Chicago Public Schools board members passed a $10.2 billion budget that could have been worse. They got in this mess because expenditures have ballooned $2.4 billion since 2020, largely because 7,927 workers were added.
Chicago Public Schools passed a $10.2 billion budget for the 2025-2026 fiscal year on a vote of 12 yes, 7 no and an abstention on Aug. 28, but left out was a controversial loan to pay the city for pensions that could have further wrecked the district’s credit rating.
While much of the conversation around district finances was centered on how to bring this year’s budget into balance with a $743 million hole in it, relatively little attention was given to how district finances devolved into massive, recurring deficits.
How did CPS get to this point?
Years of financial mismanagement culminated in a nearly $1.2 billion initial budget deficit in 2016. The district’s financial crisis coincided with major policy changes, such as the adoption of evidence-based funding by the state of Illinois, the state beginning to pay the “normal costs” for the district’s teacher pensions and the district reinstating a dedicated property tax levy to pay for the remainder of their teacher pension costs, all of which began in 2017.
These measures largely served to reduce the district’s projected budget deficits in the years immediately following, though structural issues persisted as anticipated expenditure growth continued to outpace actual revenue growth. Finances temporarily improved even more when the district was awarded $2.8 billion in additional federal pandemic relief funds, which it deployed from 2020-2025 to buoy district finances and eliminate initial projected deficits from 2022-2024.
When the last of these funds were expended in 2025, the district’s budget deficits resumed – even though district revenues remained at all-time highs.
With billions in temporary federal aid, CPS was able to avoid projected shortfalls until 2025, when the district spent the final $233 million in pandemic-related aid. That year, the district faced an initial $505 million budget deficit, which it had to reconcile through reductions in department budgets, a central office hiring freeze and debt restructuring, among other actions.
Because these measures are one-time fixes or temporary changes, the district’s budget deficits persist. Now, the district is facing an even larger $734 million budget deficit in 2026. The annual deficit is also projected to grow each year through 2030, when CPS forecasts the deficit will reach more than $1.3 billion.
Why does CPS continue to face budgetary shortfalls?
It’s not because of a dramatic decline in revenues. In fact, operating revenues continue to increase for the district and continue to hit all-time highs each year. In 2026, operating revenues for the district will top $8.6 billion for the first time in history.
The 2026 operating revenues are projected to be more than $2.4 billion (39%) higher than 2020 revenues. Revenues are also expected to be nearly $60 million higher than last year’s budget.
The fundamental issue is while revenues have grown substantially, so too have expenses. Nearly $1.7 billion of the increase in expenditures – 70% – from 2020 to 2025 have been for salaries or benefits of employees. Contract costs, which include expenditures for charter schools and transportation, have also increased by $361.5 million. Contingencies, which include funding that has been budgeted but not-yet allocated and anticipated grant funding, increases by $418.7 million.
Analysis of CPS expenditure growth reveals most has been personnel related. During this time, CPS has added nearly 8,000 additional staff to payrolls, an increase of 21%. Most of these additions have been for school personnel, with school support staff adding 3,164 positions (+29%). Teachers saw the next-largest numeric increase, adding 2,286 positions (+11%) throughout the district. Citywide student support personnel, which includes custodians, nurses, social workers and security staff increased by 1,837 (+39%).
The staffing levels that grew the most on a percentage basis were central office personnel, whose payrolls expanded by 62%, adding 643 positions from 2020-2025. School administrators and network office support roles stayed relatively unchanged.
So is the crisis over?
The tremendous growth in staffing levels in recent years driving the district’s financial distress is unsustainable, particularly as enrollment in Chicago Public Schools has continued to decline and more than 1-in-3 desks across the district sit empty. There are nearly 30,000 fewer students enrolled at CPS today than in 2020, while there are nearly 8,000 more staff employed at the district.
Growing staff and expenditures combined with declining enrollment stand diametrically opposed to each other and threaten the financial health of the district even further. Enrollment has declined by more than 8%, while staffing levels have increased by 21%, driving total expenditures up by nearly 39% since 2020.
A reduction in staffing back to 2020 levels would save the district more than $1 billion annually Making matters worse, 58% of CPS schools are underutilized, meaning that enrollment is less than 56% of capacity. This underutilization means not only has there been exorbitant growth in staffing relative to enrollment, but maintenance and operating costs of facilities is also bloated as most schools sit half empty.
In the face of the district’s financial hardships and inefficiencies, the Chicago Teachers Union leadership ratified a new contract with CPS this summer, estimated to add $1.5 billion to district expenses over four years. Among the provisions is the addition of more staff members.
The Chicago Board of Education passed a budget without borrowing and without an overt deficit, but unless it manages the explosion in staffing and deals with 1-in-3 desks sitting empty, the financial crisis is far from over.
