Chicago Public Schools will drain nearly $700 million in reserves, raise its share of the Cook County property tax as much as possible and make cuts that include $68 million from the classroom to close its $1 billion deficit, according to a $5.58 billion preliminary budget presented Wednesday.
The cuts forced by the massive budget shortfall triggered protests Wednesday at City Hall and district headquarters ahead of the monthly Board of Education meeting.
"The actions you're taking is not putting students first," said Avelardo Rivera, a sophomore at Whitney Young High School who joined dozens of CPS students at the meeting. "It's actually putting students last."
The district, which is closing 49 elementary schools and a high school program, this month fired nearly 3,000 teachers and school based staff members in an effort to address the deficit.
Mayor Rahm Emanuel and district leaders put the blame on Springfield and the lack of pension reform. CPS' pension payments this year will triple to nearly $613 million because payments that were withheld for the last three years are now coming due.
Until Wednesday, CPS officials maintained that district cuts would not hurt the classroom, and that teacher layoffs and program reductions were the result of decisions made by principals under the new per-pupil budgeting system.
The budget, with $68 million in school-based budget cuts reducing core instruction spending by 3.5 percent, enraged parents who have seen their school's principals forced to slash spending.
"You are using CPS students as pawns," said Theresa Martinez, a parent at Bell Elementary, a high-performing North Side school that has seen its budget cut by $750,000. "The children are the first to lose with the budgets you've proposed."
School officials have also made $112 million in cuts to central office operations and administrative expenses and have used $159 million in savings realized from last year's budget to help plug the $1 billion hole.
The bleak budget situation led Moody's Investors Service on Wednesday to lower the district's general obligation bond rating to A3 from A2. Moody's and several other rating agencies had also lowered the district's bond rating last year. Moody's cited the lack of "satisfactory pension reform" in issuing its latest rating downgrade.
The preliminary budget includes a $93 million increase in salaries from union contracts. The district's property tax increase will mean an extra $51 in taxes for a home valued at $213,000.
The budget must be voted on by the August board meeting, and unless the state addresses pension reform by Aug. 26, district officials say many of the cuts will remain in place.
"It is very, very clear that the lack of pension reform in Springfield has really brought this crisis right now to our classroom doorstep," schools CEO Barbara Byrd-Bennett said as she called on Local School Councils, parents, faith leaders and education advocates to lobby state legislators.
"We just can't cut our way out of this one," Byrd-Bennett said. "The charge card is tapped and there's no way for us to cut ourselves out of this deficit, so the pain that teachers are feeling and children is real."
Protesters who marched on City Hall called on the city to free up tax increment financing district money to cover the CPS shortfall. Emanuel cast aside that notion, returning to the ongoing call for pension reform.
"You cannot either tax your way or TIF your way out of this problem," Emanuel said. "It is a structural problem that needs to be addressed in a structural way, which is why we need pension reform."
Chief Administrative Officer Tim Cawley said the vast majority of the reserves being used to cover the deficit — $344 million — came from the state and as a result of Cook County delivering property taxes on time for a second year in a row.
"All it does is pull forward money," Cawley said. "It's not a structural improvement in revenues, but that's what helped us and created reserves that we can now use in 2013 and 2014."
Critics of school closings and other cuts, led by Chicago Teachers Union President Karen Lewis, have questioned the accounting that led the district to claim a $1 billion deficit.
"Every year, it's the same thing," Lewis said Wednesday. "The press release budget is the press release budget. We talked about it last year and the year before that. It is always a problem, and then they get mad when they get called liars."
For fiscal year 2013, the district earlier claimed a $665 million deficit and then said it would largely drain the district's cash reserves to cover the budget gap. In 2010 under former Mayor Richard Daley, CPS officials were threatening to increase class sizes because of a growing deficit before federal stimulus dollars helped them breach the gap for two years in a row.
The annual use of one-time fixes is what troubles bond rating agencies, said Rod Estvan, education analyst with disability rights group Access Living.
"The endless claims that they've exhausted reserves but then these funds are available, it's not new with this current administration," Estvan said. "They're now saying they found a pot of money because of accelerated payments from the county. This is not going to make people that look at the financial stability of CPS comfortable."