Chicago Public Schools has hired a financial advisory firm to provide an outside opinion on the district’s economic challenges as CPS faces daunting financial choices prioritized by Mayor Brandon Johnson, according to several sources close to the board.
The effort to hire Baker Tilly was led by new school board President Sean Harden, who was picked for the post by Johnson, and is a sign that CPS may be looking for solutions to pay the costs of a new teachers contract and a $175 million pension payment for nonteacher staff, the sources said. The mayor, who is closely aligned with the Chicago Teachers Union, has been trying for months to get CPS to take on the $175 million payment despite campaigning against it during his mayoral run in 2023.
Both CPS and Baker Tilly did not immediately respond to requests for comment Wednesday. It is unclear when the district retained the firm or how much it is paying for the consulting services.
Just how to address the two pending costs may come to a head at two budget amendment meetings, scheduled for mid-March, according to sources.
A school board typically works with its team to iron out fiscal challenges, said Ralph Martire, executive director of the Center for Tax and Budget Accountability. But this board has faced a turbulent few months amid looming financial uncertainty and controversy around the firing of CPS schools chief Pedro Martinez in late December — and a political conflict between City Hall and district leadership.
“If the intent of (hiring this firm) is simply to understand accurately what the finances of the district are and to run through the political noise and rhetoric so you can do your job, that’s rational in this environment,” Martire said.
The $9.9 billion budget was approved in July without accounting for either the cost of a new teachers contract or a pension payment previously covered by the city, so a budget amendment was expected. But the school district usually schedules budget amendments, and Harden scheduled the meetings for March, sources said.
A budget amendment will require two-thirds approval from the 21-member school board, a body that represents various interest groups — both aligned with the teachers union and charter school groups — as 10 new members were elected from districts around the city to join mayoral appointees in November.
There is just under $140 million currently available in tax increment financing funds to cover the new teachers contract and pension liabilities, according to district officials. Despite some progress at the bargaining table, the cost of the new teachers contract is still up in the air. The $175 million pension payment will be challenging for a district with such limited resources, and there is no immediate solution, sources said.
Previously, the city of Chicago covered the pension payment for nonteacher school staff. That changed in 2021 under former Mayor Lori Lightfoot, as part of an effort to disentangle finances between the city and the district. There isn’t a deadline for when CPS needs to make the pension payment to the city, though it needs to be completed by Dec. 31, according to financial experts.
Johnson campaigned against Lightfoot’s decision, but as mayor, is seeking to keep those costs with the district, as she did.
The district is in dire need of additional revenue, according to a recent financial report from the watchdog group the Civic Federation that did not rule out the potential for budget cuts. Facing the end of federal pandemic relief funding, CPS faces budget deficits of at least $500 million in the years ahead.
Financial pressures were front and center at a Wednesday school board meeting, where newly seated board members fielded questions from the CTU and community members. The mayor is supposed to appoint 11 members to the board but has only named 10.
Board members answered questions about unrelated fiscal pressures, the length of contract renewals for different charter schools and the potential closures of seven out of 15 schools in the Acero charter network.
In December, the board unanimously voted on a resolution to keep all seven Acero locations open next year instead of closing them as planned in the summer, by converting five of the locations into district-managed schools. Acero’s leadership has told the district a plan to integrate the schools into the district must be presented by the end of February, otherwise, the closures will continue.
In the 120 days since Acero announced news of the closures, notices have been hung at some locations saying they may shut down soon.
“I’ve had to go into school and not know whether I’m planning for next year or just tomorrow,” said Shannon Phillips, a teacher at Acero-Rufino Tamayo in Gage Park. “Every day I’ve had to answer questions from my students and their parents, not about what we’re learning in science class or what cool experiment we’re going to do … (but) questions like, ‘Will we be open next year? Is my friend going to another school tomorrow?’”
The Acero charter network did not respond to a request for comment Wednesday.
Empathizing with the Acero school communities at risk for closure, District 5 board member Jitu Brown said it is painful for him to “watch families be put in traumatic situations.”
Brown asked the district to provide Acero families with daily updates on the talks about the schools’ future. The (school) board, he said, will not allow “any school to underserve families and leave them out in the cold.”
Chicago Tribune’s Gregory Royal Pratt contributed.
Hiring the outside financial firm means Chicago Public Schools is likely in need of solutions to pay the for a new teachers contract a $175 million pension payment for nonteacher staff.
