The vote is over on the Chicago Public Schools budget. It dodged some immediate problems, but the financial mess will continue. Taxpayers will feel the pain long into the future.
The Chicago Public Schools’ Board of Education passed their 2025-2026 budget 12-7, with one abstention, Aug. 28 – awkwardly closing a $734 million budget gap, avoiding junk borrowing for pensions and ensuring the economic wreckage will haunt taxpayers for years.
The overwhelming influence of the Chicago Teachers Union and Mayor Brandon Johnson’s commitment to prioritizing the interests of his former employer has placed the district’s long-term financial health at risk. At least Johnson did not get the controversial loan to pay for support staff pensions that he pushed hard for.
The schools’ chief budget officer said the loan would have triggered a “downward spiral” of credit downgrades, higher borrowing costs and cuts to classrooms.
CPS CEO Macquline King’s budget makes modest cuts. It avoided a scandal-ridden and controversial short-term loan for $175 million to pay pensions that was backed by Johnson and the Chicago Teachers Union. It pushes that pension payment onto the city, unless money suddenly falls into the district’s lap. The budget also counts on $379 million from the city’s tax increment financing districts, with $79 million of that based on a hope and a prayer.
It was another stunning loss for the mayor and his chief ally after pushing this loan for over a year. That was a taxpayer win, but the budget still relies on a $232 million property tax increase.
The budget fails to make any structural fixes, guaranteeing Chicago will face a similar budget crisis next year. Programmatically, the plan elevates CTU priorities above student needs. That’s pretty sad.
In CPS’ own budget presentation, the district identified the following measures to balance 2026:
- Reduction to central office budgets: $126 million in savings from measures including central office staff reductions, a hiring freeze of non-critical central office staff, streamlining administrative roles, delaying IT projects and other measures. These savings follow $146 million in earlier cuts.
- New revenues: $149 million in additional money, including $45 million of evidence-based funding above original projections, $25 million in federal grant carryover and a $79 million jump from an anticipated tax increment financing property tax windfall. That’s in addition to $300 million expected from the funds.
- Debt maneuvers: $29 million in savings from debt refinancing.
- One-time sources: $90 million, including $65 million from the debt stabilization fund and $25 million in a leftover philanthropic donation from 2023.
- Pension payment deferral: CPS pushes a $175 million municipal pension fund payment onto the city unless extra state or tax increment funds emerge.
CPS is projected to receive $4.24 billion in property tax revenue in 2026. This includes $602 million in the dedicated teacher pension levy in 2026, $379 million from those tax increment funds and $85.2 million in revenue from the Capital Improvement Tax levy, which includes $79.7 million dedicated to paying debt service on bonds issued for capital improvements.
What the budget doesn’t tell you
The $79.7 million only pays interest on the capital bonds. CPS will not pay any of the principal until 2033. That means the $1.4 billion in funds for capital improvements received will cost taxpayers $2.73 billion – almost as much in interest as was received in principal.
The district will spend $15.257 billion on long-term debt by 2049 when future interest payments are included. It also must eventually cover $13.9 billion in unfunded pension liabilities it owes its teachers.
The recently approved CTU contract will cost the district an extra $1.5 billion through 2028, with teacher pay expected to grow at least $1.1 billion.
The district also downplays the $232.5 million property tax increase. While the district claims deficit progress, projections show budget holes growing from $520 million in 2027 to $835 million in 2030, even assuming the levy is raised to its legal cap each year.
The city is facing its own deficit approaching $1 billion. It cannot afford to pay the employer share of pensions for CPS’ nonteaching employees.
Wasteful policy choices
The oft-repeated claim: CPS needs $1.6 billion more in state funding for “adequacy,” is not supported by facts. The claim has exploded from about $1 billion to the $1.6 billion figure and recently CTU claimed it was nearly $2 billion.
The district spends millions yearly on near-empty schools, with 1-in-3 desks empty, and wants to spend $1 billion on capital improvements. District leaders know 58% of schools – or 275 school buildings – are underutilized. The 10 least-utilized schools were at just 12% capacity on average. At the same time, CPS wants to close charter schools or absorb them as district schools with CTU staffers, which drives up costs. For example, converting five Acero schools will cost $20 million next year.
CPS continues to expand the CTU-backed “sustainable community school model,” despite its known failings. The district is set to increase its current 20 “community schools” to 70, despite high costs and lagging district averages in proficiency and attendance.
Since COVID, CPS’ revenue budget for local and state funds ballooned to a record $7.9 billion for 2024-2025. Over the past decade, own-source revenues have increased by nearly $3.2 billion. Increased spending has outpaced student performance, staff levels are higher than before the pandemic, all while student enrollment dropped.
Currently, only 1-in-3 CPS students read at grade level, and fewer than 1-in-5 meet state math standards, with Black and Latino students lagging farther behind.
Needed financial reforms
There is still an opportunity to balance future budgets, and CPS can start by:
- Returning staffing to pre-COVID levels, especially administrators and non-classroom roles.
- Breaking up central and regional offices so money follows students.
- Giving principals and local school councils full autonomy over budgets.
- Consolidating near-empty schools while leasing facilities to charters.
- Expanding charters, magnet schools and school-based magnet programs to attract students and aid.
- Empowering communities through elected local school councils and principals to select more effective models.
Re-authorizing the School Finance Authority
Real reform is unlikely while CPS leadership and CTU keep doing business as usual. Bureaucrats maintain central control while CTU relies on it to enforce contracts.
Gov. J.B. Pritzker should re-establish the Chicago School Finance Authority, which from 1980 to 1996 provided oversight. A revived authority could bring fiscal discipline and end CPS’ dependence on city subsidies.
CEO King might be doing her best under pressure, but record union contracts and CTU-driven policies continue to drive up costs and degrade educational choices. The budget sustains CTU priorities at the expense of reforms, efficiencies and, ultimately, Chicago’s students and taxpayers.
