the simple majority necessary to spend a budget with the loan.
But two members of the board of directors appointed by the mayor – Ed Bannon of the District 1A and Anusha Thotakura of the District 6A – overthrowed their positions and voted for the budget in a last minute touch which fired hackles from the crowd.
“It was the best budget we could get,” said Bannon to journalists after the meeting, noting that he had made his decision after learning that there was not enough support for the board of directors for an amendment to the proposed budget that would borrow an option. “I wanted to vote yes for what was there.”
CPS officials were unable to make another budgetary presentation to the Council at a meeting Thursday, due to last minute modifications in the rules established by the members of the board of directors.
Withdrawing the loan of $ 200 million could have brought CPS to pay more in the future due to interest, for a total estimated at $ 394 million over 15 years, said CPS financial director Miroslava Meija Krug, during a budget hearing earlier this month. In the weeks preceding the vote, some financial experts predicted that the decision to borrow would also affect the district credit rating.
The budget depends on $ 379 million not yet guaranteed by the District in additional funding funds for special tax funding districts, known as the excess tif. But the members of the Multiple Ligo Board of Directors questioned the absence of a safeguard plan included in the CPS budget proposal if the financing of the TIF had to pass or be lower than the district had budgetized, to which the member of the Board of Directors Debby Pope of the District 2B – who refrained from voting on the plan – reiterated before the vote on Thursday.
“I am very concerned about the fact that we made a mistake in the sense that we budget according to hope, rather than budgeting according to reality,” said Pope. “Unfortunately, I agree that hope is not a strategy … Hope cannot be what we fill out our classrooms, because it simply does not work in this way.”
Elected members have rejected.
“Some of us, including myself, have grown poorly, but that does not give us the right to make bad decisions,” said CHE Rhymesfest of the District 10A on the south side.
This year, unlike last fall, when the tension increased, the mayor – a former organizer of the teachers’ union – had more influence on the future of the budget. In addition to receiving the majority of the support of the members of the board of directors, Mayor Johnson also appointed the acting CEO Macquline King, a former city employee, to direct the difficult budgetary decision.
But in recent weeks, she, as Martinez, had pushed the borrowing scenario of $ 200 million proposed by Johnson. On Thursday, King sat on, highlighted and delivered a discourse that recognized the political intensity and also the importance of the budgetary process for hundreds of thousands of children and parents in Chicago.
“Passing a budget means protecting our schools against additional discounts and unlocking the opportunity to fully focus on improving the quality of education throughout our city,” she said.
At the start of the meeting, the growing pain of the elected council were fully exposed while the members of the elected council questioned the time of the appointment of Vélez and if he received sufficient training. The members of the public delivered emotional speeches to the members of the board of directors who weighed the decisions they were seized.
Wanda Hopkins, a defender of parents and former parents United for Responsible Education Employee, spoke with passion to the members of the board of directors aligned by Johnson with whom she worked before, in particular Aaron “Jitu” Brown and Debby Pope, and called them to make a decision with the children of Chicago.
“I tell you that the members of the board of directors … that you have the power not to tell $ 1 to go to the city of Chicago, but … Go to schools so that there can be concierges, there can be programs,” said Hopkins.
The district has already taken measures in recent months to fill the gap of hundreds of millions through the layoffs of hundreds of teachers, paraprofessional, guardian and clogging guards. Several services have also taken a hit, including hotcular hot meals which are now snacks.
To further fill the gap, the district budget is based on the restructuring of $ 1.8 billion in accumulated debts as well as $ 272 million in savings of a combination of central office expenses, a job freezing of the central office personnel and the reuse of existing subsidies.
The budget allows pension payment to the city, subject to state or city money – through additional tif funds.
Tif remains the point of discord, the debate
CPS and the city are intertwined with regard to the tif. The State law establishes that part of the excess tif funding goes to CPS, but decisions at the city level, including the number of projects approved each year and how much they cost, an impact on the amount of money left and, in turn, the amount of the excess tif financing. The CPS receives 52% excess tif, the city of 23% and other taxation organizations rest.
Despite the members of the board of directors aligned by Johnson repulsive the budget proposal, more than 26 aldermen, who are responsible for determining the excess tif by deciding which redevelopment projects in their districts should have priority and, consequently, the amount of money, signed on a letter Wednesday supporting the CPS plan.
The letter describes the loan to make the payment of the pension of $ 175 million which covers non -teacher CPS employees as “deliberately reckless”. He stressed that aldermen “will support a tif surplus to help balance the budget of the city and the CPS”.
Although the letter Aldermanic rejects the idea of borrowing to cover the pension of non-teachers, he does not explicitly declare that the municipal council will cover the payment. But CTU, one of the closest allies of Johnson, sent a letter thanking the aldermen on Thursday to “accept full responsibility”.
In the letter, the union estimated the amount of excess money at $ 500 million and declared that if the funding funds per increase in tax were made available, it would be sufficient to make the payment of the pension and avoid the reductions of the schools.
It is not clear if the aldermen will be made with the quantity of surplus necessary to respond to these requests. But the municipal council is encouraged to allocate more money from the tif funds, as this will help them to balance their own tight budget and to increase the probability that CPS will make the payment of the pension.
In an interview with the gallery before the meeting of the Board of Directors on Thursday, the president of the CTU, Stacy Davis Gates, asked the aldermen to produce an estimate for this year’s excess tif.
“If the municipal council will be our hero at the moment, tell us the figures so that we can count on the restoration of the cups,” she said. “It is not politics for us. Dirty schools, cold lunches, is our reality. ”
Thursday’s vote is in favor of several stakeholders and unions such as premises 1 and 73 of the Seiu who expressed their support for the budget alongside the legislators at the level of the State and local, in particular the senator of the State Willie Preston, a Democrat of Chicago, who urged the Council to “do the right thing” and to approve the “responsible budget” of the king before the voice.
“Now I understand that it is difficult. These choices are difficult, but there is a difference between difficult and bad choices,” said Preston. “This proposal that you can all consider, to contract a loan, the mortgages of the future of the children you claim to protect.”
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