Mayor Brandon Johnson’s budget proposal includes a gift for Chicago Public Schools: He is recommending that the city take an unprecedented amount out of special taxing districts so CPS can cover its costs and send some cash back to the city to help it end the year in the black.
School board members say they believe CPS will receive more than $500 million — meaning Johnson will declare a record $1 billion TIF surplus. This would give CPS enough money to make it through the school year without massive cuts. And it would give the city some of what it needs to cover a $175 million municipal pension payment that the district balked at paying without help.
Johnson is making this proposal after the partly elected, partly appointed school board dealt him a political blow in August when members refused to include the possibility of borrowing so they could cover the pension payment.
At the time, board members aligned with Johnson warned others that it was risky to count on the money from the special taxing districts, called TIFs, which weren’t guaranteed. But after the vote, a small group of members approached the mayor’s office to see if Johnson would come through with the money, said Michilla Blaise, who was appointed by the mayor to represent a West Side district.
“Fortunately, we’ve got the education mayor who wants to make sure that CPS has what it needs, and so it all just came together,” she said. “We were able to land the biggest TIF surplus in recorded history. I’m really excited.”
With CPS facing funding cuts from President Donald Trump’s administration, Johnson was compelled to try to find as much money as possible for the school district, according to a source in the mayor’s office. Blaise said she hopes this gesture from the mayor brings the board together against the Trump administration.
Che “Rhymefest” Smith, elected to a South Side district, said he never had any doubt that Johnson would come through with the money. Smith said he thinks the way this unfolded is testament to the power of elected board members. This board was able to hold the line on borrowing and get the mayor to pull as much as he could out of TIFs.
Johnson will unveil the city’s budget Thursday, and the City Council needs to approve it by Dec. 31.
City Council members could still object to so much money being taken out of these special taxing districts. That money is supposed to be set aside for economic development projects in their wards. But in August a majority of City Council members signed a letter saying they supported giving CPS a large TIF surplus, even without a guarantee that the city would get help with the municipal pension payment.
CPS is still facing financial pressure. The school board approved a budget that included $50 million in unspecified cuts to central office and operations. Those cuts have yet to be announced and, as the school year moves on, finding those savings will be more difficult.
Also, the federal government recently announced that it would not give CPS $8 million that it was expecting from a grant this year. While that is a relatively small amount, it could be the start of more federal funding being withheld.
Board member Debby Pope, appointed to represent a North Side district, said the TIF money helps CPS stay afloat for now. But it is one-time cash and does not solve the long-term problem of CPS being underfunded.
“[CPS’ budget] is very delicately held together, like when you construct something out of scotch tape, and maybe the tape starts peeling or something,” she said. “So at the moment, I think it is standing and it is OK, but I view it as being precarious and I don’t want the education of our kids to be precarious. I want it to be secure and guaranteed.”
She and Blaise said they are now focused on convincing the governor and lawmakers to provide more sustainable funding for CPS and other school districts.
This looks to finally end a long drawn out saga between Johnson and the school district — one that tested Johnson’s power and led to the resignation of the entire school board and then the firing of former CEO Pedro Martinez.
The controversy started with Johnson’s sort of surprising demand when he first came to office that CPS help cover the $175 million cost of the municipal pension payment. CPS employees are the majority of pensioners, but up until 2021, the city made the entire payment. As an organizer for the Chicago Teachers Union, Johnson criticized former mayor Lori Lightfoot for shifting the cost to CPS.
Lightfoot was the first to suggest that money she was pulling out of these special taxing districts called TIFs should be used to cover the pension payment.
Tax increment financing is a funding tool that uses property taxes to spur development in specific geographic areas around the city. The mayor can pull unspent or unobligated money out of TIFs and turn it back over to the taxing bodies. CPS gets 52% of that cash; while the city gets 24%.
Deciding how much to surplus is the purview of the mayor’s office, but he needs to negotiate with City Council members, who often want the money for projects in their wards.
But even as Johnson was surplusing record amounts, Martinez and the school board balked at making the pension payment. Eventually, Johnson’s first appointed school board resigned and the second one fired Martinez. CPS did not make the pension payment last year.
The same scenario arose this year, with the city budget counting on the $175 million for the municipal pension payment.
This time, the interim CEO Macquline King and the partly-appointed, partly-elected school board members said they would pay it, but it was “contingent upon additional revenue.”
The day after the Chicago Board of Education approved the district’s budget, the mayor’s budget officials said they expected to surplus less than they had the year before — an amount that would result in CPS being short millions of dollars.
Sarah Karp covers education for WBEZ. Follow her on X @WBEZeducation and @sskedreporter.