Chicago Public Schools Fiscal Year 2013 Amended Budget

Budget Overview

Budget Overview: As Amended November 14, 2012

The FY2013 budget is designed to help Chicago Public Schools achieve its overarching vision: to ensure that every child, in every community, has access to a high-quality education and choices that prepare them for success in college and career. This theme will be repeated throughout this budget, as it is the organizing principle driving all choices we are making as a district.

Most significantly, this budget enables the district to implement a high-quality Full School Day. This will allow CPS to move away from one of the shortest school days and years of all the largest cities in the country to give students and teachers the time they need time to boost student learning. The Full School Day will include the implementation of Common Core State Standards (CCSS), which will create a more rigorous curriculum that will better prepare students for college and career. It will also allow for a new instructional framework that will better support teachers to improve the quality of instruction delivered to students in the classroom.

In October 2012, the budget was amended to reflect changes needed to implement the agreement with the Chicago Teachers Union, which provides resources for the Full School Day and increased teacher and staff compensation. The new contract includes other improvements, such as a new Wellness program, short-term disability plan, more structured teacher evaluation process, and revisions to sick day and layoff benefits. These do not have a significant impact on FY13 funding needs, but are reflected in the budget to the extent they do.

As an organization, CPS is focusing on three levers for change in boosting student achievement throughout the district: empowering principals as leaders of their schools; increasing access to high-quality school options; and engaging families and communities in that process

EMPOWERING PRINCIPALS AS SCHOOL LEADERS
We know that the most successful schools have empowered, effective principals who build teams of teachers that boost student learning at their schools most effectively. The budget can be a tool that hinders principal autonomy or one that fosters it. In FY2013, we have taken the first steps toward a more comprehensive approach to restructuring the budget to better empower principals to meet their goals. These steps include:

  • Added $130 million in new funds under the principals’ discretion: In prior years, principals were given budgets that had limited flexibility in how the dollars could be spent; each school was given a specific number of teaching and staff positions and were allocated dollars for specific categories of spending such as supplies, books and equipment that could only be used on those items; these dollars could not be utilized to hire additional teachers, for example. In FY2013, we took the first steps to reduce those constraints on principals and to provide more funding that could be spent at the principals’ discretion. In total, we added $130 million in new discretionary funds for schools; this includes the new $100 million College Ready Fund as well as additional funding in existing discretionary pots.
  • Created $100 million College Ready Fund, including $70 million of new funding: From the College Ready Fund, principals can hire additional teachers, provide enrichment programs, pay for additional textbooks and supplies for students or invest in areas the principals choose to support CCSS, the instructional framework or the Full School Day. This fund includes $70 million of new dollars for schools and $30 million of funding that was previously limited to supplies, equipment, etc. We removed the constraints so that the principals now have more discretion in how all these dollars are spent. In fact, principals used these funds to hire 276 teachers and 199 other staff.
  • Added $60 million to principals’ supplemental discretionary funding: Schools with low income students receive additional federal and state dollars to supplement their core educational services. For years, the district held back some of the federal dollars to run programs determined by the central office. For FY2013, we have instead given the majority of those funds ($30 million) to principals so that they can decide how best to provide supplemental services for their students. Additionally, nearly $30 million extra of state supplemental funding was released to principals. In total, principals have used these extra funds to hire 236 teachers and 47 other school personnel.

INCREASING ACCESS TO HIGH-PERFORMING SCHOOLS
Our vision is to have high-performing schools available for every child in every community. To achieve that, we are making significant investments by adding new programs in our current schools, adding new schools and closing or turning around low-performing schools. Here are a few ways we plan to increase access:

