Budget Overview

Introduction

Chicago Public Schools (CPS) has outlined a balanced $10.25 billion FY2026 budget that fully protects school budgets, funds all of the District’s commitments to its labor partners, and eliminates the risk of beginning-of-year or even mid-year cuts to schools — all while avoiding furloughing staff or borrowing measures that would negatively impact the District’s financial future.

This budget is aligned to the vision put forth in the District’s five-year strategic plan, which ensures a rigorous, joyful, and equitable learning experience for every student, in every school, in every community.

Maintaining School Funding

The most important feature of this budget is that it maintains the overall level of school funding from the 2024-25 school year, and protects the investments that have propelled CPS students to impressive academic gains over the past several years. While individual school budgets change every year due to changes in enrollment, programming, and student need, the FY2026 budget does not cut the total amount provided directly to schools.

The FY2026 budget follows the revised funding model introduced by CPS last school year, which significantly changed the way the District allocates funding for schools. Prior to the 2024-25 school year, CPS’ funding model was primarily driven by student-based-budgeting, where the District allocated funding to each school on a per-pupil basis and then layered in additional funding to promote equity. The District’s new model reverses this approach. The new model leads with equity by ensuring every school receives a core foundation of positions and resources, then uses enrollment as one of several need-based factors to determine additional funding. This new model sets a universal standard that ensures all CPS schools can offer a high-quality education, ensuring that children furthest from opportunity have the resources they need to be successful.

This budget also expands the number of Sustainable Community Schools from 20 to 36, ensuring that students in 16 additional schools in some of the city’s most underserved communities will benefit from additional wraparound services from community-based partners.

Investing Wisely in Student Success

Protecting school budgets — and the in-school staff who are funded by those budgets — has been the leading factor in driving CPS’ recent academic gains. Since 2019, CPS has increased the total amount of annual funding provided to schools by over $1 billion, and has increased the number of in-school staff — including teachers, classroom assistants, interventionists, nurses, counselors, therapists, social workers, and more — by over 7,000.

As a result of these investments, CPS students achieved one of the strongest academic recoveries in the country from the COVID-19 pandemic — especially in literacy. Reading proficiency for CPS elementary school students grew by more than 10 percentage points in just two years, and 8th-grade students at CPS are now achieving reading scores that are just two points off the national average — a remarkable achievement given the barriers that many of our students face. And among our high schoolers, CPS continues to set new records for graduation rate, scholarship dollars earned, early college credit attained, and rates of college enrollment and persistence.

These gains did not happen by accident. They are the direct result of the District’s strategic investment of more than $2.8 billion in pandemic relief funds provided by the federal government. These funds were intentionally spent over several years to provide the District with flexibility as student needs shifted throughout the pandemic and its aftermath. Recognizing that this would be a temporary source of revenue, the District prepared a plan to continue supporting critical investments once these funds were gone.

When COVID relief funds began running out last school year, CPS found $500 million in savings and efficiencies to protect the critical investments that were the foundation of so much student growth. However, many of these savings were one-time fixes, and pandemic aid has now fully expired. As a result, CPS came into this school year with the need to continue providing students with the staff, services, and tools they need at a time when the District has less revenue, and when costs are increasing at an accelerated pace.

Revenue Pressures

CPS continues to face significant revenue pressures at the federal, state, and local levels while having very little control over its own revenue.

At the federal level, pandemic-era aid has expired, and the federal government has recently attempted to withhold additional funding from CPS.

At the state level, CPS has benefited from the Evidence-Based Funding (EBF) formula created by the State of Illinois in 2017 to direct additional dollars to districts where students are furthest from opportunity. But despite this recent improvement, CPS still does not have the appropriate level of funding from the state to meet students’ needs, and in fact, CPS is already losing ground under the current formula. According to the state’s EBF model, CPS now has 73 percent of what the formula says the District needs to be “adequately” funded. This is down from 79 percent last year, and 81 percent in FY2024 — a sharp eight-point decline in just two years. It is estimated that the District requires an additional $985 million to reach the state’s own goal of 90 percent adequacy by FY2027. Furthermore, CPS is impacted by inadequate state funding of block grants and mandated categorical grants for early childhood education, transportation, and special education. In addition, there are unique circumstances regarding state coverage of teacher pensions and CPS’ ability to raise its own capital funding that are discussed in greater detail in the following section.

