CHICAGO Aug 28 The Chicago Board of Education
on Wednesday unanimously approved a $6.6 billion fiscal 2014
budget for the Chicago Public Schools, tapping budget reserves
to cover 70 percent of a $1 billion deficit.
The budget gap for the nation's third largest public school
system was driven by a steep climb in pension payments that will
rise to $613 million in this budget year from $208 million in
fiscal 2013. The big rise is largely due to the expiration of a
three-year partial pension funding holiday the Illinois
Legislature approved in 2010.
The city-run district also blamed the deficit on flat or
declining revenue and contractual salary increases.
It plugged the gap this year mostly by draining nearly $700
million in budget reserves. The budget also cut spending by $112
million and increased the property tax levy to the maximum rate
allowed by state law.
Chicago Public School CEO Barbara Byrd-Bennett said the
district can't cut its way out of its fiscal crisis.
"We need meaningful pension reform that can generate
significant savings and prevent devastating future cuts to our
schools," Byrd-Bennett said in a statement.
Any changes in the pension system must come from the
Illinois Legislature, which is struggling to come up with a plan
to deal with the state's own $100 billion unfunded pension
The school spending plan for the fiscal year that began July
1 has drawn criticism from the Chicago Teachers Union and a
government finance watchdog group.
In a budget analysis released on Wednesday, the union said
the school district was unfairly blaming all its fiscal woes on
inadequate funding from the state of Illinois and inaction by
state lawmakers on pension reform.
"Absent from this discussion was any acknowledgement of poor
district decisions: no advocacy for additional local revenue, no
planning for the self-inflicted increase in pension payments,
brazen charter (school) expansion at the same time public
schools are closed en masse, and complete disregard for public
input on the district's spending priorities," the union's
The Chicago-based Civic Federation's analysis of the budget,
released last week, concluded it was unsustainable and said the
district's fiscal health will continue to deteriorate without
pension reform. The group also noted the system was already
projecting budget gaps of nearly $1 billion for the next two
Chicago Mayor Rahm Emanuel, who lobbied the state
legislature last year for pension reform, is closing about 50
schools, the largest mass public school closing in U.S. history.
The system eliminated 1,581 teaching positions and 1,587
non-teaching positions this summer, but has hired back 1,000
teachers for the school year.
Moody's Investors Service last month downgraded the credit
rating on the school system's $6.3 billion of outstanding
general obligation debt a notch to A3, citing a high debt and
pension burden that relies on the same tax base as the city of
The rating agency on July 17 cut the city's GO rating three
notches to A3 due to growing pension liabilities and related