  • Add new magnet, gifted, and talented schools and programs for FY2013: In total, CPS will be adding over 1,800 new seats in high-quality magnet, selective enrollment, International Baccalaureate, and Science Technology, Engineering and Math (STEM) programs.
    • STEM: Five brand-new STEM schools – products of innovative partnerships between CPS and IBM, Verizon, Motorola Solutions, Microsoft and Cisco – will open in FY2013. These schools will create 870 seats for the STEM program and provide a rigorous curriculum ensuring that students are prepared for college or careers in science, technology, engineering and math.
    • Magnet Schools: Magnet schools offer specialized programs that are application-based, with students admitted by lottery or through auditions to language arts and fine/performing arts programs, among others. In FY2013, we will add a total of 522 additional seats in these schools.
    • Selective Enrollment: We will add 206 seats in these competitive admission programs, primarily adding grade levels to existing programs.
    • International Baccalaureate: We are adding 250 new seats to these highly successful, academically rigorous programs.
  • Offer new and expanding charter school opportunities: Charter schools continue to offer high-quality school options for many students; as a result, CPS is expanding its investment in these schools. In FY2013, we will open 10 new charter schools already approved by the Board of Education, bringing the total to 104 and adding over 2,765 new seats for students. We are also adding grade levels at existing charters as they continue their natural progression to full operation, adding 1,900 new seats. In total, the FY2013 budget anticipates over 53,000 students will attend charter schools in FY2013. With the adjustment in rates outlined in the Portfolio department narrative, we will be making a $76 million investment in these new and expanding schools.
  • Investing in early childhood education: With the understanding that learning begins at birth, CPS has consistently invested in programs that serve the youngest children. The district will serve 42,000 children from birth to age 5 this year. Despite state funding cuts of $19 million, CPS will continue to fund early childhood to ensure that the number of children served is not impacted. Additionally, the FY2013 budget includes $4.7 million in new funding to support early childhood evaluation teams, ensuring that special education needs are identified early. Finally, we are maintaining our commitment to Full-Day Kindergarten, providing $30 million in supplemental funds to continue to serve 17,000 children.
  • Improving the quality of meals at school: Students are able to learn better when they have good, nutritious meals. CPS will meet the new, higher USDA “gold” standard for breakfast and lunch served in our schools. This means students will have more fruits, vegetables and whole grains. At the same time, CPS will also meet savings targets in the food service area.
  • Developing the 10-Year Neighborhood Vision: This 10-year strategic plan for schools in the district will define our educational priorities and provide a roadmap for capital investment in facilities. This will be a neighborhood-by-neighborhood vision that ensures that each child has access to high-performing schools. It will guide our decisions around new schools, new programs, school turnaround and school closing actions. We will be releasing this plan later in FY2013.

ENGAGING FAMILIES AND COMMUNITIES
Our third strategic lever focuses on families. We recognize the importance of families supporting student learning and their schools and have reorganized our staff to recognize this critical need. Here’s how we intend to foster engagement:

  • New Public and Community Affairs focus: We have created a new, cabinet-level department – Public and Community Affairs – to support our work with communities. This department includes Local School Council Relations and Family and Community Engagement, along with Intergovernmental Affairs; it is designed to recognize the integration of all aspects of the community, including elected leaders, in ensuring that our schools are successful. This new department is described more fully in the Public and Community Affairs detailed narrative.
  • More information available to the public on CPS’s budget: We hope that you are visiting our new, interactive budget website, www.cps.edu/fy13budget, where you can find information about each of the major components of the budget. More importantly, we hope you take advantage of the interactive features of the website that allow you to explore all of the budget data – from the highest levels of the district to specific schools and departments – that is available to you for the first time ever. We have moved from fixed data tables that allow users access to limited presentations of information to user-driven systems so that you can find exactly the information you are looking for on CPS’s budget. We believe this new level of transparency reinforces our commitment to engaging and empowering families and communities in education.

FY2013 BUDGET CHALLENGES

CPS faces daunting fiscal challenges for FY2013. After years in which revenues and expenditures generally increased together, the downturn in the economy began to erode revenues while expenses continued to climb. One-time fixes, including federal stimulus funding, bond restructuring and TIF surplus helped mask the depth of the structural deficit CPS faced. Starting in FY2013, we must begin to confront the reality of the structural deficit. In order to invest in these priority areas, CPS had to make hard choices about areas to cut, when to rely on one-time resources and when to seek outside support. These challenges will only become greater in FY2014 and beyond.

Background: FY2013 Operating, Capital, and Debt Budgets
The FY2013 budget that CPS is presenting represents three separate but interrelated budgets:

  • Operating Budget: Provides annual revenues and expenditures to cover day-to-day operations such as paying for teachers, utilities, school bus transportation and school meals.
  • Capital Budget: Outlines a multi-year spending plan for major, long-term investments in facilities, such as school construction or renovation, building labs in schools for career programs or construction of playgrounds and the sources of funds that will pay for it.
  • Debt Budget: Contains the revenues that will be set aside in the current fiscal year to pay for debt service in the following year – as required by our bond covenants – and shows the expenditures that will be made this year for debt service, i.e. principal, interest and fees on our bonds.

