Key Points:
- CPS may borrow in emergencies to protect schools.
- $10.2B budget safeguards classrooms.
- TIF surplus helps manage $734M deficit.
Chicago Public Schools Chief Financial Officer Miroslava Mejia Krug reassured board members this week that emergency borrowing remains an option for the district under its proposed Chicago Public Schools Budget of $10.2 billion budget.
In a memo sent Tuesday, Krug explained that the district’s legal team confirmed that the school board could authorize emergency borrowing by a simple majority vote if unexpected funding shortages occur. This clarification was aimed at easing concerns from board members about whether the district had adequate safeguards to protect school funding throughout the year.
Budget Challenges and Key Points
The proposed Chicago Public Schools Budget does not currently include a $200 million loan or the debated $175 million pension reimbursement to the city. Instead, it maintains that the pension payment would only be made if additional revenue becomes available later in the year.
Krug emphasized that including such borrowing in the current plan would put pressure on classroom funding. She explained that issuing a short-term loan without an immediate need could increase interest payments, limit future financial flexibility, and potentially lead to cuts in school operations.
The district is already issuing $2.4 billion in new long-term debt, and estimates show that taking on further loans could add as much as $194 million in interest costs. Those costs, Krug noted, would reduce resources available for teaching, student programs, and essential school services.
The budget proposal prioritizes avoiding midyear or early-year cuts to schools. It also provides a contingency pathway: if revenues fall short, the board could vote to borrow funds later in the fiscal year to maintain existing operations.
Impact on Schools and Students
Some board members raised concerns about whether the Chicago Public Schools Budget leaves schools vulnerable if expected revenues do not arrive. Krug’s memo reassured members that emergency borrowing could ensure continuity in classrooms, protecting core academic programs and essential services for students.
One of the district’s biggest financial challenges is its high debt-per-student ratio, among the largest of any major U.S. school district. This makes borrowing decisions particularly sensitive, as every dollar spent on debt repayment is a dollar not available for teachers, staff, and school programming.
Despite these concerns, Krug reiterated that the budget protects classroom funding while allowing flexibility if conditions change midyear. By keeping immediate borrowing out of the plan, the district hopes to preserve financial stability and direct more funds toward schools.
Looking Ahead
The Chicago Board of Education is scheduled to vote on the proposed Chicago Public Schools Budget by Friday. If approved, the plan would take effect for the fiscal year that began July 1. State law requires CPS to have a budget in place to legally continue spending and to ensure that schools open and operate without disruption.
Krug also addressed questions about anticipated revenue from the city’s Tax Increment Financing (TIF) surplus. The budget assumes CPS will receive $379 million from this source, which would represent a modest increase from the prior year. According to Krug, this estimate is consistent with past allocations, as CPS typically receives more than half of surplused TIF funds.
As the district works to close a projected $734 million deficit, the emphasis remains on maintaining stability for students and educators. The proposed budget seeks to avoid cuts to schools, preserve instructional resources, and provide pathways for additional borrowing only if unforeseen shortfalls emerge.
For teachers and families, the outcome of this week’s board vote will determine how resources are distributed across classrooms in the coming year. While financial challenges remain, district leaders have stressed that their goal is to protect schools from disruption and ensure students continue to have access to essential educational opportunities.
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