CPS balances budget by draining savings

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To finally balance its budget, Chicago Public School officials will lay off more than 2000 teachers and support staff, zero out the district’s reserves, at least temporarily, and reduce the amount provided for charter school students by 6 percent.

To finally balance its budget, Chicago Public School officials will lay off more than 2000 teachers and support staff, zero out the district’s reserves and reduce the amount provided for charter school students by 6 percent.

The district also is scaling back its funding of CPS CEO Ron Huberman’s major Culture of Calm initiative, which tries to quell violence by providing more mentors and support to troubled students. Huberman says after issuing Requests For Proposals he realized he could do what he wanted for less. He will use a little more than $40 million from federal stimulus funds, about $20 million less than originally planned. 

“It is all brand new,” Huberman said on Friday.  

These are some of the details of the budget which was posted on the district’s website this morning. Next week, public budget hearings will be held and the Board of Education will vote on the budget at their August board meeting. 

Huberman announced in March that the district faced a deficit of almost $1 billion due to increased costs, decreased tax revenue and state funding and a big payment owed to the pension fund. Since then, Gov. Pat Quinn and the state legislature agreed to restore state funding almost to last year’s levels and to let CPS out of the big pension fund payment.

Still, the district has a $356 million hole. CPS’ total budget is more than $6 billion.

The biggest part of that deficit–$200 million–will be filled by emptying out the savings account and delaying capital projects. Over the past year, CPS has been leaning heavily on the reserves to pay bills because the state is behind in payments by about $236 million. Only about $190 million is left and all that will be used in this year’s budget.

Board policy calls for the district to have 5 percent of their budget in reserves, which is about $280 million. However, Huberman said that the policy allows the district to go under that amount if they have a plan for restoring the funds, which it does. For one thing, Huberman says he expects the state will pay its bills eventually. “It is a reasonable assumption,” he says.

Yet the other ways Huberman and his team plan to restore the deficit are not a given, by any stretch. Perhaps the state will pass an income tax increase or some federal revenue will come through or the city will declare a surplus in a Tax Increment Finance district, according to their plan. 

Huberman acknowledged that depleting the reserves could affect the district’s bond rating, but he said that these are extraordinary times. “We are doing everything we can to mitigate the impact on children,” he said. “If there was ever a time to utilize reserves, we felt this was it.”

The other big, though expected move, is the laying off of teachers and support staff. In late July about 600 teachers and support staff were laid off and another round started on Friday. 

High school classes will increase from an average of 31 students to 33, resulting in about 500 teachers losing their jobs. The district also is trimming down the number of extra staff that magnet and selective enrollment schools are provided. District officials said they worked closely with each school to determine which cuts they could make without minimal effect on their program. Officials stressed that the schools are still “magnets.”

In addition, the district is strictly enforcing the formula for doling out teachers and staff. In the past, some schools were allowed to keep extra teachers, assistant principals or aides outside of the enrollment formula. 

Some bilingual teachers also are being cut because the state failed to provide level funding for bilingual education. Bilingual education will be cut by about $24 million. Its total budget is about $70 million. District officials said they decided that they would not use their own money to keep the same number of bilingual teachers, but that they believe they can still meet their obligation to English Language Learners. 

Huberman emphasized that some of those lay offs could be avoided if the teachers’ union would agree to forego some of their promised raise of 4 percent. But so far negotiations with the union have not resulted in  any agreements. 

The teachers’ union leadership contends that the district has not done enough to find savings and has been asking for a look at the budget so they can help identify cuts. Labor attorney Rachel Resnick said the union has been given more than 600 pages in budget information and that the union has come with nothing. 

While district officials claim they are still open to suggestions, time is clearly running short. 

Also, the union leadership is furious that Huberman decided to lay off “unsatisfactory” teachers first, rather than by issue pink slips to the least experienced, as called for in the teachers’ contract. Last week, the union filed a federal lawsuit over the issue.

One relative winner in the budget was early childhood education.  Unlike in bilingual education where the district is letting most of the state cuts trickle down to class rooms, the district plans to use federal stimulus money to offset $60 million in state cuts in early childhood education. 

“We want to invest heavily in early childhood because every study has shown how important it is,” Huberman said. Young children who need bilingual services also participate in preschool programs and will benefit from this funding, Resnick pointed out.  

Huberman also plans to continue to downsize central office. Since he became CEO in February 2009, he has cut about $155 million from administration and citywide offices. Some of those saving were renegotiating contracts with utilities and finding ways to provide services more efficiently. He also has laid off more than 1,000 central office and citywide employees, including such people as custodial staff, part time social workers and people who work in the cafeterias serving lunch.

Fiscal Year 2011 budget includes an addition $45 million in cuts.

Though the process for approval of the budget is underway, some things could still change. The Congress is debating sending some money to states to prevent the mass firing of teachers. Also, Huberman said the union could still agree to concession.