Each of these budgets is discussed and presented separately. However, understanding the relationship among the three is important to fully understanding CPS’s fiscal picture

As described fully in the Revenue chapter, CPS receives its funds from three major sources: federal, state and local. Some of these revenues are dedicated exclusively to debt or capital, and often, debt has the first claim on the revenues because specific revenues were pledged in the bond agreements. This means that the operating budget receives revenues after allocations are made to the debt and capital budgets. In particular, revenue from property taxes, Personal Property Replacement Tax, other local revenue, General State Aid, state capital reimbursement and the federal government must be allocated among the three budgets, as shown in Table 1.

This Amended budget reflects reductions in the amount that must be set aside for debt service as a result of a three-part strategy: capitalizing interest on bonds issued in August 2012, restructuring a portion of current outstanding debt later this fiscal year, and selling surplus real estate. These changes, which are described fully in the Debt Management chapter, will free up $70 million for the Operating budget to cover most of the cost of the new teacher contract.

Table 1: Debt and Capital requirements reduce funds for Operating Budget

FY2013 Revenue Source
($ in millions)

Total

Amount for Debt Service

Amount for Capital

Balance for Operating Budget

Local Revenue

 

 

 

 

Property Taxes

2,106.0

53.2

 

2,052.8

Personal Property Replacement Tax

163.4

57.7

 

105.7

Other Local Revenue

281.5

107.1

40.0

134.4

State Revenue

 

 

 

 

General State Aid

1,076.0

143.2

 

932.8

State Capital Reimbursement

115.0

54.1

60.9

0

All Other Revenues

660.4

 

 

660.4

Federal Revenue

937.7

26.8

 

910.9

Interest Income

4.5

 

1.0

3.5

TOTAL REVENUES

5,344.5

442.1

101.9

4,800.5

The remainder of this overview will focus on the operating budget. There are separate chapters that describe in detail the capital budget and the debt budget.

OPERATING BUDGET REVIEW
FY2012 performance better than budget: We anticipate that our FY2012 performance will be slightly better than projected when the budget was adopted in August 2011. As shown in Table 2, while revenues are projected to be below budget, expenditures are as well; while we still ended the year with a significant deficit, it was not as large as originally budgeted.

On the revenue side, we received more in state and local revenue than we had budgeted, but less in federal—although total revenues were still below FY2011. Property tax revenue was higher because the value of new property was greater than anticipated. Similarly, replacement taxes were up overall due to statewide factors. General State Aid operating revenue was up slightly from budget because we needed to allocate less for debt service than projected. On the federal side, revenues were less than projected primarily due to a one-time delay after payments were changed to reimbursements rather than allocations.

On the expenditure side, spending was $234 million below budget, of which, $59.8 million was in school discretionary spending. As discussed above, schools receive state supplemental resources based on the number of low-income children they serve. Because schools are permitted to carry over to the next fiscal year any funds that are not spent, they frequently do not spend the full appropriation. Accordingly, the entire $59.8 million of unspent discretionary funding will be carried over to FY2013.

Spending was also below budget in the school lunch fund, the general fund (where staff turnover was higher than budgeted), federal grants (where some carryover of funds is allowed) and in charter school tuition payments (where fewer students than projected were enrolled).

Table 2: FY2012 Results

 

FY2012 Budget

FY2012 Estimated End of Year

Budget v. Estimated

Revenues

4,869.1

4,761.3

(107.8)

Expenditures

5,110.2

4,875.9

234.3

Net

(241.1)

(114.6)

126.5

FY2013 Adopted budget: As shown in Table 3, the FY2013 adopted budget included approximately $52 million more in expenditures than the FY2012 budget, yet it invests in many new priorities that help the district achieve its vision of every child having access to a high-quality education to prepare for success in college and career. This modest increase in expenditures, when compared to the substantially larger investments we are making, reveal that we have significantly restructured our spending to reflect our priorities.

