With a pivotal vote Thursday on the Chicago Public Schools budget, a battle is still raging over a proposal by school district officials that some board members and Mayor Brandon Johnson’s office say relies too heavily on shaky revenue.
As was the case last year, there’s a debate about whether a loan should be used to ward off budget cuts. The school district is already deeply in debt and pays high interest rates, but it can’t independently raise revenue.
The mayor’s office and CPS officials are at odds despite the interim schools chief having been hired from Johnson’s administration this summer. Board members are split, too, though the majority seems inclined to support Johnson’s position. Most are mayoral appointees or were elected with the backing of his allies at the Chicago Teachers Union.
CPS leaders presented a budget earlier this month that they said closed a $734 million deficit through operational cuts, central office layoffs and debt refinancing.
Controversially, however, the plan counts on a record $379 million in surplus funds from the city’s special tax-increment financing, or TIF, districts.
At the same time, schools officials said they would only give City Hall $175 million for a pension payment covering non-teacher CPS employees — which the city needs to balance its books — if CPS receives even more money than already expected from the state or city.
Senior mayoral aide Jason Lee bashed the plan Wednesday.
He said CPS has never counted on so much TIF surplus funding in its budget. There’s no guarantee that CPS will get such a big pot of money, he said, especially if board members don’t commit to making the pension payment.
TIF districts are zones across the city where some property taxes are set aside for economic development or infrastructure projects. The mayor, with City Council approval, can use unspent or unobligated money as a one-time fix for operating budget gaps. CPS gets 52% of TIF surpluses; the city gets about 23% and other taxing bodies get the rest.
The process of declaring a surplus takes place in the fall during the city’s budget season and can be politically challenging.
“Obviously [CPS officials are] taking extreme measures just so they can say they have a balanced budget on paper,” Lee said. “But in reality, by their own historical budget practices, this budget wouldn’t even be considered balanced. And so we’re highly concerned that by doing that, they would leave a significant shortfall in the event that these surpluses aren’t approved.”
CPS officials on the other hand insist that it is a safe bet that $379 million will come through. That’s how much CPS got last year. And they argue the city also needs a large TIF surplus to balance its own budget.
The city is legally responsible for paying the entire municipal pension payment, and CPS officials are strongly against taking a loan to cover it.
In a memo obtained by WBEZ and the Chicago Sun-Times, the CPS chief financial officer argued that leaving the door open to a loan would put CPS in peril. She said credit agencies have already signaled that would trigger a credit rating downgrade, which would make refinancing more expensive this year and in the future.
City Council members pen a letter
Twenty-six members of the City Council fired off a letter to school board members Wednesday urging them to reject taking a loan that would reimburse the city for the $175 million pension payment. That’s despite the city’s budget — approved by the council in December 2024 — counting on CPS making the payment.
The signatories — including several members of Johnson’s handpicked leadership team — said they also don’t want to see classroom cuts. They committed to supporting a TIF surplus but notably didn’t say how much money that would mean for CPS.
The mayor’s office has denied many TIF-eligible projects requested by City Council members in order to come up with big surpluses in recent years, Lee said, including many infrastructure projects that communities desperately needed.
Housing Committee Chair Byron Sigcho-Lopez (25th), one of the mayor’s most vocal supporters, signed the letter. He said he was committed to “some” TIF support, but not necessarily the $379 million that CPS is counting on.
“The level of TIF funding, we’ll have to determine during the budget season. We cannot say yet what that will be,” Sigcho-Lopez said.
Far North Side Ald. Maria Hadden (49th), co-chair of the Council’s Progressive Caucus, said she won’t know what level of TIF surplus she is willing to support until Johnson releases his three-year budget forecast and she finds out “how the mayor’s gonna be proposing to balance the budget.”
Both say the answer for CPS is a sustainable revenue source, such as state funding or a city tax that commits some revenue for CPS.
Several board members support CPS officials
Board members opposed to the mayor say they will vote in favor of CPS officials’ budget proposal, arguing it manages to close the deficit without encroaching on classrooms and avoids borrowing. The pension payment is not the school district’s responsibility, they say, and a short-term loan would only saddle the district with more debt and affect future deficits.
Jessica Biggs said those factors made her decision to vote in favor of the plan “pretty easy.” Biggs, whose District 6 includes the Loop and parts of Englewood, disagreed that counting on TIF funds was a risk.
Facing its own budget deficit, Biggs believes the city will seek all the surplus it can to balance its budget, giving CPS a windfall that’s at least in line with last year.
“Every City Council member that we have heard from and talked to has assured us that this is a reasonable surplus assumption, including members of the finance committee,” Biggs said.
Ellen Rosenfeld, another elected board member whose District 4 includes Lincoln Park and Lake View, said the district’s proposal was “responsible” and the “right thing to do.”
Majority say CPS officials ignoring political realities
Board members who support the mayor stand in favor of amending the budget to include the pension payment and leaving the option of a loan on the table. They argue it’s risky to rely on uncertain revenue projections from TIF surplus funds to help close the budget gap.
As things stand, at least 11 members — the majority needed to win a vote — back the mayor’s plan.
Jitu Brown, an elected member in the West Side’s District 5, said he wants to protect classrooms from any potential funding cuts, which have historically impacted Black and Latino communities.
“The budget was not truly balanced, and then it was also not cut-proof,” Brown said. “We are deeply concerned that there’s a culture in Chicago Public Schools that cuts have been done on the backs of Black and brown children.”
Though the city will likely need TIF funds to balance its own budget, Brown worries City Council might balk at giving CPS the big TIF surplus if the district doesn’t pay the pension payment for a second year in a row.
“So the option to take a loan is important,” Brown said. “So that if the state funding doesn’t come through, if the TIF surplus doesn’t come through, then we have a fallback. It’s a contingency plan and I just think having that option is smart.”