Chicago Public Schools Initiates FY 2026 Budget Process that Protects Classrooms and Student Learning

CHICAGO — As the 2024–25 school year winds down, Chicago Public Schools (CPS) is launching its Fiscal Year 2026 budget process with a clear commitment: protect school funding, avoid new debt, and hold the line on taxes—even amid rising costs and the expiration of federal COVID-19 relief.
CPS CEO Pedro Martinez this week outlined a responsible, student-centered path forward, focused on maintaining investments in teaching, learning, and student supports, while pursuing additional revenue as well as cost savings in central office operations and contracts. The District will continue its equity-based budgeting model, ensuring every school receives a baseline of resources, regardless of size or location, plus additional funding based on the needs of students in each building.

The draft school budgets that will be shared with principals Thursday will reflect the best of three potential budget scenarios that were presented to the Chicago Board of Education. It is the only one that allows CPS to maintain school funding levels - a stated priority for the Board, the Mayor’s office, and other key stakeholders.

“Even in the face of real financial challenges, we are protecting our classrooms,” said CEO Martinez. “We are not cutting the total amount of funding that goes directly to schools. But to ensure strong, sustainable learning environments, we need collective action—across families, school leaders, educators, partners, and government.”

Budget Challenges and Available Funding

CPS is currently projecting a $529 million budget shortfall for the 2025–26 school year. This figure is driven by:
Rising contractual and operating costs, including the cost of serving more students with greater needs - with documented increases in students with disabilities and English Learners, among other student groups.

• The expiration of federal ESSER relief funds
• Longstanding existing debt totaling more than $9 billion

Each year, CPS spends over $500 million on debt repayment—funds that could otherwise support classrooms. This includes $194 million in costs from emergency loans for short-term budget issues. These costs will continue until the last bonds mature in 2048.

To begin addressing this year’s projected shortfall, the District will release school budgets to principals Thursday based on $300 million in potential additional revenue. With this assumption, the deficit would shrink to $229 million, allowing CPS to sustain current school funding levels and balance the budget through cuts and cost-saving measures in central and citywide budgets.

Further reductions in the gap will require bold and collaborative action at the local, state, and federal levels.

Local Opportunities for Fiscal Innovation

For more than a year, CPS has advocated for more equitable and transparent use of Tax-Increment Financing (TIF) funds—public dollars that have historically been diverted from schools. The District continues its call for additional TIF funds today as it seeks the additional $300 million for Fiscal Year 2026.

“Currently, more than $3 billion in TIF funds are held in City accounts,” said CEO Martinez. “Allocating a portion of this funding to our classrooms would provide much-needed support for students and educators. This approach is both fiscally responsible and aligned with our commitment to education.”
TIF accounts generate more than $1.2 billion annually. CEO Martinez has recommended that the City allocate $600 million of these funds to CPS. This strategic move could eliminate the need for further borrowing and help protect the District’s credit rating."

State-Level Advocacy Must Continue

Despite improvements to Illinois’ education funding formula, CPS remains underfunded, falling significantly short of funding adequacy according to the state’s own Evidence-Based Funding (EBF) model.

CPS also faces unique financial burdens not shared by other districts, including:

• $600+ million in teacher pension costs paid by Chicago taxpayers
• $540 million in capital debt service funded by unrestricted dollars, limiting investment in instruction
• Persistent underfunding in pre-K, special education, and student transportation

The District has long sought “pension parity” with other Illinois school districts with a request for the state to share the burden of funding teachers’ pensions more equally. Currently CPS is the only district in Illinois required to fully fund its own teacher pension fund. In addition, as part of its FY2026 legislative push, CPS is calling on the state to:

• Increase EBF investments by $550 million annually to stay on track for full funding by 2027.
• Allocate $165 million statewide to support student nutrition, transportation, and special education
• Invest an additional $75 million in early childhood education

Last month, CEO Martinez led a delegation of 100 students and families to Springfield to advocate for these critical investments.

A Call to Action

CEO Martinez and Chief Education Officer Bogdana Chkoumbova have overseen the District during a period of significant academic growth with elementary school students posting gains in literacy and math on state assessments for two consecutive school years while intentional efforts have yielded a record-breaking high school graduation rate - with graduates earning more than $2 billion in scholarships and more than half of CPS graduates leaving high school with not only a diploma but college credit, career credentials and certifications.

“Chicago’s students deserve a sustainable, long-term solution—not temporary fixes,’” said CEdO Chkoumbova We’ve already shown what’s possible when our schools are properly resourced, and I have full confidence that our City’s leaders will come together to maintain the school funding levels that have positioned Chicago as a national leader in academic recovery and progress.”
As CEO Martinez, a CPS alumnus and parent, and CEdO Chkoumbova, a 24-year veteran of CPS, prepare to leave the District later this spring, they expressed pride in the District’s academic progress and called for continued collaboration.

“A strong public education system not only prepares our students for success—it secures our collective future as a thriving city. It attracts diverse businesses and manufacturers that see Chicago as the home of a skilled, dynamic workforce driving our economy forward,” said CEO Martinez. “We’re known as 'the City that works’, but my hope is that we become even more: the city that works together.”

Next Steps

Local School Councils must approve their school budgets by June 4.

The proposed full District budget, including central and citywide investments, is expected to be released this summer for public input.

The CPS Board of Education will vote later this summer on the final FY2026 District budget.

To learn more about how to support sustainable school funding, visit cps.edu/advocacyday.