CPS issues $5.8 billion preliminary budget [Chicago Tribune :: ]
(Chicago Tribune (IL) Via Acquire Media NewsEdge) July 03--Forced once again to cover a gaping deficit that this year approaches $900 million, Chicago Public Schools is using a one-time accounting adjustment to make ends meet in a $5.8 billion preliminary operating budget that was released Wednesday.
The district is tacking on an additional two months of property tax revenue to the 2015 budget, changing its fiscal year, which next year will run from September through August. In addition, as it has for 16 of the past 21 years, the district will increase its share of the property tax to the maximum amount allowed.
Property taxes are projected to go up an average of $34 next year on a $250,000 home as a result of the budget proposal.
Dealing with a mountainous deficit is an annual ritual for CPS, where in past years school officials have drained cash reserves, used federal stimulus dollars and issued bonds to bridge budget shortfalls. For the past two years, the district has blamed the historic deficit on rising pension costs.
"We must make these investments under serious financial constraints," said schools chief Barbara Byrd-Bennett. "A change in the way in which we recognize revenue enables the Fiscal Year 15 budget, but it's a one-time fix, and our financial challenges continue to loom over us. This one-time action is not going to address our structural deficit. We've got to receive pension reform from Springfield."
The Civic Federation, a government watchdog group, sympathized with the need for changes to the pension system for government workers but said CPS is not setting itself right for the long term by changing its accounting methods to balance its books.
"It's not a best practice to use such a significant amount of one-time revenue," said Civic Federation Vice President and Research Director Sarah Wetmore. "That money will not be available to fill a similar budget hole next year. But we certainly understand the district's options are constrained by a lack of pension reform and an ongoing decrease in state funding for education."
The district's pension contribution will be $634 million in the coming fiscal year, the highest ever.
The proposed spending plan represents a 3 percent increase over last year's budget. District officials say the bulk of added expenses come from teacher salary and benefit increases.
The accounting shift will pump up revenue for the fiscal year by about $650 million, according to CPS. That money will allow the district to avoid cuts in the classroom, according to CPS, but officials warned that might not be the case next year if a pension overhaul is not achieved.
After being criticized for reductions to its arts programs, the district said it will add 84 arts teachers, and the same number of physical education teachers.
CPS said Wednesday it also plans to add $1 million to its Safe Passage program and $1.7 million for social-emotional programs as the district looks at confronting discipline issues by addressing student behavioral needs. Other operating budget money will go toward seven new alternative schools for troubled youths, adding $4.7 million to the budget.
The district also said it is making $55 million in cuts through items that include a new facilities management contract and the reduction of 20 central office positions. Last week officials announced 1,100 employee layoffs, although many of the 550 teachers included in those cuts are expected to be rehired for openings at other schools. The final figure won't be known until next month.
Last year the district moved to a per-pupil funding formula and many principals saw declines in their individual school budgets, leading to staff and programming cuts. The district this year increased per-pupil funding by about $70 million, but most of that money will go toward covering salary increases. Education advocates complain that many of the positions cut last year will not be restored.
"In what world can they keep repeating the line that they've kept cuts away from the classroom when neighborhood school budgets have been decimated under this administration?" said Wendy Katten, co-founder of the parent group Raise Your Hand. "With per-pupil funding, as enrollment changes schools and students lose positions, so there's no longer a basic protection for students under this policy."
Katten said that during the last school year, about 170 arts positions were cut when budgets to individual schools were slashed. New district mandates on arts and physical education programming in schools without additional funding has meant principals are getting rid of other staff positions like librarians and technology staff, Katten said.
The budget is scheduled for a vote by the city's Board of Education on July 23. Until then, education policy analyst Rod Estvan of the group Access Living said parents, bond rating agencies and education experts will be looking to see whether CPS has plans to for the years ahead to solve its ongoing financial crisis.
He said the city may need to look at drastic measures such as raising the district's property tax beyond the cap or instituting more severe austerity measures.
Even if a pension overhaul is achieved, "it's unlikely pension savings will materialize right away," Estvan said.
"I'll be interested to look at CPS' outlook on cost savings with pension reform -- how much do they see it reducing pension payment obligations and over what period of time."
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