At the local level, the amount of property taxes collected by the City and claimed by Chicago’s Tax-Increment Financing (TIF) districts grew 266 percent between 2014 and 2023, and as of 2024 — according to the most up-to-date information available — there is more than $3 billion in TIF revenue in City coffers. While CPS is grateful for the record amount of TIF surplus revenue provided by the City in recent years, the current program could yield over $650 million in annual revenue for the District if all funds were shared.

Amid these revenue pressures, CPS has very limited control over its own ability to generate revenue. CPS’ main tool is the annual property tax levy, where annual increases are capped at five percent or the rate of inflation, whichever is higher. While the District aggressively pursues grants and reimbursements, and benefits from philanthropic generosity, these are no substitute for sustainable, dedicated revenue streams to provide the District with the stability necessary to consistently provide a high-quality public education.

Cost Drivers

At the same time CPS confronts significant revenue pressures for FY2026, CPS faces three major cost drivers: growth in student need, increasing pension obligations, and aging infrastructure.

Over 71 percent of CPS students are economically disadvantaged, many requiring additional services and resources to succeed. Like many school districts across the U.S., CPS is serving a growing number of students who require unique and specialized services — English Learners, students experiencing homelessness, and our students with disabilities. The District has both a legal and moral obligation to serve these students who face unique barriers — especially our students with disabilities. The District has made a significant effort over the past several years to turn the page on past practices and deliver record levels of support to our students with disabilities. This includes adding over 1,300 special education teachers, over 3,000 Special Education Classroom Assistants, and hundreds of nurses, social workers, therapists, and counselors since 2019. Every student — regardless of their circumstances — deserves a high-quality educational experience. But while the needs have grown, the state and federal resources to serve those needs have not kept pace.

The second major cost driver is the District’s pension obligations. While CPS has received some support from the state of Illinois on this front, the District still has significant outstanding pension liabilities for which there is no dedicated revenue source, and CPS is forced to divert funds from classrooms to pay for these liabilities. More specifically, CPS is the only district in the state that is required to fund its own teacher pensions. The state covers teacher pension costs for every other district in Illinois, while providing only 35 percent of CPS’ total cost in FY2026. The remaining 65 percent ($663.6 million) is covered by Chicago taxpayers, a burden no other district in Illinois incurs.

The third significant cost pressure is the District’s aging infrastructure. The average age of CPS buildings is 85 years, which requires significant maintenance, repair, and replacement needs. Unlike every other district in the state, CPS has limited access to alternative revenue sources such as bond referenda to fund capital projects. Because of this, the District must divert between $400 and $500 million from the classroom annually to pay for debt service to fund school construction and repairs. This limitation has forced the District to perpetually spend more on day-to-day maintenance, which is more expensive than making permanent long term improvements to school buildings that would save the District money in the long run and improve the learning experience for current and future students. Furthermore, with inflation driving up the price of equipment, labor, and raw materials, it becomes increasingly difficult to provide students and staff with the learning environments they deserve given our revenue limitations.

Initial Deficit Closing Steps Taken in the Spring

As CPS prepared initial department and school budget allocations in the spring, District leadership identified additional liabilities as well as strategic actions to help balance the budget. These actions were taken with the goal of keeping cuts away from the classroom, with a net impact of $165 million in deficit reduction.

The bulk of these savings come from $146 million in reductions to CPS department budgets. These include a 15 percent cut ($48 million) to Central Office expenditures that mainly pay for staff and vendors that provide critical administrative support to District functions, and a 6 percent cut ($98 million) to Citywide expenditures that mainly fund staff, programming, and materials that are administered at the District level and serve students across multiple schools.

These spending reductions were made after a careful and thoughtful District-wide review, and are focused mainly on optimizing resources, improving efficiency, reducing vendor costs, eliminating duplicative work, and refocusing workstreams to support the most important District functions.A breakdown of spending reductions by department is below; there are close to 200 individual cuts across the various departments.

