What to know about the CPS School Board resignations and the fallout

The Chicago Board of Education was turned upside down over the last week.

The board resigned Oct. 4 and, a few days later, Mayor Brandon Johnson named new board members. Here's a rundown.

Why are the seven members of Chicago’s School Board resigning?

The ordeal stems from disagreements over how to address an expected $300 million financial shortfall at Chicago Public Schools.

The mayor, the board, the Chicago Teachers Union and embattled CPS Chief Executive Officer Pedro Martinez have weighed in.

Johnson pushed CPS to take a short-term, high-interest loan to support this year's budget. That would help pay for rising expenses and for a pension payment for non-teacher CPS staff.

The board agreed with Martinez over the summer that a loan wasn’t a solution. They also refused to take on the pension payment.

What is the funding shortfall? 

The gap this year is at least $128 million, but that doesn’t include an additional $175 million the city says it's owed to fund the pensions.

The school district started with a nearly $800 million hole before approving this year’s budget in July. Rising costs for health insurance and special education services, the end of federal COVID-19 relief dollars, salary increases and the pension payment led to the deficit.

The final budget, proposed by Martinez and approved by the board, closed $500 million of that deficit through cost cuts, refinancing debts and by keeping positions unfilled.

How risky is the short-term loan that Mayor Johnson wants?

The size and terms of the loan haven’t been negotiated.

But in an internal memo arguing against this particular loan, CPS officials called it expensive “crisis borrowing.” CPS bonds are already ranked "junk," which results in higher borrowing costs.

City officials insist the CPS memo has serious flaws.

CPS takes fixed-rate long-term loans mostly to pay for building and repairing schools and short-term loans to manage cash flow until the city gets its property tax revenue from the county.

The district has $9.3 billion billion in debt and will pay $817 million to cover principal and interest this year. Debt payments leave the district with about $3,000 less to spend on each student’s education.

What about state funding? 

Critics accuse CPS of seeking a “bailout” from the state. Meanwhile, Johnson has said the state owes CPS money.

The reality is that the school system has long been underfunded — a fact the state acknowledges.

A 2017 state law created a new funding system that calculates what school districts need to adequately serve their students. The formula takes into account the share of students who are unhoused, disabled, learning English or face other hardships.

This year, CPS only has 79% of what’s required to serve all its students, according to the Illinois State Board of Education. That gap is nearly $1.2 billion for CPS this year.

What role is the Chicago Teachers Union playing in all of this? What are the union’s contract demands?

The CTU and CPS are in contract negotiations now. The teachers’ contract expired at the end of June.

A typical CTU contract costs around $100 million to $120 million annually. Despite that knowledge, CPS officials didn’t factor a new CTU contract in this year’s budget.

That led to a lot of the tension between Martinez and the union, which propelled Johnson to office.

Is money from city tax increment financing districts a possible solution?

It could be, but it would be politically challenging for the mayor and a tough pill for some alderpersons to swallow.

TIF is a funding tool used by Chicago to subsidize development or infrastructure needs, including school construction. Under the system, geographic TIF districts are created around the city. When property values rise, the extra tax revenue can go toward development projects.

Every year, the mayor and the budget department decide how much of those funds to sweep into the city budget for operational use. That’s called declaring a TIF surplus.

Last year, Johnson declared a record $434 million surplus to wipe out some of the city’s budget shortfall. A little more than half that money went to CPS.

What effect will the chaos at CPS have on schools right now?

The school board sets policy, and the CEO is too high-level to have any immediate impact on schools. However, instability at the top has a ripple effect and can cause unease among principals and families.

The Chicago Teachers Union cannot strike until at least February due to a legal process it must follow first. Late last week, it took another step in the process toward a strike.

In addition to salary increases, the union is asking for guarantees of additional staff and more money for sports programs.

Sarah Karp covers education for WBEZ. Follow her on X @WBEZeducation and @sskedreporter.