The Chicago Public Schools (CPS) is struggling with a financial crisis and must close a severe budget gap before schools open this fall. Chicago school officials must enact aggressive measures or the start of the school year for 400,000 students may be affected. Potential impact could include school closings, teacher layoffs, and delayed start of school year.
The financial crisis, which has been brewing over several years, is coming to a head this month. News reports citing public documents state that the school district owes $634 million dollars to the Chicago Teachers’ Pension Fund by June 30. In total, the district will owe about $1 billion on July 1, the start of the new fiscal year.
Chicago Mayor Rahm Emanuel has declined comment to reporters about whether the CPS will be able to make the pension fund payment. At a press conference early this month, Emanuel said, “There’s no doubt the finances are challenging…And so, there is a financial challenge, and my whole goal is to now work with the state and make sure that the financial challenges do not undermine the hard work that our teachers, our principals, our parents and our students are doing academically at CPS.”
The Chicago Tribune reported that widening budget gaps stem from the district borrowing from its reserves, which stifled the teacher pension fund for a decade. Tapping the rainy day fund was a short-term measure and the Chicago public schools have continued to have budget shortfalls.
The beleaguered CPS is without an executive officer after Barbara Byrd-Bennett resigned on May 31 amid a federal investigation of the school district.
Chicago is further hampered in its ability to raise money after a major credit rating agency downgraded much of the city’s debt to junk status in May. Options to close the budget shortfall are controversial, which include substantial tax increases and cutting costs by closing schools and laying off teachers.
