Budgets given to principals, Chicago Public Schools tap ‘reserves’

By: Sarah Karp / June 05, 2013

Last summer in the midst of teacher contract negotiations and as they prepared to undertake massive school closings, CPS leaders said they were using one-time reserves to fill a budget deficit and were completely out of money.

But on Wednesday, district officials said they will once again use one-time reserves to fill a budget deficit projected to be close to $1 billion. District officials made this announcement as they were releasing school budgets to principals.

CPS is facing a substantial budget deficit because it must contribute $612 million to pension funds, a $400 million increase from last year. Officials were hoping to spread those payments over a longer period of time, but last week state legislators didn’t approve a bill that would have given the district a pension holiday.

CPS spokeswoman Becky Carroll said that the new reserves will be created by the county making property tax payments on time again this year. Carroll said the district also might garner some savings from the state keeping current with payments.

However, identifying the county payments as extra money is a direct contradiction to earlier statements. The annual audit, released in January, showed a fund balance of $329 million—a fact critics immediately jumped on accusing CPS of being dishonest by crying poverty and then ending up with money in the bank.

At the time, CPS officials said last year’s one-time county property tax payment was not extra money, but had just been received earlier than expected and was already allocated. Carroll said the reason this year’s on time payments are considered reserves has to do with timing.

“We now expect to get the next round of county dollars by the end of FY13 – since we did not plan for those dollars in our FY13 budget as passed by the Board, they will be counted as reserves. Next year, they will actually be counted in that budget,” she said.

These new reserves are unlikely to make up the entire shortfall faced by the district. This predicament had principals nervous about their school budgets as they waited an unusually long time to receive them. School budgets are usually released in April or May so that principals can get a handle on how many teachers they can hire or how many they must lay off.

In announcing that principals were finally getting their budgets, CPS officials said they were doing their best to prevent students from feeling the impact of budget problems.

“The District is continuing to identify reductions in central office, operations and administrative spending in order to keep cuts as far away from the classroom as possible,” according to a press release.

But getting a handle on whether schools will feel the impact of the district’s deficit in their budgets is difficult. For the first time this year, CPS moved to per-student funding, rather than giving schools money for positions, which was done historically.

CPS officials say they are doing this to give principals more autonomy over their budgets. However, some worry that it is a way to cut school budgets without having to explicitly reduce the number of teachers and raise class sizes. Also, it could incentivize laying off veteran, more expensive teachers and replacing them with less expensive ones.

Principals were summoned to late afternoon meetings Wednesday to receive their budgets so they have yet to report whether they will be getting more or less this year than last year. Carroll said she does not yet have any overall information on how many schools saw increase and decreases in their overall budget.

Carroll said schools are getting $4,429 for every kindergarten through third grader and $4,140 for every four every fourth through eighth grader. High schools are getting $5,029 for each student. Schools will still get the additional money for low-income, special education and bilingual students based on the complicated formula that has always been used.

Up until last year, CPS ran a per pupil budgeting pilot program. At the time, the per-pupil rate was based on the student population of the school. Schools with less than 300 students got $6,969 per pupil, whereas those with between 451 and 900 students got $5,077. The per student rates this year are similar to the old rates for larger schools.

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How Illinois’ Flawed Funding System Shortchanges Chicago’s Students

From ThinkProgress.org
By Pat Garofalo, posted on Sep 12, 2012

Chicago’s public school teachers remained on strike for a third day today. But as ThinkProgress reported yesterday, even when Chicago schools are in session, students have to deal with a host of should-be-embarrassing problems, including crumbling buildings, lack of art and physical education classes, and an abysmally short school day. (Chicago’s elementary school day is so short that some students are given just 10 minutes for lunch in order to cram in all the necessary instruction.)

These problems stem in large part from Illinois’ education funding system, which is one of, if not the most, inequitable in the nation. Illinois schools rely even more heavily on property taxes than the standard U.S. school district, which, as the Center for Tax and Budget Accountability noted, “ties the quality of the public education a school can give a child to the wealth of the community in which that child lives.”

Huge proportions of Chicago students come from low-income households, so the property tax base from which the schools are funded is not high. The Chicago Reporter outlined some of the practical consequences of this system:

– Due to the primary reliance on local property tax revenue for school funding, there are massive cumulative gaps in per-pupil spending, particularly in poor or minority communities. The 6,413 students who started elementary school in Evanston [a suburb north of Chicago] in 1994 and graduated from high school in 2007 had about $290 million more spent on their education than the same number of Chicago Public Schools students.

– Many of the school districts that spent the most per-student received at least 90 percent of their money from local property taxes. Yet, these districts tended to tax themselves at far lower rates than their poorer counterparts.

– The percentage of state contribution to school funding has decreased four of the last five years and is one of the lowest in the nation.

Illinois is also generally terrible at funding education, ranking 40th in per-capital education spending, despite being 15th in per-capita income. And the disproportionate lack of funding for low-income areas, particularly within cities, manifests itself in several ways. Besides the obvious lack of resources for students, wealthier districts can attract better teachers and pay for better safety measures.

As one Chicago school teacher wrote, “How can the discrepancy be so wide in school funding? The answer is simple; Gage Park [where she taught] is a violent, gang-­‐ridden neighborhood where the houses are very cheap. The worth of the properties will never rise due to the extreme violence in the neighborhood. Also, most of the living spaces are rented – there just aren’t that many people that own homes. Therefore, property taxes are low, virtually non-­‐existent.” By some estimates, it would take about $1.9 billion to bring Chicago’s students up to level at which they were meeting state standards.