Rising costs erode revenue

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Chicago could net an extra $300 million under Gov. Rod Blagojevich’s school funding proposal—a potential windfall for teachers, who will be negotiating a new contract this summer.

But the plan, which calls for a tax on business transactions, will face stiff opposition from business groups and tax-weary legislators. Without a cash infusion from the state, teachers will have to bargain with a district that aggressively toes the line on wages and benefits.

Chief Financial Officer Pedro Martinez says district revenues have historically grown about 4 percent annually, a trend that is likely to continue this fiscal year and add nearly $200 million to the current operating budget of $4.7 billion.

But that increase would still provide little wiggle room during contract talks, given a cornucopia of rising costs, including teachers’ pension fund obligations, inflation and a possible deficit in the current budget. CPS is negotiating with Commonwealth Edison to hold the line on spiking utility rates.

Each percentage point increase in pay will prove pricey, costing the district roughly $25 million, says Martinez. Districts across the country are typically negotiating 3 percent to 5 percent raises, says Julia Koppich, an education consultant and former education faculty member at the University of California at Berkeley.

Chicago teachers received four percent raises in each of the last four years under the current 2003 contract, an amount that compared favorably with other urban districts. At the time, “teachers were getting 1 percent, 2 percent, if they were getting anything at all,” says Koppich.

Former union president Deborah Lynch took heat for that contract because teachers were hit with increased health care costs. But, as Koppich points out, “health care costs were going up everywhere. [The controversy] was a mystery to me.”