Chicago Public Schools approves budget, Civic Federation warns of challenges
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The Chicago Public Schools board of education unanimously approved the $9.9 billion fiscal 2025 budget Thursday.
The vote came on the heels of a report from the Civic Federation of Chicago, a nonprofit fiscal watchdog, that warned the budget “presents a temporary solution to a long-term structural financial problem.”
The budget represents an increase of roughly $500 million over the previous fiscal year, driven mostly by growth in the district’s capital budget,
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S&P Director Ying Huang declined to comment directly on the
As for the use of federal relief funds to balance the deficit, she said, “the board’s ability to scale its operations to match expenditures with available revenues and manage the size of short-term borrowing will be critical in avoiding potential downward rating pressure.”
In a January credit opinion, Moody’s noted the district ended fiscal 2023 with no tax anticipation notes outstanding. However, CPS still has very low liquidity relative to its peers, the rating agency said, especially in the general fund — and that’s the biggest constraint to its credit profile.
“The district will continue to use TANs because cash balances are not high enough to maintain cash flow when the district is awaiting its second installment of property taxes,” the rating agency said. “The district deposits funds with the bond trustee three to 18 months in advance of debt service payment for the following year. This deposit is the primary reason why available general fund net cash is much lower than operating fund net cash position, which includes the funds on deposit with the trustee.”
The district’s 2025 budget also marks a shift from student-based budgeting — in which dollars follow students, who are weighted based on demographic characteristics — to a fully need-based funding model, which offers additional resources for schools with greater need.
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But at the meeting Thursday, board member Michelle Morales referred to a vicious cycle in which under-resourced schools had lost enrollment, causing them to bleed even more funding.
Illinois public schools that serve low-income populations face greater funding challenges than their peers in other states. A
In those two states, the report noted, “the highest poverty districts receive at least 15% less state and local funds than the lowest poverty districts.”
Illinois also had some of the lowest district revenues derived from the state, ranking 42nd out of the 46 states included in the nonprofit’s analysis, ahead of only Pennsylvania, New Hampshire, Nebraska and South Dakota. (Alaska, Hawaii, Nevada and Vermont were excluded, due in part to revenue tabulating differences.)
The CPS presentation notes the district’s “structural budget issues remain moving forward due mainly to a lack of adequate and equitable funding from the state.”
Over half (59%) of the district’s operating revenue comes from local sources: property taxes, personal property replacement taxes and tax increment financing surplus. The state contributes 25% of operating revenues, including evidence-based funding and categorical grants. The federal government chips in 16% of operating revenues, but federal relief funding ends September 30.
The presentation points out the state treats CPS differently than every other district in the state on teacher pensions — it funds teacher pensions for others but provides 35% of pension funding for CPS — and argues that “$1.1 billion in additional funding would be available if the state fully funded [the] evidence-based funding formula.”
“Illinois should play an even more significant role in supporting Illinois’ school districts,” the Civic Federation’s report concluded. “Chicago Public Schools is still only funded at 81% of adequacy based on the [evidence-based funding] formula, and a majority of other school districts around the state are also under the state’s prescribed 90% of adequacy funding targets.”
But Illinois Gov. J.B. Pritzker pushed back on the arguments by CPS and Mayor Brandon Johnson that the state owes CPS more money, saying it’s not “the job of Springfield to rescue the school districts that might have been irresponsible with the one-time money they received,” according to the
“When [evidence-based funding] was passed, the state’s significant role in funding schools was agreed to and clear,” Pritzker spokesperson Alex Gough said. “Illinois would invest $350 million more each year into EBF until all school districts were 90% funded. We agree that the state should continue to fund EBF.
“In the governor’s administration, Illinois has played an even more significant role in funding schools in FY25 alone,” he added. “That includes a $75 million increase in the Early Childhood Block Grant, as part of year two of Smart Start Illinois, which funds preschool, and $45 million to continue year two of the three-year pilot for Teacher Vacancy Grants.”
A CPS spokesperson said the 2025 budget’s $500 million increase is necessary “to address vital facility repairs,” and pointed to a statement from CPS CEO Pedro Martinez that this budget “puts teaching and learning front and center where [they] belong.”
“We recognize that future budgets will require new, sustained streams of revenue,” board President Jianan Shi said Thursday. “Everything is on the table. We are all responsible for ensuring the success of our students.”
