Understanding Chicago Public Schools’ Fiscal Crisis

stephanie farmer

Students often ask me how to apply a social justice orientation to real-world problems. My strategy has been through social justice-based research. When I think of social justice, I think of how all members of society should be treated in fair and equitable ways that stresses the full development of humanity. With this as my starting point, I tend to investigate social problems whose outcomes are not always fair, equitable and respectful of human dignity.

Recently, I set out to understand the factors contributing to Chicago Public Schools’ (CPS) unyielding fiscal crisis. Over the past five years, CPS has confronted annual budget crises. In order to cover these annual deficits, CPS officials have taken a number of measures that have undermined education security for all of Chicago’s children, including cutting $1 billion from classrooms, eliminating 6,400 education professionals and closing dozens of schools.

Mayor Rahm Emanuel and CPS are quick to blame “greedy” teachers and their pensions for their fiscal woes, and are looking to cut benefits for teaching professionals. Knowing that officials tend to frame an issue in ways that reflect their political priorities, I was curious if other factors excluded from the official narrative were also contributing to CPS budgetary stress.

Working with Ashley Baber, a former Roosevelt sociology graduate student and current PhD candidate at Loyola University Chicago, and Chris Poulos, a PhD candidate at University of Illinois at Chicago, we looked at the 49 schools closed in 2013 that were most impacted by CPS’ budgetary crisis.

Another surprising finding was that of the 108 new charter schools opened from 2000–2015, 62 percent were opened in areas with high population loss (25 percent or greater). From a planning perspective, it doesn’t make sense to open new schools in neighborhoods of declining population, especially when the school system has limited financial revenue to support its existing institutions.

While charter schools are privately operated, they are primarily funded with public tax revenue. Public revenue for charter schools comes from the same pot of money that CPS uses to finance public schools, thus every new charter school places more stress on CPS’ limited resources.

CPS also pays charter schools a sum to cover the cost of their facilities. Some charter schools incur debt to build new facilities or add to existing ones. Since the revenue to pay back a deficit comes from CPS’ tax income, charter school debt essentially becomes off-the-books public debt. While there are no publicly available records to determine the actual magnitude of the entire amount of charter school facility debt, we were able to get a snapshot of what this may look like.

We scoured the financial audits that charters submitted to the Illinois State Board of Education in 2015 — of the 27 percent of CPS charter schools that submitted an audit, their combined outstanding debt was $227 million. If this is representative of all charter school debt load, then we can anticipate that total charter school debt is somewhere around $1 billion, which is in addition to CPS’ overall $6 billion deficit. Debt service on this accounts for 25 percent of CPS’ budget. Now we have to include the off-the-books charter school debt paid off with tax revenue for a fuller understanding of how CPS’ finances are being crippled.

“Understanding the roots of CPS’ fiscal crisis is important for many reasons. At the same time CPS seeks to cut teacher pensions and healthcare benefits, it continues along the same path of unplanned charter expansion.”

Understanding the roots of CPS’ fiscal crisis is important for many reasons. At the same time CPS seeks to cut teacher pensions and healthcare benefits, it continues along the same path of unplanned charter expansion. Furthermore, the pace of charter school proliferation is expected to hasten as the federal, state and local governments shaping Chicago Public Schools are under the control of charter school advocates. We hope our research will be useful for public education advocates and inform better policy decisions.

If you want to read our report, you can find it here.

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