$48.5 million in Central Office Spending Reductions:

• $9.8 million from Academic Offices
• $0.78 million increase to Board Office
• $0.78 million from Communications
• $0.26 million from Equity Office
• $0.24 million from Executive Office
• $0.34 million from Family and Community Engagement
• $4.0 million from Finance
• $4.4 million from Geographic Networks
• $0.23 million from Inspector General
• $0.20 million from Intergovernmental Affairs
• $0.32 million from Internal Audit and Advisory Services
• $1.9 million from Law
• $17.9 million from Operations
• $1.8 million from Portfolio
• $2.2 million from Student Health and Wellness
• $0.77 million from Student Protections and Title IX
• $4.1 million from Talent

$98.1 million in Citywide Spending Reductions:

• $54.3 million from Academic Offices
• $0.73 million from Family and Community Engagement
• $28.8 million from Operations
• $10.2 million from Student Health and Wellness
• $4.1 million from Talent

In addition to the $146 million in reductions to CPS department budgets, CPS leaders also used the following strategies during this initial phase of budget adjustments:

• $34 million in school-based grant strategies and programming adjustments
• $12 million in savings from a more targeted process for fall enrollment adjustments implemented in FY2025
• $23 million in projected savings from the District’s $40 million fund to stay within contractual class size limits; because CPS preserved teacher staffing levels, the District projects that the full $40 million will not be needed for schools with unique situations leading to oversized classrooms

During this initial phase of budget adjustments, CPS also identified two new liabilities adding to the FY2026 deficit:

• $30 million required in a reserve fund for new special education positions
• $20 million required in a reserve fund for districtwide IT projects

The net impact of this initial phase of budget adjustments — finalized by June 2025 — is $165 million in deficit reduction.

Engaging the CPS Community

In June 2025, Interim Superintendent/CEO Dr. Macquline King assumed leadership of the District and acknowledged the totality of potential costs that the District could face, as well as the prospects of accessing potentially available revenues.

At the behest of Interim Superintendent/CEO King, the District spearheaded an extensive community engagement campaign to ensure that budget decisions were being driven by those who are most impacted by them. During the summer, CPS hosted information briefings, in-person and virtual feedback sessions, and an online survey where students, parents, educators, labor leaders, and community partners could grow their understanding of the District’s financial situation and offer solutions on how best to reduce the deficit.

Several themes emerged from these community conversations. By-and-large, CPS stakeholders said they wanted the District to:

• Keep cuts as far away from classrooms as possible, and avoid cuts that would diminish the overall student experience
• Work collaboratively with state and local partners to identify new streams of revenue to support schools
• Ensure a more equitable distribution of resources across schools
• Resist any further borrowing that would drive up the District’s existing debt
• Forgo reimbursing the City of Chicago for non-teacher pensions
• Continue to engage the community around budget decisions

This feedback directly informed the strategies CPS has implemented to close the remainder of its budget gap in a responsible, student-centered, and equitable way.

Closing the District’s $734 Million Deficit

Initial budget adjustments from June provided the District $165 million in progress against the $734 million deficit. To close the remaining $569 million deficit without impacting direct school funding, CPS focused first on spending reductions on the District’s Central Office functions and other opportunities to keep cuts away from students.

The actions CPS is taking include the following:

• Reduce department budgets by an additional $126 million
• Accelerate $29 million in savings associated with debt refinancing
• Apply $45 million in Evidence-Based Funding above initial projections
• Apply $25 million in projected federal grant carryover
• Repurpose $65 million from Debt Service Stabilization Fund
• Leverage $25 million in existing philanthropic funding
• Increase FY2026 TIF revenue assumption by $79 million
• Define $175 million reimbursement to City for MEABF as contingent upon additional revenue

Reduce Department Budgets by an Additional $126 Million

In addition to the $146 million already cut from centrally-managed spending in the initial round of budget adjustments, the District identified $126 million in further reductions in late July and early August, as outlined below:

• $50 million in savings by additional reductions to central office personnel, streamlining business operations, data teams, and professional development costs, and transferring some functions from the central office level to the network level to provide more direct support to schools
• $29 million in savings from repurposing existing state and federal grant dollars to cover existing costs
• $10 million in savings due to a hiring freeze of central office staff; CPS will only fill staffing vacancies that are mission critical or revenue-related
• $10 million less for incubation costs for transitioning five Acero campuses to become CPS-managed schools, as recent estimates have reduced this liability from $30 million to $20 million
• $7 million in savings from delaying centrally-funded IT projects
• $6 million in administrative reductions to departments and central programs that were substantially expanded during the COVID-19 pandemic
• $5 million in savings from eliminating food and travel budgets for staff
• $4 million in savings from a negotiated increase in employee health care contributions for staff making over $90,000
• $3 million in savings from reducing the CPS marketing budget from $6 million to $3 million
• $2 million in savings from reducing the budget for non-union employee raises from $9 million to $7 million