Table 3: FY2013 Adopted Budget

 

FY2012 Budget

FY2012 Estimated End of Year

FY2013 Budget

FY2013 v. FY2012 Budget

Revenues

4,869.1

4,761.3

4,730.5

(138.6)

Expenditures

5,110.2

4,875.9

5,162.3

52.1

Net

(241.1)

(114.6)

(431.8)

(190.7)

Table 4: Driving Down Expenses in FY2013

FY2013 Reductions

Savings ($ in millions)

Operations Savings Total

95.3

Facilities

36.0

Procurement (driving savings from suppliers)

20.0

IT streamlining

11.1

Reduce non-personnel costs

8.4

Transportation (bus route pairing, smaller buses)

8.0

Other Operations savings (streamlining in Talent, Finance, Security)

7.5

Transportation alternatives for special ed students and families

4.3

Education Savings Total

49.0

Eliminate outdated or less effective programs

20.6

Central Education Office reductions

10.0

Culture of Calm efficiencies

7.7

Rationalize staffing for magnet, IB, regional gifted, and classical schools

6.3

TOTAL SAVINGS

144.3

Streamlining outside of the classroom: CPS has consistently focused on increasing resources to schools and streamlining the central office bureaucracy. Since 2009, the number of staff on board has consistently declined, as Chart 1 demonstrates. Central office staff has declined from 1,518 as of June 30, 2009 to 1,086 as of June 11, 2012. This represents a decline of 28 percent. In total, staff not assigned to schools has decreased from 4,891 in FY2009 to 3,812 in FY2012. This represents a decline of 22 percent. Moreover, non-bargaining unit staff has not received salary increases since 2009.

Chart 1: Staff Reductions Outside of Schools Has Helped Reduce Costs

FY2013 Amended budget: The first year of the new CTU agreement is projected to cost $103 million above what was already included in the adopted budget. The $103 million includes $59 million for a 3% cost of living salary adjustment, $33 million for step increases (provided to teachers for additional experience), $5 million for lane increases (awarded for enhanced academic credentials/achievement), and $6 million for increases for non-teaching staff that are CTU members (e.g., school clerks, clinicians, etc.).

CPS is reducing central office spending to generate revenue needed to pay for additional contract costs without impacting kids or the classroom

  • Capitalizing interest on the recent bond issue, and a planned restructuring of approximately $100 million in bonds in the next few months. Together, these changes will free up $55 million.
  • Selling surplus property currently on the market to generate $15 million.
  • Reducing overhead in the lunchroom and improving reimbursement to free up $11 million.
  • Achieving administrative savings through procurement, delaying hiring/not filling non-teaching positions, and making other administrative cuts for a total of $22 million.

These changes impact both the revenue projections and expenditure estimates in the budget.

Revenue changes year over year: As shown in Table 3 (above), revenues were projected to decline by $139 million compared to the FY2012 budget, and by $30.9 million compared to the FY2012 estimated end-of-year results (as shown in Table 5 below). This would have made FY2013 the second year in a row that CPS will experience year-over-year declines in operating revenues. However, due to the strategies to cover the cost of the teacher contract, revenues available for the Amended Operating budget will be $70 million higher than the Adopted budget and slightly above the FY2012 Estimated End-of-Year amounts. To be clear, the revenues that CPS receives in total from federal, state and local sources do not change as part of this amendment, except for the addition of $15 million from the sale of surplus property; the changes shown below primarily result from our ability to divert less of those revenues to debt service – thanks to the financing actions described above – which frees up funds for our operating budget.

Table 5: FY2013 Operating Revenues Reflecting Amended Budget

Revenue

FY2012 Budget

FY2012 Estimated End-of-Year

FY2013 Adopted
Budget

FY2013 v. FY2012 Estimated End-of-Year

FY2013
Amended Budget

Local

 

 

 

 

 

Property Tax

2,038.0

2,053.4

2,052.8

(0.6)

2,052.8

Replacement Tax

103.6

120.4

105.7

(14.7)

105.7

TIF

16.0

16.0

30.0

14.0

30.0

Other Local

112.9

101.3

104.3

3.0

104.3

Interest

2.1

2.1

3.5

1.4

3.5

State

 

 

 

 

 

General State Aid (GSA)

955.1

970.8

862.8

(108.0)

932.8

Early Childhood Education

120.3

120.3

111.1

(9.2)

111.1

Other State

543.8

549.5

549.3

(0.2)

549.3

Federal

977.3

827.5

910.8

83.3

910.8

Total Revenue

4,869.1

4,761.3

4,730.5

(30.9)

4,800.3

State revenues declining: Most significantly, under the Amended budget, revenues from the State of Illinois, representing nearly 30 percent of our operating revenues, are expected to decline by nearly $50 million. This is less than the Adopted budget because of the changes implemented on the debt service side. However, the absolute decline in state funding that was included in the adopted budget and still exists in total, significantly impacts CPS's overall funding.

