August 21, 2025
Published originally in the Crain's Chicago Business on Thursday, August 21, 2025.
On Aug. 28, the Chicago Board of Education must pass a balanced budget for fiscal year 2026. Its choice will determine the viability of a district on the financial brink.
Interim CEO Macquline King has presented the board with a budget that closes a $734 million deficit with fiscal and ethical clarity. It proposes cuts that do not impact classrooms and identifies revenues that do not mortgage the district’s future.
Conversations persist about borrowing money to reimburse the city of Chicago for $175 million in pension costs for some CPS employees — a payment the district is not obligated to make. Such borrowing would compound the district's precarious fiscal position, leading to catastrophic near- and long-term impacts that would undermine the district’s core mission of educating children.
History teaches us what happens when CPS takes on debt to cover operating costs. A decade ago, the district faced a $1 billion budget deficit ahead of the 2015-16 school year. The crisis had been years in the making. CPS consistently outspent revenues and used its reserves to plug budget holes, leaving no financial cushion when costs increased.
At the same time, the state of Illinois entered a two-year budget standoff, worsening the Chicago schools’ budget crunch. Advocates called for assistance from the state, which finally came in 2017 with the passage of the Evidence-Based Funding (EBF) law. But in the interim, CPS relied on borrowing schemes for operating costs.
The district is still reckoning with the costs of that decision today. From 2015 to 2017, the district issued a large amount of scoop-and-toss debt whose costs linger: CPS will pay nearly $200 million in debt service this year, with some obligations stretching into the 2040s. The reliance on crisis borrowing also contributed to nine credit rating downgrades, from A+ in 2014 to a B+ junk grade rating just two years later.
Had the district found sustainable solutions in 2015 instead of adding to its debt load, today’s deficit could be much smaller. That $200 million now tied up in debt service from that period would be enough to hire over a thousand teachers or offset most of the non-program cuts CPS will make to balance its fiscal year 2026 budget.
Or it could cover the pension payment that is at the root of today’s interminable controversy.
Opponents of King's responsible budget suggest the city may not declare a TIF surplus this coming year, as is assumed in the proposed budget. Hard facts and simple math belie that claim. As has been the case for a decade, the city will need a sweep of tax-increment financing district funds to close its own $1.2 billion projected deficit.
Denying CPS TIF money for fiscal year 2026 would involve the city cutting off its nose to spite its face. It would also deny TIF surplus funds to the other units of local government, including Cook County, the Chicago Park District, City Colleges, and the Metropolitan Water Reclamation District, all of which have come to rely on an annual sweep to balance their budgets.
King, the interim CPS chief, has demonstrated courage by proposing a budget that confronts the district’s challenges head-on, protects the classroom, and does not resort to reckless short-term borrowing. Now the Board of Education must follow her lead and approve a budget that satisfies the ultimate moral imperative — do no harm to Chicago’s students.
Joe Ferguson is president of the Civic Federation, a nonpartisan government research organization based in Chicago. He served as inspector general for the city of Chicago from 2009 to 2021.
Published originally in the Crain's Chicago Business on Thursday, August 21, 2025.