Mayor Brandon Johnson’s budget proposal includes a gift for Chicago Public Schools: He is recommending that the city take an unprecedented amount out of special taxing districts so CPS can cover its costs and send some cash back to the city to help it end the year in the black.
With the school district facing funding cuts from President Donald Trump’s administration, Johnson was compelled to try to find as much money as possible for the school district, according to a source in the mayor’s office.
Johnson will unveil the city’s budget Thursday and, at that time, it will become clear how much he will pull out of the special taxing districts, called TIFs. But sources say it will provide CPS the $379 million it counted on in its budget, plus $8 million that the federal government recently stripped from CPS.
It will also provide some of the $175 million the city needs from the school district to cover a controversial municipal pension payment.
The school district’s budget counted on $379 million from these special taxing districts called TIFs, even though it was not guaranteed that the city would provide this revenue.
The school district’s official budget, approved by the school board in August, commits to handing over any money above the $379 million to the city to help cover a pension payment. The board will need to approve an intergovernmental agreement at the Oct. 23 board meeting to make that happen.
Sources close to the board say that they expect CPS to get more than $500 million. Because this is one-time funding, they say that they plan to turn their attention to the state to get more sustainable longterm funding.
The city budget will still need to be approved and some City Council members could still object to so much money being taken out of these special taxing districts. That money is supposed to be set aside for economic development projects in their wards. But a majority of City Council members signed a letter saying they supported giving CPS the TIF surplus, even without a guarantee that the city would get help with the municipal pension payment.
The school district is still facing financial pressures. The school board approved a budget that included $50 million in unspecified cuts to central office and operations. Those cuts have yet to be announced and, as the school year moves on, finding those savings will be more difficult.
Also, the federal government recently announced that it was not going to give CPS $8 million that it was expecting from a grant this year. While that is a relatively small amount, it could be the start of more grants being withheld.
This looks to finally end a long drawn out saga between Johnson and the school district — one that tested Johnson’s power and led to the resignation of the entire school board and then the firing of former CEO Pedro Martinez.
The controversy started with Johnson’s sort of surprising demand when he first came to office that CPS help cover the $175 million cost of the municipal pension payment. CPS employees are the majority of pensioners, but until 2021, the city made the entire payment. As an organizer for the Chicago Teachers Union, Johnson criticized former Mayor Lori Lightfoot for shifting the cost to CPS.
Lightfoot was the first to suggest that money she was pulling out of these special taxing districts should be used to cover the pension payment.
Tax increment financing is a funding tool that uses property taxes to spur development in specific geographic areas around the city. The mayor can pull unspent or unobligated money out of TIFs and turn it back over to the taxing bodies. CPS gets 52% of that cash; while the city gets 24%.
Deciding how much to surplus is the purview of the mayor’s office, but he needs to negotiate with City Council members, who often want the money for projects in their wards.
But even as Johnson was surplusing record amounts, Martinez and the school board balked at making the pension payment. Eventually, Johnson’s first appointed school board resigned and the second one fired Martinez. CPS did not make the pension payment last year.
The same scenario arose this year, with the city budget counting on the $175 million for the municipal pension payment.
This time, the interim CEO Macquline King and the partly-appointed, partly-elected school board members said they would pay it, but it was “contingent upon additional revenue.”
The day after the Chicago Board of Education approved the district’s budget, the mayor’s budget officials said they expected to surplus less than they had the year before — an amount that would result in CPS being short millions of dollars.
But the mayor said he insisted on finding the money.
Sarah Karp covers education for WBEZ. Follow her on X @WBEZeducation and @sskedreporter.