It is worth noting that these reductions mean laying off hundreds of dedicated and hardworking District staff members. The loss of any talented professional serving the children of Chicago is devastating, and the unique impact of each of these losses will be felt somewhere in our system. These layoffs are the unfortunate result of the difficult choices that CPS must make in order to protect school budgets and the District’s financial solvency.

If there is a silver lining to the cuts identified in both of these rounds of budget adjustments, it is that many of the efficiencies and reductions identified by CPS to close this year’s budget gap are largely structural, meaning that the District is reducing the projected deficit for future years, improving CPS’ long-term financial forecast.

Accelerate $29 Million in Savings Associated With Debt Refinancing

Every year, CPS takes advantage of opportunities to refinance existing debt to put the District in a better financial position. CPS plans to issue $1.8 billion in new debt in FY2026 to refund existing debt to provide future savings for the District. While the District’s finance team typically reviews and takes advantage of any opportunities for savings in the debt market, the opportunity is higher this year as many bonds issued at high interest rates in the mid-2010s are now callable. The initial deficit of $734M included the assumption of $100M in savings, with additional savings targeted for future years. Based on the current deficit, CPS will accelerate $29M of savings initially targeted for FY27 to help close the FY26 budget gap.

Apply $45 Million in Evidence-Based Funding Above Initial Projections

On August 1, the state released data for FY2026 Evidence-Based Funding allocations to all school districts. The data showed that CPS returned to “Tier 1,” the tier of schools furthest from funding adequacy in the state’s formula, providing CPS $76 million in new funding for FY2026. This provides an increase of $45 million above previous projections for new EBF funding.

Apply $25 Million in Projected Grant Carryover

CPS projects to have $25 million of remaining federal grant carryover available from FY2025 to apply to FY2026 expenses.

Repurpose $65 Million From Debt Service Stabilization Fund

As a short-term strategy to help avoid cuts to schools or unsustainable borrowing, CPS will use up to $65 million in one-time resources from the account balance of the Debt Service Stabilization Fund to help close this year’s budget gap.

The Debt Service Stabilization Fund was established as a reserve fund to assist with interim fiscal year debt service expenses and temporary operating fund liquidity issues. The Fund has previously been fully depleted and used to assist with operational expenses, but due to recent investment returns, it has grown enough to allow for this single use.

Leverage $25 Million in Existing Philanthropic Funding

Continuing the District’s approach of examining every dollar spent and received to determine options to keep cuts away from schools, CPS is leveraging a major philanthropic donation received in 2023. CPS will leverage $25 million of this funding to help close the FY2026 deficit.

Increase FY2026 TIF Revenue Assumption by $79 Million

In the City’s 2025 budget, CPS received a commitment of a record nearly $300 million in TIF surplus revenue from the City of Chicago. Furthermore, in recent weeks, CPS received an additional $79 million in TIF revenue — exceeding the District’s expectations. This funding was used to help alleviate FY2025 budget pressures caused by lower-than-expected Personal Property Replacement Tax (PPRT) collections and operational cost overruns.

In its initial FY2026 budget outline, CPS had assumed that the City would again supply $300 million in TIF surplus revenue. At this point, CPS is increasing its assumption that an additional $79 million will be provided to CPS via additional TIF surplus, matching final 2025 distributions.

The disbursement of additional FY2025 TIF revenue, as well as the accelerating growth of property tax revenue collected by TIF districts, indicates a greater ability by the City to support CPS and the other taxing bodies. By law, CPS receives approximately 52 percent of TIF surplus funds, while the City only receives approximately 23 percent. This means that whatever the final amount of TIF surplus revenue that the City leverages, CPS will receive more than double this amount.

Define $175 Million Reimbursement to City for MEABF as Contingent Upon Additional Revenue

Finally, this budget defines that CPS reimbursing the City of Chicago for the Municipal Employees Annuity and Benefit Fund (MEABF) is contingent upon the District receiving additional FY2026 state revenue beyond budgeted assumptions, or additional FY2026 TIF surplus revenue from the City or other local resources beyond budgeted assumptions.

