While much of the nation knows all about Chicago's shocking murder rate and economic struggles, the Chicago Public Schools (CPS) recently released its annual financial report that indicates a dramatic divergence of enrollment and costs, with the former plummeting over the past decade and the latter skyrocketing.
The Comprehensive Annual Financial Report which gives detailed information about Chicago Public Schools budget crisis says, "CPS introduced expenditure reductions and more efficient spending controls to move from a $710 million operating deficit gap in FY2015 to a $537 million deficit gap in FY2016. The District continues to take action to more effectively utilize our limited resources, but the fundamental inequality in state education funding remains an unresolved threat to our district.”
A financial report differs from a budget in that the report examines results of the previous year – in this case, 2016 – while a budget focuses on the coming year.
Bill Bergman, research director at Truth in Accounting, an Illinois watchdog group, highlights part of the report in which the CPS board in August approved a balanced budget for fiscal year 2017 that “contains estimated resources of $5.5 billion for operations which is $.6 billion greater than actual revenue for 2016.”
He pointed to similar disparities in the two previous budgets and financial reports as well.
“CPS spending exceeded revenue, fees and grants by over $1 billion in both of those years,” he said. “In other words, they keep saying they are going to balance the budget, but keep spending more than they take in.”
He stressed that part of the issue is that the school system keeps digging deeper into debt because that’s the only way to pay for the lack of money it needs to meet budget demands.
“CPS spends money on salaries and benefits for teachers and other workers, and for a wide variety of other expenses necessary for delivering educational services,” Bergman said. “It also spends over $300 million a year on interest expense, the consequence of past borrowing to try to fill the gap between spending and other ‘revenue’ sources.”
Bergman said the budget issue at Chicago Public Schools is part of an even bigger problem in the Chicago area.
The Comprehensive Annual Financial Report says “although we have made real progress in working toward fiscal stability, the State of Illinois continues to punish Chicago’s students through the perpetuation of an inequitable funding system." “This budget issue is wrapped up in a broader, deeper malaise in the City of Chicago and the State of Illinois finances, and in turn confidence in future financial and economic conditions. Decades of public mismanagement have been papered over in part with false accounting reports for citizens and taxpayers," Bergman said.
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