401kRollover Blog

Chicago Public Schools started classes this week without being certain how it would fund itself until the end of the school year. The district originally calculated that it was $1.1 billion shy of its budget. After layoffs, school closings, loans, and contract negotiations, the district has been able to cover approximately half of the shortage. Chicago expects the state to fund the remaining shortfall. If not, the district will be forced to implement further budget cuts. While the district looks to Illinois to supply the rest of the budget, this solution seems unlikely as the state is also dealing with its own budgetary crisis. The state had decreased funding going to Chicago’s school district, and this would be difficult to reverse.

The district and state financial issues are predominately caused by increasing pension costs. Both are running out of options for short term, easy fixes. The short term solutions used as temporary Band-Aids have not been replaced with long term permanent solutions. After a three year pension holiday the district is faced with the consequences of their short term “solutions.” To make up for stopped payments, current pension costs have more than doubled. Policy makers’ short term solutions have not only left Chicago Public Schools underfunded, but with extremely low credit ratings, which makes it more difficult for the district to obtain loans. Even with recent economic improvements and increased property tax rates, it is not possible to recover all the funds needed for the budget.

As the district warns about deeper cuts, a need for a solution becomes more apparent. However, with “quick fixes” worsening the long term problem, it is still unsure how the budget deficit will be resolved.

If you are concerned that our children’s education will be at risk due to the government’s poor financial decisions, please Like & Share our post.