CPS Budget Crisis

CPS Funding BasicsLocal Funding - $2.858 billion in

FY 15

Federal Funding - $735.8 million in FY 15

State Funding - $1.751 billion in FY 15General State Aid (GSA)Chicago Block GrantsState Contributions for Capital Projects

Local Funding

• Property taxes are the main local source of revenue• Property Tax Extension Limitation Law

(PTELL)– prevents Chicago from raising property tax extension above the CPI

• Tax Increment Financing (TIF) surpluses as designated by the Mayor and City Council

Tax Increment Financing (TIF) Districts

In TIF districts growth in property taxes are held in a fund for specific purposes such as infrastructure, public improvements, etc.

The City can approve TIF surplus funds be distributed to other taxing bodies such as CPS

CPS received $6.3 million in TIF surplus money in FY 15

Federal FundingFederal government provides funds to

state for:No Child Left Behind

Teacher ImprovementEnglish LearnersLow-Income Students

Special EducationSchool LunchesOther grants

General State Aid3 components

1) Foundation GrantFoundation Level of $6,119 per student between state and

local resourcesLocal resources is defined by property value and an assumed

tax rate2) Low-income Grant

Supplemental funding increases with greater proportion of low-income students in a district

3) PTELL AdjustmentPTELL limits a local districts property tax extension to the

lesser of the Consumer Price Index (CPI) or 5%If property value is limited by PTELL, this adjustment

provides additional GSA

CPS receives proportionally more in General State Aid

CPS educates 19.3% of students in the state, but receives 21% of GSA

General State Aid- Equity

Chicago Block GrantsCPS receives 2 education block grants which

include funding for: early childhood ed, special education, transportation, free lunch, etc.

For the 2013-2014 school year CPS received $279 million more in state funding than it would have without the block grants

Non-Chicago legislators assert that this balances the pension inequity

State Contributions for Capital Projects

In FY 15, CPS received approximately $75 million in additional funding for school construction projects from various grants and programs.

FY 16 State and CPS Budgets

FY 16 State Education Budget

The K-12 education budget was the only budget passed

FY 16 Education budget allocated $110 million more to GSA than FY 15

While GSA funding was increased statewide, CPS saw a $65.5 million reduction in their GSAIncrease in assumed property valueDecrease in proportion of low-income studentsGSA does not take local debt service or pension

obligations into account

FY 16 CPS Budget

CPS FY 16 budget totals $6.078 billion

$1.215 billion (nearly 20%) will be spent on debt service and pension obligations

Relies on $480 million in additional state money that is not currently appropriated

History of Chicago Teachers Pension Fund and Teachers Retirement System

1895- CTPF created to provide retirement benefits

1936- TRS created to establish combined pension system for the rest of the state

CTPF- Payments

Dedicated pension levy for CTPF was eliminated in 1995

From 1995 to 2005, CPS made no employer contributions into the CTPF

From 2011 to 2013, lower payments were made, i.e. “pension holiday”

Since 1996, CPS contributed $2.7 billion instead of $5.2 billion

CTPF- Current Status

CTPF has over $9 billion in unfunded liabilities

CPS has a $676 million payment to CTPF in FY 16

Moving ForwardIn the short-term, we need to be sure that a solution does not repeat

past mistakes

In the long-term we need to look at revamping our antiquated school funding formula to decrease our reliance on property tax revenues, and we must increase funding for education overall and ensure Chicago students consistently get their fair share of tax dollars.

The volatility of CPS cannot continue without negatively impacting our communities and our city as a whole. Operating in continual crisis mode seems to have become the new normal - and this is unacceptable.

All decision-makers must work collaboratively to address CPS fiscal challenges