While CPS employees and retirees make up roughly one-third of the City’s annual obligation to the MEABF, state law is clear that the City of Chicago is ultimately responsible for maintaining this pension fund, as the City controls the tax levy designated to cover the fund. For almost an entire century, from 1921 to 2020, the City of Chicago met its full obligation to the fund. CPS was able to reimburse the City for a portion of this obligation for several years due to additional TIF surplus revenue provided by the City and federal pandemic aid that provided the District with more financial flexibility. However, CPS did not reimburse the City in FY2025 due to declining revenues, and given the financial challenges facing the District in FY2026, and given the lack of a dedicated revenue source for MEABF, CPS cannot make this reimbursement without short- or long-term impact to our schools.

Doing so would be deeply unfair to future generations of students and staff, and contrary to the feedback the District has received from communities during this process.

If TIF surplus funds exceed the $379 million assumption in this budget, or if CPS is provided with additional FY2026 revenue from the state beyond budgeted assumptions, CPS will have the ability to use these additional funds to begin reimbursing the City for MEABF. In the broader scheme, this issue is part of an ongoing conversation with our government partners, including the State of Illinois, about ensuring dedicated revenue streams to support the pensions of CPS and other municipal employees.

Challenges of Borrowing For Operating Expenses

CPS has not included adding to the District’s $9.1 billion debt burden as a strategy to close the FY2026 gap.

For starters, feedback from CPS’ stakeholders — and the public at large — has been clear that borrowing for operating expenses is an unpopular idea.

Secondly, the District is already issuing $2.4 billion in new long-term debt this year, including $1.8 billion in new debt to save $129 million through debt refinancing and reduce the District’s overall debt service costs, and over $600 million in new debt for capital projects and to reimburse the District for capital expenditures already incurred.

Additionally, CPS carries $1.25 billion in short term Tax Anticipation Notices (TANs) to make payroll due to a lack of cash reserves and misalignment between the CPS fiscal year and the schedule of disbursement of property tax revenue from Cook County.

Given this, there may not be a market for additional debt from CPS.

Most importantly, CPS anticipates that borrowing for operating expenses would send the District into a downward spiral of credit downgrades, higher interest rates, steeper cuts to staff, programs, and services, and a growing debt burden that could eventually exceed the District’s annual budget.

Unfortunately, there is a cautionary precedent: the last time CPS engaged in a similar borrowing scheme between FY2016 and FY2018, the District received 34 credit downgrades, going from an AA rating to junk. CPS still has not recovered from this borrowing; the District remains the largest public issuer of junk bonds in the nation. Over the past several years, CPS has become more stable, earning 14 credit upgrades since 2019. However, two major factors helped CPS in this partial recovery: the state’s landmark passage of EBF, and once-in-a-lifetime federal pandemic aid funding. CPS cannot assume that any similar revenue developments are on the horizon to help the District out of a financial hole.

CPS is currently paying over $200 million per year to pay off this crisis debt incurred between 2016 and 2018. This means fewer programs, fewer services, fewer staff, and fewer opportunities for students in our schools right now. This time around is no different. If the District overextends itself today, students and staff will suffer for it in the future.

Progress on Long-Term Financial Challenges

As referenced earlier, the FY2026 proposed budget fully protects school budgets, funds all of the District’s commitments to its labor partners, and avoids furloughs or borrowing measures. It also makes significant progress on the District’s long-term financial challenges to protect these priorities over the long-term.

At the start of this year’s budget process, CPS projected deficits reaching nearly $1 billion in FY2027 and exceeding that in future years.

Projected Budget Deficit Prior to FY2026 Budget Balancing

Projected Budget Deficit After Structural FY2026 Solutions and Actions Impacting Future Years

While CPS still faces an uphill climb in future fiscal years, this budget makes significant progress to combat these challenges without cuts to schools and without additional borrowing.

Ensuring Long-Term Financial Stability

The steps taken to balance the FY2026 budget reflect CPS’ commitment to maintaining, and hopefully growing, the funding currently allocated to schools. But to do so will require more sustainable revenue. As a District, CPS stands ready to work with all local and state partners to find long-term solutions that will support all funding streams.