In total, CPS's state funding was cut by $56.8 million and GSA funding was cut by $44 million. This is the third year in a row that GSA was cut, following years of increases.

Table 6: General State Aid Declining

 

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

Total State allocation

4,475.2

4,616.4

4,600.3

4,600.3

4,448.1

4,236.8

CPS share (All Funds)

1,091.1

1,139.8

1,152.2

1,147.1

1,120.2

1,076.0

CPS change vs. prior year

67.2

48.6

12.5

(5.1)

(26.9)

(44.2)

CPS also receives a large share of its state funding through block grants that support special education, transportation, early childhood, nutrition and other services. In recent years, the state has cut the block grants.

In FY2013, this $12.6 million reduction included a $9 million cut to the Early Childhood program1, putting pressure on CPS to make up for the state's shortfall.

Table 7: State Support Through Block Grants Declining

 

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

Amount Appropriated

549.8

614.3

659.1

665.2

624.9

621.2

610.2

Change

 

64.5

44.8

6.2

(40.3)

(3.7)

(12.6)

Federal allocations also declining: While not immediately apparent when looked at in aggregate, federal revenues are declining; only the use of carried-over funds and the anticipation of new competitive grants provides for the increase shown in Table 5. The Education Jobs Fund (Ed Jobs) program, which represented the last of the federal stimulus support under the American Reinvestment and Recovery Act (ARRA), expired at the end of FY2012, reducing federal support by $48.2 million for FY2013.

CPS's allocation of Title I, its largest federal revenue source, is declining in FY2013 by $9.7 million to $286.6 million.

Combined, the state and federal sources are declining by a total of $114 million.

However, CPS has historically carried over federal funding from one year to the next. In FY2013, $33 million of these carryover funds will be used, making the Title I budgeted revenue $320 million. Similarly, carryover funds are used for the federal Title II program and Individuals with Disabilities Education Act, among others, as detailed in the Revenue chapter. Thus, the use of carryover funds – a one-time action to offset these declines – masks the drop in federal revenue CPS is receiving.

More pressure on local resources: Shortfalls in state funding and reductions in federal funding mean CPS must turn to local property taxes to support core operations, increasing property taxes once again. Under the FY2013 budget proposal, an average homeowner with a $250,000 home in Chicago will pay $28 more in property taxes per year, money that will allow CPS to invest in programs that ensure children in every community have access to a high-quality education to prepare them for college and career.

However, this increase just offsets other losses. The property tax increase generates $62 million in new revenue for FY20132, but does not reflect an incremental increase over FY2012 due to timing issues; therefore, property tax revenue is shown as essentially level with FY2012.

In total, despite taking all possible steps to maximize revenue, CPS will again have less revenue for operating expenses in FY2013 than it did in the prior year.

Budget relies on one-time revenues: Despite the steps CPS has taken to increase revenues and make deep expense cuts, the FY2013 budget still projects a $431.8 million shortfall. Fortunately, CPS has carefully managed its expenditures in recent years, building reserves to be used in times of financial stress. In FY2013, we will tap into those reserves. As described more fully in the Fund Balance Statement chapter, the proposed budget relies on all $349 million of unrestricted fund balance, draws down $25 million of restricted fund balance for security and tort-related expenses and reallocates to schools the projected $57.8 million of state discretionary funding they did not spend in FY2012 (as discussed above in “FY2012 Performance better than budget”). This creates challenges for FY2014, but we felt we had to use all available resources to invest in helping children access a high-quality education rather than sitting on funds for another “rainy day.”

FY2013 SUMMARY INFORMATION

While detailed information is available in various chapters of this document and on the website, below we summarize some of the key comparisons for the FY2013 budget.

Table 8 provides a high-level overview of the FY2012 budget, expenditures and the proposed FY2013 budget by top-level organization. Table 9 provides positions counts for these same units. As described in the Organizational Overview chapter and shown in the organization chart, these units represent the top level of the organization; all other areas report up through these.

