CPS faces financial woes

March 11, 2009 (CHICAGO) Staff cuts are likely and officials hinted that a property tax increase may be necessary.

The schools will receive about $50 million dollars in federal stimulus money.

That means school officials must find ways to fill the hole in its budget – a budget that's being called the biggest in history.

It's not going to be easy and its appears Chicago Public School officials and heads of the teachers union have different opinions of how to solve the impending crisis.

While CPS officials blame skyrocketing cost of teacher pension contributions and a lack of state funding, the teachers union says its still simply a matter of not blaming teachers and continuing to put the education of children first.

The outlook is bleak as Chicago Public School officials tell of a $475 million budget shortfall for next year that may require more cuts and even higher property taxes.

"The district did not raise property taxes last year. I can say with some certainty if it happens that's where the money could come from," said Michael Scott, school board president.

The state of Illinois already has its own budget deficit of nearly $9 billion and will not be able to provide more funding.

Officials say the projected school budget deficit is the largest CPS has faced in recent history and is the result of a $30 million increase for health care costs and other benefits; $35 million in extra borrowing costs; along with $130 million dollars more for employee pension costs and another $145 million in rising teacher salaries.

New schools CEO Ron Huberman says class size won't increase and core education programs won't be cut in order to balance next year's numbers.

Right now, there is no plan for teacher lay-offs, but there could be other staff cuts.

Huberman hopes for some sort of pension reform from lawmakers in Springfield to help to plug the budgetary hole.

"When they talk about reforming the pension system, I'm not talking about the legislature writing a big check," said Ron Huberman, CPS CEO.

Chicago Teachers Union officials don't believe contributions to their pension fund is breaking the back of the district. They question how CPS is managing its money -- especially when it comes to hiring consultants and what they call top heavy administrative departments.

"When you ask to solve a problem by taking money away from people who are providing the lifeline to educational services I think you're being very short-sighted," Mary McGuire, Teachers union recording secretary.

CPS officials plan to finalize the budget plan by June. It will then be presented to the school board in August.

Chicago is not alone with its school budget problems. On Wednesday, more that 8,800 teachers and other employees of the Los Angeles, California school district will receive layoff notices for the next school year. That district has a budget deficit of nearly $718 million.

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