Staff Reporter
A critical vote on the Chicago Public Schools budget is set for Thursday, and the debate has turned into a political and financial standoff. At the center of the conflict is whether the district should lean on a record surplus from tax-increment financing (TIF) funds or keep the option of a loan open to safeguard against shortfalls.
The stakes are high. CPS is grappling with a $734 million deficit, growing debt, and no ability to independently raise revenue. Officials say they have managed to balance the budget through operational cuts, layoffs at the central office, and debt refinancing. However, the most controversial element is a plan to bank on $379 million from TIF surpluses, which critics argue is risky and unprecedented.
STORY HIGHLIGHTS
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Budget Vote: Thursday’s decision could reshape CPS’s financial strategy.
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Deficit Challenge: CPS faces a $734 million budget gap.
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TIF Funding: District expects $379 million from TIF surpluses, the largest amount in history.
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Pension Payment Fight: CPS promises $175 million only if extra funds arrive from the city or state.
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Loan Debate: Mayor’s team wants a backup borrowing plan; CPS warns of credit downgrades.
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Political Split: Most board members appear to favor the mayor’s position.
Why TIF Surplus is the Flashpoint
The Chicago Public Schools budget plan leans heavily on revenue from TIF districts — areas where a portion of property taxes is earmarked for development projects. Surplus funds can be redirected, but this requires City Council approval during the fall budget season, which is often politically sensitive.
Jason Lee, senior advisor to Mayor Brandon Johnson, called the district’s approach “a dangerous gamble.”
“Obviously [CPS officials are] taking extreme measures just so they can say they have a balanced budget on paper,” Lee said on Wednesday. “But in reality, by their own historical budget practices, this budget wouldn’t even be considered balanced. We’re highly concerned that this will leave a significant shortfall if these surpluses aren’t approved.”
Lee argued that CPS has never relied on such a large TIF surplus before and warned that uncertainty could create chaos if the funds fail to materialize.
CPS Defends Its Strategy
CPS officials reject the notion that the plan is risky, insisting that TIF funding at this level is realistic. They point to last year’s surplus, which also reached hundreds of millions.
A CPS financial officer noted in a memo obtained by WBEZ and the Chicago Sun-Times that opening the door to loans could backfire.
“Leaving the loan option on the table would put CPS in peril,” the memo stated, warning that credit agencies could downgrade the district’s rating, making refinancing more expensive now and in the future.
The Pension Payment Dispute
Adding fuel to the fire is a $175 million pension payment for non-teacher CPS employees, which the city expects but CPS considers outside its responsibility. CPS has said it will only make the payment if additional funds from the city or state come through — a condition that City Hall finds unacceptable.
“The city needs this payment to balance its own books,” Lee emphasized, while CPS maintains that borrowing to meet the demand would be financially reckless.
City Council Joins the Debate
Twenty-six City Council members entered the fray with a letter to the school board urging them to reject any borrowing plan, despite the city’s budget assuming the pension payment. While the letter expressed support for allocating a TIF surplus, it stopped short of committing to the full $379 million CPS expects.
Housing Committee Chair Byron Sigcho-Lopez, a key Johnson ally, said:
“The level of TIF funding, we’ll have to determine during the budget season. We cannot say yet what that will be.”
Far North Side Ald. Maria Hadden echoed that uncertainty, noting that decisions will depend on the mayor’s three-year budget forecast. “I won’t know what level of TIF surplus I can support until we see the full picture,” she said.
Both aldermen emphasized that the real solution lies in sustainable revenue, whether through increased state funding or a dedicated city tax for CPS.
Board Members Divided
The split extends to the Chicago Board of Education, where members differ on whether the district should take a calculated risk or plan for a fallback option.
Jessica Biggs, representing District 6, supports the CPS proposal, citing the need to avoid debt.
“Every City Council member we’ve spoken to has assured us this surplus assumption is reasonable, including members of the finance committee,” Biggs said.
Ellen Rosenfeld, another board member, called the plan “responsible” and the “right thing to do.”
But Jitu Brown, who represents the West Side, disagreed. He argues that failing to plan for contingencies could result in harmful classroom cuts.
“The budget was not truly balanced, and then it was also not cut-proof,” Brown said. “If TIF surpluses don’t come through, schools serving Black and Latino communities will take the hit. That’s why leaving the loan option open is smart.”
What Happens Next?
The Thursday vote will decide whether CPS moves forward with a budget that bets big on TIF surpluses or revises its strategy to include a backup borrowing option. With at least 11 board members reportedly leaning toward the mayor’s stance, the outcome will likely shape Chicago’s education funding battles for years to come.
The upcoming vote on the Chicago Public Schools budget is more than just a financial decision — it is a defining moment for the city’s education system and its political leadership. At the heart of the debate is whether CPS can safely depend on a record TIF surplus or if it should prepare for the worst by keeping a loan option on the table.
While CPS officials argue that borrowing would damage the district’s long-term stability, the mayor’s team warns that relying on uncertain revenue could lead to devastating classroom cuts later in the year. With deep divisions among board members, City Council, and City Hall, Thursday’s decision will determine whether CPS chooses financial caution or takes a calculated risk.
What remains clear is that Chicago needs a sustainable revenue solution for its schools — one that goes beyond one-time fixes and political battles. Until then, the struggle over funding, pensions, and debt will likely remain a recurring fight in the city’s education landscape.
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