At the federal level, CPS will continue to advocate for additional funding for public education and fight to protect the District from future defunding attempts by the Trump administration.

At the state level, CPS will continue to advocate for additional funding to bring the District to full funding adequacy and for full funding of mandated categorical grants, much of which supports costs for students with disabilities. As the Chicago Board of Education completes its transition to a fully-elected board, CPS will seek critical changes at the state level, including having the state cover nearly 100 percent of CPS’ teacher pensions (the state currently only covers 35 percent of teacher pensions now), and giving CPS additional tools to raise money for capital improvements.

At the City level, CPS will continue to work with City partners to strike a balance of support and accountability while the Chicago Board of Education transitions to a fully-elected Board.

Next Steps

Two budget hearings will be held on August 19, 2025 to gather additional feedback from the CPS community on the proposed FY2026 operating budget. Information on how to participate in these hearings can be found at cps.edu/budget.

Following these hearings, the District will present the balanced FY2026 budget to the Chicago Board of Education for approval on August 28, 2025.

CPS’ Operating Budget by Spending Unit

CPS’ total operating budget includes $8.66 billion in funding, with 95 percent of these funds directly supporting schools. Funding allocated directly to District, charter, and contract school budgets makes up 60 percent of the operating budget. Citywide funding allocations to provide centrally managed support directly to schools, such as custodians, nurses, social workers, security, and other functions, make up 35 percent. Citywide allocations include funds transferred to schools after the start of the year to account for fall enrollment funding adjustments, grant awards, and other factors. The remaining 5 percent of the CPS operating budget covers central office and network costs providing essential services in support of schools and the District.

CPS’ Operating Budget by Expense Category

The following table breaks out the District’s same $8.66 billion operating budget by expense category, to provide an overview of what types of spending CPS has planned in its FY2026 budget.

Salaries and Benefits: 71 percent of the FY2026 operating budget funds employee salaries and benefits. The FY2026 budget for salaries reflects an increase of $107 million over the FY2025 budget which is primarily driven by the cost of contractual increases for union employees. FY2026 benefit costs increased by $70 million over FY2025 budget, mostly attributed to increasing costs of medical coverage and associated medical claims.

Contracts: This category includes tuition for charter schools and private therapeutic schools and payments for clinicians that are not CPS staff. This category also includes early childhood education programs provided by community partners and programs such as Safe Passage, City Year, After School Matters, and Safe Haven. In addition, this category includes transportation, repair contracts, legal services, waste removal, custodial services, engineering, and other services. FY2026 contractual costs will increase by a projected $63 million over FY2025 mostly driven by statutory increases in charter funding tied to the per-capita tuition charge, as well as increased student transportation costs. Significant savings in this category were accounted for by reducing the contractual costs for facility repairs and custodial management services.

Commodities: Commodities include spending on items such as food and utilities (which make up the largest share), instructional supplies such as textbooks and software, and other supplies such as postage and paper. The FY2026 budget for commodities is $20 million over FY2025 budget due to increased utility costs, anticipated increase in school meals served, and one-time expenses associated with District curriculum materials.

Equipment: Equipment pays for the cost of furniture, computers, and similar other non-consumable items. The FY2026 budget includes a decrease of $19 million due to the scaling back of the District’s new security camera rollout and a reduction of planned purchase of classroom furniture.

Contingencies: This account type includes three categories of spending. The first category represents funding that has been budgeted but not yet allocated to specific accounts or units where it will eventually be spent. Under the current system for school funding, schools are not required to allocate all of their funds, but can hold some in contingency while they determine how they want to spend it. Similarly, the District holds grant funds in contingency, particularly if the grant is not yet confirmed. The FY2026 contingency budget reflects a reduction of $155 million, driven largely by the expiry of pandemic-era grant funding.

CPS’ Operating Revenues

Local Revenues

CPS is projected to receive $4,156.5 million in property tax revenues in FY2026, which remains the District’s largest single revenue source. A portion of the District’s property tax revenues are restricted for specific uses. Within the operating budget, CPS projects to receive $602 million from the dedicated Chicago Teacher Pension Fund (CTPF) levy, which assists CPS in paying its annual pension obligation. (For more information on the pension levy calculation, please review the Pensions chapter).

