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CPS budget includes $103 million in pay raises as fiscal challenges loom

by Rebecca LaFlure
Oct 24, 2012

The Chicago Board of Education Wednesday delayed approval of its new budget, which covers $103 million in raises largely by extending the amount of time the district pays off certain bonds.

The board approved Chicago Public Schools’ fiscal year 2013 budget in August, but now must amend the budget to include pay increases outlined in the new Chicago Teachers Union contract resulting from last month’s strike.

While CPS officials say they were able to cover the added costs without cuts to the classroom, there are significant fiscal challenges ahead. CPS projects a $1 billion budget deficit next fiscal year, largely driven by a $388 million increase in pension costs. The amended budget continues to use all of CPS’ fund reserves.

“You used your reserves, you’re postponing your interest payments. … You have several expenses you’ve simply postponed,” board member Henry Bienen said in response to the amended budget. “While we covered this year’s budget as we must do, we haven’t really come to grips with the structural problems that exist in the CPS budget.”

The board was scheduled to vote on the amended budget Wednesday, but CPS officials had to delay the vote because it did not give adequate notice of the two public budget meetings it held Oct. 16. CPS plans to host additional hearings Nov. 5. The board is scheduled to vote on the budget at the Nov. 14 board meeting.

The teacher compensation increases include $59 million for 3 percent cost-of-living raises; $33 million for step increases that reward experience; $5 million for lanes increases that reward academic levels; and $6 million in cost-of-living raises for non-teaching CTU positions.

CPS officials propose covering the compensation increases by, among other things, trimming food service costs, delaying or canceling the hiring of administrative positions, and selling vacant properties.

CPS will cover $42 million of the $130 million in added costs by refinancing bonds due in 2013 and 2014.

“They should not be talking about refinancing bonds with happy talk,” Rodney Estvan, education policy analyst with Access Living, said following the budget presentation. “It’s really like us going and mortgaging or refinancing our house because we need cash. … That’s what this is about. The board should explain this publicly in this budget. It is not a good thing to do this.”

Tim Cawley, CPS chief administrative officer, said he understands that the amended budget does not offer long-term solutions to the district’s fiscal challenges, and working with state lawmakers to reform the Illinois pension system is crucial.

“We know we can’t continue to rely on reserves because we no longer have reserves. We also can’t continue to borrow for the future to close our structural deficit,” he said. Pension reform “is a critical need for us to keep this district running.”

Moving forward, newly appointed schools CEO Barbara Byrd-Bennett said district officials strive to avoid deep cuts in Chicago classrooms as the district faces what she called a fiscal crisis.

“Our number one priority continues to be our students and their academic achievement and the resources they will need,” Byrd-Bennett said. “Our budget will continue to reflect that priority.”