CPS Budgets: Past, Present, and Future PowerPoint - · PDF fileCPS Budgets: Past, Present, and Future . Prepared by the Chicago Teachers Union . September 25, 2013 . 1

CPS Budgets: Past, Present, and Future Prepared by the Chicago Teachers Union September 25, 2013

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INTRODUCTION:

TRUST, PRIORITIES, AND THE RECENT PAST

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Three Key Elements Drive CPS Budget Perceptions

• Trust between the district and key constituencies is extremely low: 1. Parents and communities 2. School Personnel 3. Policymakers

• This lack of trust has two primary causes: 1. The district’s lack of forthrightness on policy

decisions 2. The strongly negative impacts of many of those

decisions 3

-$1,000,000,000

-$800,000,000

-$600,000,000

-$400,000,000

-$200,000,000

$0

$200,000,000

$400,000,000

2005 2006 2007 2008 2009 2010 2011 2012

CPS Budget Deficit/Surplus, 2005 – 2012 SY

Press Release Deficit

Estimated Deficit

Actual Surplus/Deficit

Budget Claims: A Case Study

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0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CPS Revenues, 2003 – 12 SY

Local Revenue

State Revenue

Federal Revenue

Total Revenue

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How did we get here? • To be clear, surpluses stemmed from cuts directly to schools. • CTU has been involved. CPS has imposed 9-figure

“concessions” in each of the last four years. • 2010: More than 1300 teachers were laid off to fix an

alleged budget deficit. • 2011: The district rescinded a contractually-agreed raise to

fix an alleged budget deficit. • 2012: The district attempted to impose a four-year contract

with 20% more work for a one-time 2% raise. • 2013: CPS proposed more than $250 million in pension

benefit cuts, closed 50 schools, and laid off thousands of employees.

• The district has cut other vital priorities, too.

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How did we get here? • The program of cuts allowed expenses to be inflated, causing

the deficit to appear larger than it really was. • The following slides show how expense variance explains the

district’s surpluses.

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3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Spen

ding

in 0

00s

CPS Expenditures, Projected vs. Actual

Projected Expenses

Actual Expenses

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0

500000

1000000

1500000

2000000

2500000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Teac

her S

alar

ies (

in 0

00s)

Teacher Salaries, Projected vs. Actual

Final Budgeted Salaries

Actual Teacher Salaries

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0

10000

20000

30000

40000

50000

60000

70000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Spen

ding

in 0

00s

CPS Educational Equipment Spending, Projected vs. Actual

Final Budget

Actual

10

0

20000

40000

60000

80000

100000

120000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Spen

ding

in 0

00s

CPS Textbook Spending, Projected vs. Actual

Final Budget

Actual

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0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Spen

ding

in 0

00s

CPS Supplies Spending, Budgeted vs. Actual

Final Budget

Actual

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Spending Tradeoffs • Spending cuts in some areas are more than offset by major

increases in spending in other areas. • Questions about the district’s priorities are readily apparent

from the following slides.

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0

100

200

300

400

500

600

700

800

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY 2010 FY2011 FY2012 FY2013

$ in

Mill

ions

CPS Spending Trends, FY04-FY13

Capital Spending

Debt Service

Charter Schools

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98%

2%

Charter Spending as % of Total CPS Spending, FY2004

TOTAL OPERATING FUNDS

Charter Schools

Total Budget: $3.76 billion Charter spending: $66.6 million

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91%

9%

Charter Spending as % of Total CPS Spending, FY2013

TOTAL OPERATING FUNDS

Charter Schools

Total Budget: $5.16 billion Charter spending: $483 million Charter spending increased 625% vs. a total spending increase of 37%.

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School “Choice” Impact • Total operating and capital costs associated with

school closures and turnarounds since 2003: more than $500 million.

• Capital costs for 50 closed schools in 2013 alone: more than $150 million.

• Costs to disrupted communities: devastation • Academic results: mixed at best for charters per

CREDO study; turnarounds/closed schools worse for students per University of Chicago.

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Impact of Debt Service: $100 million

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The Latest Cut: Student Based Budgeting (SBB) • SBB was rolled out this spring as a way to “empower

principals” to make decisions at the local level. • Under SBB, about half of school money is allocated

to schools on a per-pupil basis rather than on a staffing formula.

• The other half (e.g. Special Education, SGSA) is allocated under the old formula.

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The Latest Cut: School Based Budgeting • Despite rhetoric of local empowerment, the SBB rollout

was accompanied by two major types of budget cuts. 1. School budgets were categorically cut. 2. School enrollment projections were shorted,

thereby further restricting funds. • The impact has been more than 2100 layoffs of teachers,

paraprofessionals, and school support staff. Overall, CPS projects 1400 fewer teaching positions than last year.

• Raise Your Hand surveyed about 25% of schools and found nearly $100 million in budget cuts. The district claims “only” $68 million in cuts to schools. 20

The Latest Cut: School Based Budgeting • SBB has two further impacts.