Table 8: Budget by Top Level Organization

Unit Name

FY 2012 Adopted Budget

FY 2012 Ending Budget

FY 2012 Expenditures

FY 2013 Amended Budget

Accountability Total

5,608,569

4,109,209

3,178,065

4,294,019

Board of Education

2,566,823

2,072,046

1,159,484

1,239,955

Chief Administrative Office Total

643,271,942

810,194,034

721,118,975

911,781,985

Chief Education Officer Total

503,888,244

531,097,297

447,425,891

515,924,058

Chief Executive Officer

1,032,200

835,641

838,334

316,423

Chief of Staff Total

2,574,582

2,314,355

2,192,470

3,037,981

Communications Office Total

1,992,763

2,007,495

1,620,347

2,361,322

Inspector General

1,919,618

1,812,909

1,487,979

1,824,744

Law Office Total

13,005,167

12,665,093

11,987,766

13,197,749

Network Offices Total

35,990,005

31,537,969

25,904,391

34,097,506

Network Support

1,303,726

2,584,172

1,340,289

311,568

Portfolio Office Total - Portfolio Office Total

6,623,948

7,937,987

6,461,284

88,381,839

Public and Community Affairs Total

5,660,278

6,899,903

5,985,168

7,787,166

School Collaboratives Total

3,838,903,370

3,652,083,585

3,566,624,098

3,600,353,304

Strategy Management Office

0

0

0

1,212,236

Talent Office Total

45,868,765

42,052,603

34,020,403

46,099,876

Grand Total

5,110,210,000

5,110,204,300

4,831,344,944

5,232,221,731

Note: FY 2012 Ending Budget and Expenditures are as of 6/24/2012.

There are several areas from the table above that warrant further explanation:

Chief Administrative Office: This area includes major operational departments such as Facilities Operations and Maintenance, Nutrition Support Services, Transportation, and Finance, among others. The FY2013 Amended budget appears to be approximately $190 million higher than the FY2012 expenditures. However, the increase is primarily in the Facilities Operations and Maintenance department, where we moved 700 engineer positions ($70 million) and have budgeted them centrally, rather than in individual school budgets. Similarly, we have shifted responsibility for snow removal and other repairs from the school budgets to the Facilities department. After significant savings in this area through centralization, we reduced costs to $20 million. Finally, the additional $103 million costs of the CTU contract are reflect in this budget until the salary adjustments are made at the individual level. Then they will appear, as appropriate, in the School Collaboratives. Therefore, the $75 million increase can be explained by this shift in Facilities, offset by reductions in other areas. By viewing the interactive budget website, you can review the specific details by department.

Portfolio Office: The Portfolio Office was created in FY2012, with the responsibility of ensuring that every student has access to high-quality school options. Several key responsibilities were shifted to Portfolio during FY2012, including responsibility for managing school actions like turnaround, closings and phase-outs, among others. Since each of these actions requires investments, funding has been included in FY2013 for the first time. Previously, these costs were held in a “contingency” account rather than with the responsible department. Therefore, what appears to be a substantial increase is primarily a shift in expenditures.

Talent Office: The Talent Office is responsible for ensuring CPS has a high-quality workforce. One of the key FY2013 initiatives is implementation of a new teacher evaluation system. Approximately $10 million is included in the Talent Office budget in FY2013 to support this implementation. In addition, $1 million is included to increase the number of principal interns, improving our pipeline of high-quality school leaders. Other reductions offset the increase.

School Collaboratives: School Collaboratives represent the total of the school budgets. While we have continued to increase investment in schools by adding things like the College Ready Fund, it seems counterintuitive that these budgets in aggregate would go down. A significant reason for the decrease is the shift of facility costs from the schools to the Facilities Operations and Maintenance department, as described above. This represents an approximately $90 million reduction in school budgets offset by the increase in the Facilities department budget.

