Chicago Teachers Union leaders argue Chicago Public Schools already has the money to settle tense contract negotiations without mid-year budget cuts. CPS officials argue that’s not the case if the district will still be required to make a pension payment that City Hall is counting on.
After months of talks and weeks of escalating rhetoric, the two sides are still making the same points. But they agree on one thing: They see ways they can get through this school year with a balanced budget — albeit very different ways.
The CTU has said the record amount of cash CPS received from the city’s tax increment financing districts should land a deal. And union leaders in the past week have pointed to CPS’ $1.1 billion fund balance as evidence that the district has the financial resources necessary to end the contract battle.
“They have a sufficient amount of reserves,” CTU research director Pavlyn Jankov said Monday.
“It’s that in conjunction with the highest, historic TIF surplus we’ve ever had, $300 million,” he said, “which in every other contract bargaining scenario is the deal closer: The TIF surplus gets released, and we have a contract.”
The large fund balance is a massive improvement from negative balances almost a decade ago. But the $1.1 billion figure doesn’t represent cash the district actually has on hand to spend.
The CTU acknowledged as much in response to questions Monday. Jankov said the fund rather represents a healthier financial position that allows the district to paper over short-term negative balances. And it allows CPS to borrow money at lower interest rates, which the district already does to afford payroll.
CPS CEO Pedro Martinez said the district needs even more TIF dollars to help afford this year’s budget. And CPS officials insist the $1.1 billion fund balance is misleading.
CPS Chief Financial Officer Miroslava Mejia Krug told reporters at a news conference Monday that the district exhausts the funds on operational expenses and has to take short-term loans so it can make payroll. That leaves only $66 million — or three days’ worth of operating expenses — in the bank at any one time.
“Just think about if CPS really had $1 billion sitting in the bank. Why are we required to issue $1 billion in short-term loans to pay our employees?” Krug said. “It also does not represent the amount of cash actually available at the end of the fiscal year.”
Martinez added: “There is no mythical pot of gold, so I hope we can put this to rest.”
Martinez was given six months notice of termination in part over his refusal to take a loan to balance this year’s budget. “I would not have risked the job that I love, in the district that I love, in the city that I love, my home city, if we had massive reserves, then we could have solved all these budget issues.”
Martinez said the school district can pay the salary raises it offered the teachers union this year using TIF funds. It offered 4% raises for each of four years.
But Martinez said CPS still can’t afford a $175 million municipal pension payment that the city is counting on CPS to pay. About half of the employees covered by this pension work for CPS, but up until 2019, the city covered it.
If CPS refuses to make that payment, the city would have a budget hole to fill. Alternatively, if the payment stays on CPS’ books — and a new CTU contract is settled — the district would face a mid-year deficit that could bring layoffs, furloughs or other cuts.
Former Mayor Lori Lightfoot shifted some of the pension contribution to CPS and, though he opposed that move as a CTU organizer, now Mayor Brandon Johnson needs it to balance the city’s tight budget. Johnson urged the district to take out a short-term loan to cover costs and avoid cuts.
Martinez said he was willing to cover the payment when the school district had federal COVID relief money to help, but now that money has run out, he is not. With the school district facing a potential deficit, Martinez said, “That money should not be taken away from CPS.”
Martinez also made the pitch once again for the city to expire TIF districts so the school district could get that tax money. TIFs set aside new property tax dollars for projects in under-developed communities. But that’s money that otherwise would have gone to CPS and other government agencies. Martinez said he understands the reason for TIFs but argued that property tax money is needed for schools and other city programs.
The school district is projecting a $700 million deficit next year, including the salary increases, and $900 million in years after that.
The CTU on Friday said it would accept the cost-of-living raises offered by the school district, which are 4% a year over four years. But it is still fighting for more money for veteran teachers, who stop getting additional annual raises, called steps, based on experience. The CTU said they think those raises would cost about $25 million a year.
CPS human resources chief Ben Felton said the veteran teacher salary proposals would cost “tens of millions” of additional dollars when the school district already has just enough to pay the cost-of-living increases.
“We understand that CTU’s job is to advocate for their members, and that the preferred outcome is certainly to avoid a strike,” he said. “But for those reasons, we’ll continue to prioritize these landmark salary increases and proposals as a worthwhile investment.”