Personal Property Replacement Taxes (PPRT) are collected by the State of Illinois and distributed to local governments state-wide. While the tax rates behind the collections are constant, the amount of funding CPS receives from this revenue can vary significantly from year to year. This is because PPRT is a tax that businesses and partnerships, trusts, and S corporations pay on their net Illinois income, along with a tax that public utilities pay on invested income. As corporate and investment income fluctuates, so does the amount received by local government agencies, including CPS. Due to economic factors and the impact of pass-through entity tax legislation, PA 102-0658, PPRT underperformed FY2025 expectations with an end-of-year total of $257 million in CPS revenue, approximately $118 million less than the FY2025 budgeted total of $375 million. CPS projects to collect $240 million in PPRT revenue in FY2026.

State law requires that surplus TIF District property tax revenue is proportionally distributed to the taxing bodies within the TIF Districts. CPS has budgeted $379 million in TIF surplus funding in FY2026 to match the final allocation provided to CPS in FY2025. CPS’ share of TIF surplus funding will be finalized once the City of Chicago passes its budget in the fall.

All other local revenue includes a variety of other revenue sources, including school-generated revenue, payments from charter schools, and revenue generated through intergovernmental agreements (IGAs), including $142 million from an annual City property tax levy that funds the debt service on CPS issued bonds through the District’s School Building and Improvement IGA.

State Revenues

In FY2026, CPS’ state revenue budget is $2,300 million, which comprises 26.6 percent of CPS’ operating budget. The state provides funding to CPS through Evidence-Based Funding, support for teacher pension normal cost, and several other appropriations that come in the form of reimbursable or block grants.

EBF is the largest portion of funding that CPS receives from the State of Illinois. In FY2026, EBF represents 62.5 percent of the $2,300 million of CPS’ state operating revenues.

FY2026 is the ninth consecutive year that CPS has benefited from the State of Illinois making payments to the Chicago Teacher Pension Fund (CTPF). While the state contributions help to offset the impact that CTPF has on CPS’ financial health, Chicago remains the only district in Illinois that is required to pay contributions to its teacher pension fund. In FY2026, the state contribution to CTPF is $363.1 million, an increase of $9.2 million from the prior year’s contribution of $353.9 million, but only 35 percent of the District’s total teacher pension cost.

In addition to EBF and teacher pension contributions, CPS is projected to receive $525 million in revenue from other state-appropriated funds and categorical grants. The majority of this funding is from the Early Childhood Block Grant, estimated at $277 million in FY2026, and mandated categorical grants, estimated at $180 million in FY2026.

Federal Revenues

Most federal grants require the Chicago Board of Education to provide supplemental educational services for children from low-income households, children from non-English speaking families, and for neglected and delinquent children from preschool through twelfth grade. These grants are dedicated to specific purposes and cannot supplant local programs. Medicaid reimbursement and Impact Aid are the only federal funding that is without any restriction.

For additional information on the FY2026 Revenues, please review the Revenue chapter of the budget book.

CPS Personnel Budget

The FY2026 budget includes 45,542 full-time equivalents (FTEs), a decrease of 423 FTEs from the FY2025 budget. 96 percent of all positions in the FY2026 budget provide direct support to schools.

Over 70 percent of the District’s budget is tied to the people who provide our students with instruction, support, and critical operational administration. The changes in the FY2026 headcount include:

• An additional 103 Teachers to support enrollment increases seen after the start of school, as well as additional special education teachers to support changing IEP needs of students with disabilities.
• A decrease of 216 School Support Staff, primarily driven by assessing required staffing levels of Special Ed Classroom Assistants (SECAs) in certain settings to meet student IEP needs, and reduction of vacant school lunchroom positions. Based on evolving student IEP needs coupled with expected enrollment changes, the District has budgeted for over 400 classroom support roles to be added back during the school year, as needed.
• A decrease of 174 FTE in Central and Network offices; these include staff performing central operational functions within Finance, Talent, IT, and other administrative offices, content specialists within academic offices, Network-specific Instructional Support Leaders, and other staff providing academic, programmatic, and technical support to schools.
• A decrease of 125 Citywide Student Support staff, primarily driven by a reduction of citywide lunchroom positions, as well as crossing guards that service private facilities and in areas where the district provides overlapping safe passage service.