Chicago Public Schools has hired a financial advisory firm to provide an outside opinion on the district’s economic challenges as CPS faces daunting financial choices prioritized by Mayor Brandon Johnson, according to several sources close to the board.
The effort to hire Baker Tilly was led by new school board President Sean Harden, who was handpicked for the post by Johnson, and is a sign that CPS may be looking for solutions to pay the costs of a new teachers contract and a $175 million pension payment for nonteacher staff, the sources said. The mayor, who is closely aligned with the Chicago Teachers Union, has been trying for months to get CPS to take on the $175 million payment despite campaigning against it during his mayoral run in 2023.
Both CPS and Baker Tilly did not immediately respond to requests for comment Wednesday. It is unclear when the district retained the firm or how much it is paying for the consulting services.
Just how to address the two pending costs may come to a head at two budget amendment meetings, currently scheduled for mid-March, according to sources.
A school board typically works with its team to iron out fiscal challenges, said Ralph Martire, executive director of the Center for Tax and Budget Accountability. But this board has faced a turbulent few months amid looming financial uncertainty and controversy around the firing of CPS schools chief Pedro Martinez in late December — and a political conflict between city hall and the district’s leadership.
“If the intent of (hiring this firm) is simply to understand accurately what the finances of the district are and to run through the political noise and rhetoric so you can do your job, that’s rational in this environment,” Martire said.
The current $9.9 billion budget was approved in July without accounting for either the cost of a new teachers contract or a pension payment previously covered by the city, so a budget amendment was expected. But the school district usually schedules budget amendments, and Harden scheduled the meetings for March, sources said.
A budget amendment will require 2/3rds approval from the 21-member school board, a body that now represents various interest groups — both aligned with the teachers union and charter school groups — as 10 new members were elected from districts around the city to join mayoral-appointees in November.
There is just under $140 million currently available in tax-increment financing funds to cover both the new teachers contract and pension liabilities, according to district officials. Despite some progress made at the bargaining table, the cost of the new teachers contract is still up in the air. The $175 million pension payment will be challenging for a district with such limited resources, and there is no immediate solution, sources said.
Previously, the City of Chicago covered the pension payment for nonteacher school staff. That changed in 2021 under former Mayor Lori Lightfoot, as part of an effort to disentangle finances between the city and the district. There isn’t a deadline for when CPS needs to make the pension payment to the city, though it needs to be completed by Dec. 31, according to financial experts.
Johnson campaigned against Lightfoot’s decision, but as mayor, is seeking to keep those costs with the district, as she did.
The district is in dire need of additional revenue, according to a recent financial report from the watchdog group the Civic Federation that did not rule out the potential for budget cuts. Facing the end of federal pandemic relief funding, CPS faces budget deficits of at least $500 million in the years ahead.
Financial pressures were front and center at a Wednesday school board meeting, where newly seated board members fielded questions from the CTU and community members. Mayor Brandon Johnson is supposed to appoint 11 members to the board but has only named 10.
Board members answered questions about unrelated fiscal pressures, the length of contract renewals for different charter schools and the potential closures of seven out of 15 schools in the Acero charter network.
In December, the board unanimously voted on a resolution to keep all seven Acero locations open next year instead of closing them as planned in the summer, by converting five of the locations into district-managed schools. Acero’s leadership has told the district a plan to integrate the schools into the district must be presented by the end of February, otherwise, the closures will continue.
In the 120 days since Acero first announced news of the closures, notices have been hung at some locations saying they may shut down soon.
“I’ve had to go into school and not know whether I’m planning for next year or just tomorrow,” said Shannon Phillps, a teacher at Acero-Rufino Tamayo in Gage Park. “Every day I’ve had to answer questions from my students and their parents, not about what we’re learning in science class or what cool experiment we’re going to do… (but) questions like, ‘Will we be open next year? Is my friend going to another school tomorrow?’”
The Acero charter network did not respond to a request for comment Wednesday.
Empathizing with the Acero school communities at risk for closure, District 5 board member Jitu Brown said it is painful for him to “watch families be put in traumatic situations.”
Brown asked the district to provide Acero families with daily updates on the talks about the schools’ future. The (school) board, he said, will not allow “any school to underserve families and leave them out in the cold.”
Chicago Tribune’s Gregory Royal Pratt contributed.
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