CPS faces biggest deficit in years: $475 million

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The annual budget-wrangling has begun.

Chicago Public Schools officials have projected a gaping $475 million hole—the largest in a decade—in the district’s $5.4 billion fiscal year 2010 operating budget. Armed with the figure, district leaders will spend the next three months hammering out cost-cutting measures with unions and badgering state lawmakers for extra cash.

Today’s press conference also made clear that the windfall of dollars going directly to districts from the federal stimulus package for education will make barely a dent in the deficit. CPS estimates its cut at $190 million, but only $50 million can be used to help fill the gap in the general operating budget. The rest must be spent on new programs in specific areas, like tutoring and after-school programs.

The annual budget-wrangling has begun.

Chicago Public Schools officials have projected a gaping $475 million hole—the largest in a decade—in the district’s $5.4 billion fiscal year 2010 operating budget. Armed with the figure, district leaders will spend the next three months hammering out cost-cutting measures with unions and badgering state lawmakers for extra cash.

Today’s press conference also made clear that the windfall of dollars going directly to districts from the federal stimulus package for education will make barely a dent in the deficit. CPS estimates its cut at $190 million, but only $50 million can be used to help fill the gap in the general operating budget. The rest must be spent on new programs in specific areas, like tutoring and after-school programs.

The full budget proposal is due in June.

Without some new source of revenue, though, the state will be very hard-pressed to find more money for CPS. Illinois is facing a staggering $9 billion deficit, and it’s unclear how Gov. Pat Quinn will use stimulus money to prop up state funding to schools. Quinn will make his budget recommendations on March 18. (Currently, state per-pupil funding is at $5,959, far short of the $7,388 recommended by the state’s Education Funding Advisory Board.)

CPS could also get additional stimulus funding through competitive grants administered by the state and the U.S. Department of Education.

Lawmakers are also discussing a gas tax hike to pay for capital projects, and even a potential income tax hike (with credits for working families). But passing tax hikes in the middle of a monstrous recession poses big political hurdles.

Michael Scott, reinstalled as School Board president just weeks ago, says higher property taxes will almost certainly be needed to help fill the budget gap. He pledged to cut 10 percent of his own administrative staff and, although he couldn’t say how much such cuts might save the district, it’s no more than a mere drop in the $475 million bucket.

Newly minted CEO Ron Huberman says increased class sizes and cuts to core educational programs are “off the table” and that the district would instead look for new revenue sources while cutting administrative positions.

He did not rule out teacher layoffs outright, however. In fact, the district is expecting to enroll 2000 fewer students next year—enrollment has, in fact, fallen by 19,000 in recent years—and the teaching staff will decrease accordingly, likely through normal attrition.

In a breakdown of the district’s woes, Huberman laid out six “deficit drivers.” The biggest by far is $145 million in teacher pay hikes negotiated in 2007, followed closely by $130 million in newly required pension contributions.

The rest: $100 million in reserve depletion from this fiscal year; $70 million in increased costs for operations and debt service, including an ever-increasing list of capital repairs that are needed; and $30 million in rising healthcare and benefit costs.

Huberman believes lawmakers will be all but forced to reform the state’s pension systems this year. Already, Quinn has proposed reducing the pension benefits of new state employees to help rein in costs, which have been a chief culprit in the state’s budget woes.

–John Myers