Chicago Public Schools faces $240 million budget shortfall

A new financial report for Chicago Public Schools (CPS) shows there are no easy solutions to the district's $240 million budget shortfall. The report was prepared by Baker Tilly, an outside advisory firm, and released just before a crucial school board meeting. The report reveals that significant cuts might be necessary. This could mean layoffs or furlough days for staff. CPS is also considering borrowing money or asking the city for more funding, which presents its own challenges. The board's decision on how to proceed could have major financial implications for both the school district and the city. Despite a record $311 million in extra cash from tax increment financing (TIF) districts, there is not enough to meet new agreements or obligations, including staff pension payments. It was not planned for in the CPS July budget. The report indicates there are only $139 million available to address the shortfall. The potential solutions suggested in the amendment include using TIF funds, local revenue, or making cuts to budget items. The report warns that making large cuts at this late point in the school year would negatively affect students and staff. CPS is also dealing with a $200 million gap related to lower-than-expected tax revenues and rising costs in special education and transportation. Refinancing options being considered could lead to future financial issues down the line. CPS CEO Pedro Martinez has expressed concerns about taking on pension costs that he believes are not the district's responsibility. Mayor Brandon Johnson, who supports the CPS budget amendment, is facing pushback over this budget situation. The mayor's team suggests that short-term borrowing may be necessary to fill the budget gap. They recommend timelines of three, five, or ten years for repayments. Concerns were raised about the potential ramifications if the school board does not approve the proposed budget changes.