July 31, 2019
(CHICAGO) In an analysis released today, the Civic Federation announced its support of the City Colleges of Chicago’s proposed FY2020 operating budget as a one-year plan for the District—while expressing concerns about the District’s long-term fiscal stability. The full report is available here.
The Civic Federation supports many aspects of the District’s efforts to stabilize its finances for FY2020 and beyond, including implementing several cost-containment strategies. The District will increase the property tax levy to the maximum allowed under State law for the first time in more than a decade, which is 1.9% in tax year 2019 for payment in 2020, in line with the rate of inflation.
City Colleges has also committed to dedicate a portion of the funds from the sale of its downtown headquarters to replenish its reserves, which is important for future contingencies. The Federation is further pleased that the District recently livestreamed its annual budget hearing and is working to develop a new strategic plan.
“While the Civic Federation supports City Colleges’ budget for the upcoming year, we are disappointed that a significant portion of the proceeds from the sale of the downtown headquarters are being used to balance this year’s operating budget,” said Civic Federation President Laurence Msall. “Additionally, the ongoing decline in student enrollment is troubling and bears close watch, as it significantly affects the District’s bottom line.”
As detailed in the report, City Colleges continues to recover from a protracted and unprecedented State budget impasse in FY2016 and FY2017. During the two-year impasse, institutions of higher education were severely underfunded, and grants for low income students were reduced or delayed, which subsequently impacted student enrollment. City Colleges fared better during the impasse than many other Illinois community college districts, due to its high level of reserves and prudent efforts to freeze certain areas of spending. However, the effects continue to hang over the District years after the fact.
“Due to woefully inadequate State funding in fiscal years 2016 and 2017, City Colleges’ decision to draw down its reserves at the time was prudent. Now, the District’s stated commitment to rebuild reserves is a great step toward future stability,” said Civic Federation President Laurence Msall. “Unfortunately, the use of non-recurring revenue sources to balance the budget offsets some of the effects of the cost-containment strategies, and the District will eventually need to find additional cuts or revenues—or tap those same reserves—to help balance future budgets.”
To improve the health and stability of City Colleges’ finances, the Civic Federation offers several recommendations, including providing greater detail on personnel and related expenses, developing a tuition and fee policy, improving the fund balance policy and livestreaming and archiving all board and committee meetings. The Federation further recommends that the District advocate for the State to change the Community College Equalization formula to provide fair and equitable funding to City Colleges, and also offers various recommendations on long-range financial planning and strategic planning.