1. SBB marks veteran teachers as too expensive. 2. SBB provides a path to increased per pupil

expenditures at charter schools. 1. 83% of public school units received a budget

cut. 2. 72% of charter schools saw budget increases.

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The Latest Cut: School Based Budgeting • A sampling of school budget cuts from the Board’s own data:

• Curie HS: $4 million and 60.5 positions • Kelly HS: $4 million and 47 positions • Turnaround schools included too –

• Fenger HS: $3.4 million and 47 positions • Phillips HS: $3.4 million and 46 positions • Harper HS: $3.1 million and 24 positions • Marshall HS: $3 million and 40.5 positions

• Charters receive more: • Noble Street HS: $1.2 million increase • CICS Longwood: $1.2 million increase • UNO Octavio Paz: $1.2 million increase

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The Issue of Reserves • CPS claimed to drain all of its reserves in FY2013,

but had more than $500 million available in the FY2014 budget.

• The district is making the same claim again this year.

• More responsible approach would be to raise additional revenue and then use past surpluses to proactively pay pension obligations, thereby avoiding the major “cliff”.

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THE ROLE OF ILLINOIS STATE GOVERNMENT

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Origins: 1995 Amendatory Act

• Passed by Republican governor and Republican majorities in both chambers.

• Provided mayoral control of schools in Chicago. • Eliminated dedicated property tax levy for Chicago

Teachers’ Pension Fund and folded the money into CPS operations. CPS then made zero pension contributions for the next 10 years.

• This amendatory act is the reason for contentious Springfield battles over Chicago school policy.

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State Revenues for CPS • Three forms

• GSA • Block Grants • Pension contributions

• Block grants vs. pension cost shift? • Limits to state revenues: GSA proration, block grant

cuts and payment delays, much lower pension contributions

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0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Dolla

rs (i

n 00

0s)

State Revenue to CPS, 2003 - 12

GSA

Pension

"Other"

Total

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0

100

200

300

400

500

600

700

800

FY08 FY09 FY10 FY11 FY12 FY13

Fund

ing

(in

mill

ions

of $

)

Illinois Block Grant and Pension Funding to CPS FY08-FY13

Block Grant

Pension

Total

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0

500

1000

1500

2000

2500

3000

FY08 FY09 FY10 FY11 FY12

Fund

ing

(in m

illio

ns o

f $)

State Funding of TRS vs. CTPF, FY08-FY12

State TRS Contribution

State CTPF Contribution

Old CTPF Formula*

Illinois Block Grant Funding

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Way Forward? • CTU supports Senator Manar’s school

finance task force (SJR 32) and eagerly awaits the outcomes of their work.

• Significant education funding inequities across the state must be addressed.

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THE ROLE OF CHICAGO MUNICIPAL GOVERNMENT

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Chicago Property Tax Rates • According to a Civic Federation analysis,

Chicago has the lowest effective property tax rates in Cook County and is 2nd only to Oak Brook in metro area.

• CPS cut itself by not taxing to the property tax cap in FY2009 and FY2010. Those decisions cost the district at least $100 million per year.

• Property tax increases have been driven by property value gains and the effects of programs like TIF. 32

Source: Cook County Clerk

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Source: Cook County Clerk

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TIF Impact • Development is not the problem. The problem is

the way development is done. • Connected developers and corporations in

wealthy areas benefit at the expense of truly blighted areas.

• TIF money to CPS has been distributed more to selective schools than to neighborhood schools and concentrated in the northern half of the city.

• Declare a TIF surplus and return money to taxing bodies. There is currently more than $1.7 billion unallocated in TIF accounts. City claims $1.5 billion restricted. No clear projects, though.

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RECOMMENDED SOLUTIONS

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Legislative Action 1. Support revenue generation. 2. Change budget priorities: focus less on

flavor-of-the-month education reform schemes and more on the process of teaching and learning.

3. Move beyond logic that cuts will solve our budget challenges. Austerity prosperity.

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The Expert’s View… • “The idea that governance changes are going to magically

improve achievement or equity is unlikely to get us there. We’ve got to focus on what happens inside of schools—the quality of teaching, the quality of curriculum, the supports that are there for kids—and move beyond a governance-only conversation.”

• “We are right down there in the basement of the state rankings on educational outcomes. That happened because of tremendous disinvestment in the public system, including Proposition 13, which restricted tax revenues, and all the things that followed. The state really went into a testing-without-investing modality.”

• Linda Darling-Hammond, Stanford University Professor and education advisor for the State of California

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Sustainable and Fair Revenue Sources 1. Fair Tax 2. Sales Tax Base Expansion 3. Close corporate loopholes 4. Renegotiate interest rate swaps 5. TIF policies like HB 197 (Mayfield) 6. Financial Transaction Tax

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