Table 9: Position Counts

Unit Name

FY2012 Budgeted Positions

FY2012 Actual Positions

FY2013 Amended Positions

Board of Education 

15

10

8

Inspector General 

17

17

17

Office of Law Total 

76

76

76

Chief Executive Officer 

8

7

1

Chief of Staff Total 

21

20

26

Chief Education Officer Total 

2,259

2,241

2,233

Chief Administrative Office Total 

1,256

1,190

1,850

Communications Office Total 

9

19

20

Office of Strategy Management 

--

--

TBD

Accountability Total 

43

29

26

Portfolio Office Total 

44

74

68

Public and Community Affairs Total 

39

51

50

Talent Office Total 

256

181

275

Network Support 

6

5

2

Network Offices Total 

280

218

223

School Collaboratives Total 

35,729

36,531

35,991

TOTAL

40,057

40,667

40,867

Chart 2: Budget Primarily Spent on Salaries and Benefits

Description: an image

Account

FY 2012 Adopted Budget

FY 2012 Ending Budget

FY 2012 Expenditures

FY 2013 Amended Budget

Salary

2,711,627,094

2,719,698,180

2,615,836,901

2,655,690,797

Benefits

871,982,054

865,579,450

877,944,631

899,548,125

Contracts

945,196,829

1,000,889,134

909,785,525

982,520,005

Commodities

330,988,163

348,068,724

281,590,829

346,211,422

Equipment

33,881,299

43,927,952

34,961,171

47,835,583

Transportation

110,253,631

117,210,993

111,194,217

121,608,512

Contingencies

106,280,930

14,829,868

31,670

178,807,287

Grand Total

5,110,210,000

5,110,204,300

4,831,344,944

5,232,221,731

Note: FY 2012 Ending Budget and Expenditures are as of 6/24/2012.

FY2014 AND BEYOND

The challenge of pensions: As discussed fully in the Pension chapter, the growing cost of employee pensions places a huge financial burden on CPS. Although CPS's required contribution to the Chicago Teachers Pension Fund (which covers all CPS teachers and others with teaching certificates, such as principals) is budgeted at $196 million for FY2013, this level is artificially low. As seen in Chart 2, for three years ending in FY2013, CPS has had its pension contribution set by statute at a fixed rate. When this legislative relief ends, the pension contribution will jump to an estimated $534 million, an increase of $338 million from FY2013. Pension contributions continue to grow each year. This huge growth in pension costs threatens to crowd out core spending on classrooms. CPS will work closely with the General Assembly and stakeholders to make reforms so that the pension fund remains viable without threatening the classroom.

Chart 3: CPS's Statutorily Required Employer Contributions to CTPF jumps dramatically in FY2014

The challenge of declining revenues and increasing costs means a $1 billion deficit in FY14: As discussed above, due to the recession of 2008, state funding has been on a steady decline. Both General State Aid and block grants have declined each year since FY2010. Given the state's fiscal challenges, it is unlikely this pattern will change in the near future. Federal revenues are also decreasing, as the formulas that drive resource allocation shift resources elsewhere in the nation and mandatory cuts at the federal level are poised to go into effect. This shifts the burden to local taxpayers, who are already struggling with the challenging economy and declining property values. Moreover, even without this taxpayer burden, the amount property taxes can be increased is limited by law. On the revenue side, CPS has very little flexibility to manage its budget.

However, costs continue to increase. Pension costs –as described more fully in the Pensions chapter –will go up and debt service costs will continue to climb, even with the modest five-year capital plan described in the Capital chapter. In the operating budget, salaries are the largest expense, making up $2.6 billion (50 percent) of the $5.2 billion proposed FY2013 budget. When benefits are included, 67 percent of the budget ($3.5 billion) covers compensation and related costs. Food costs for school meals, building maintenance, transportation, charter school tuition payments, community-based education supports and early childhood providers, among others, make up the balance of the budget.

Finally, despite the cuts made in the budget in both FY2012 and FY2013, we will be forced to use significant one-time resources in FY2013, creating even greater challenges for FY2014. As a preliminary estimate, CPS is projecting the FY2014 deficit at approximately $1 billion.

Opportunities for the future: CPS is prepared to confront the financial challenges facing it and to use these challenges as an opportunity to rethink how it can best provide a high-quality educational opportunity for every child to ensure he or she graduates college and career ready.

SUMMARY TABLES

The sections that follow provide summary financial information:

In addition, other chapters provide detailed information on major components of the budget and the district:

Appendices contain additional useful information:

For the first time ever, CPS is also making detailed budget information available on an interactive website: www.cps.edu/fy13budget

[1] In addition, separate from the block grants, CPS received a one-time $10 million state grant to support early childhood programs in FY2012; thus, the total reduction in state early childhood funding is $19 million.

[2] Property taxes are paid on a calendar year basis, while CPS' budget is on a fiscal year basis. Therefore, the calendar year 2012 property tax increase is $41 million but the impact on the fiscal year budget is $62 million.

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Page Last Modified on Wednesday, August 27, 2014