FY2026 Capital Budget Overview

The FY2026 budget for Chicago Public Schools (CPS) includes a capital budget totaling $555.9 million of investments that will focus on priority facilities needs at neighborhood schools, mechanical systems that control the indoor environment and air quality of our schools, building envelope improvements for roofing systems, ADA accessibility, restroom modernizations, student recreation and athletic improvements, site improvements, and continued expansion of technology upgrades and other academic priorities. To support schools throughout the city, the FY2026 capital plan provides funding in five main areas: critical facility needs, interior improvements, programmatic investments, site improvements, and IT upgrades.

CPS will continue to invest in energy efficiency measures, including the replacement of existing equipment with energy-efficient equipment, replacement of steam heating systems with hydronic systems, lighting controls, replacement or addition of Building Automation Systems (BAS) for more efficient systems operations, heat pumps, replacement of existing roof-mounted equipment with energy-efficient equipment, improved roof reflectance and energy efficiency resulting from a water and airtight roofing envelope system, which we can build on to further invest in energy savings through clean energy investments.

CPS is committed to promoting equitable access to high-quality school environments, and equity served as the foundation for the FY2026 capital plan. The District's Equity Office played an important role in developing the FY2026 capital proposal by ensuring that resources are distributed fairly and equitably across CPS schools, allowing all students to share in the District's record-setting progress. In addition, the FY2026 capital budget planning process included several enhancements, most notably around transparency and community outreach.

Community feedback requested more transparency in the prioritization process for Capital projects. In April, Chicago Public Schools (CPS) held three virtual and two in-person meetings to engage communities in discussing capital priorities for the FY26 capital plan. These sessions, led by the CPS Capital Department, Office of Equity, and Office of Family and Community Engagement (FACE), offered insights into the capital planning process and helped prioritize critical needs. We received over 5,000 survey responses during the capital plan development process. The high number of critical facility needs identified by the Educational Facilities Master Plan (EFMP) is reflected in the proposed Capital budget, which allocates funds across various categories.

The CPS facility portfolio includes 522 campuses and 803 buildings. Our average facility age is over 85 years old, and the total CPS immediate critical facility need is nearly $4 billion. Since FY2017, CPS has invested over $3 billion in capital improvements across the District. These projects include major renovations to ensure our schools remain warm and dry, facility construction to relieve overcrowding, security cameras to provide a safer environment for our children, and renovations to aid programmatic enhancements, among others. Additionally, CPS is continuing to invest in ADA upgrades to ensure all CPS campuses are more accessible.

The FY2026 capital budget is primarily funded by future issuance of general obligation bonds, which are principally repaid by Evidence-Based Funding (EBF). (For more information, please see the Debt Management chapter of the budget book.) A portion of the FY2026 budget is also funded by Tax Increment Financing (TIF) funds, state funding, and other outside resources as they become identified.

CPS’ capital plan aligns with the priorities outlined in the Educational Facilities Master Plan. Future projects will be determined by equity, assessed need, educational priorities, and available funding, with the goal of maximizing the number of students impacted by the capital investments.

For additional information on the FY2026 Capital budget, please review the Capital chapter of the budget book.

Debt Budget Overview

The Chicago Board of Education (Board) is authorized by state law to issue notes and bonds, enter into lease agreements for capital improvement projects, and assist in the management of cash flow and liquidity. As of June 30, 2025, the Board has approximately $9.1 billion of outstanding long-term debt and $450 million of outstanding short-term debt. FY2026 includes appropriations of $1.0 billion for long-term debt service payments. Approximately $23.2 million of appropriations for interest on short-term debt is included in the operating budget.

CPS’ Capital Improvement Program, described in the Capital chapter, funds long-term investments that provide our students with a world-class education in high-quality learning environments. CPS relies on the issuance of bonds to fund the investments laid out in the program, which include roofs, envelopes, and windows; state-of-the-art high school science labs; high-speed internet and digital devices; playgrounds and athletic fields; and the expansion of full-day pre-k and other high-quality programs. Bonds are debt instruments that are similar to a loan, requiring annual principal and interest payments. Typically, CPS issues long-term fixed-rate bonds, which pay a set interest rate according to a schedule established at the time of debt issuance. As of June 30, 2025, all CPS outstanding long-term debt is fixed rate.

For additional information on the FY2026 Debt budget, please review the Debt Management chapter of the budget book.