September 24, 2026
Authored by Daniel Vesecky
Click to read the full report.
EXECUTIVE SUMMARY
On July 30, 2026, Chicago Public Schools (CPS, or the “District”) passed a budget for its 2027 fiscal year, covering the 2026-2027 school year. The budget closed a $748 million deficit. However, it did so in part by assuming $150 million in State revenue that has not yet been secured or pledged. This may lead to a mid-year budget gap that will necessitate greater cuts than would have otherwise been required under the CEO’s original proposal. Further complicating the situation, the City of Chicago released a lower TIF surplus projection than anticipated after the Board of Education adopted the FY2027 CPS budget, which could widen the budget gap by another $100 million.
Highlights from the budget include:
- A $270 million increase in revenue from FY2026, driven the assumption of extra State aid and increasing local property taxes;
- A $61 million increase in expenditures, driven primarily by contractual increases in salaries and benefits;
- A personnel increase of over 1,000 despite citywide cuts to balance the budget; and
- An assumption of a $285 million in tax increment financing (TIF) surplus. This is lower than the amount CPS received in FY2026 and complicated by a smaller TIF surplus projection released by the City of Chicago after the CPS Board had already adopted the FY2027 budget, which would provide CPS with roughly $187 million.
The District faces numerous fiscal challenges going forward, most notably a continued structural deficit in which revenue levels continuously fail to keep pace with rising expenditures. Other challenges include:
- Severely underfunded pensions as CPS continues to receive substantially less state funding than other districts in Illinois;
- High debt costs due to low credit ratings;
- Misalignment between resources and long-term declining enrollment, creating pressure to right-sizing operations; and
- Unresolved financial entanglements with the City of Chicago, particularly the issue of whether CPS should take on a portion of the municipal employees’ pension fund contribution.
Click to read the full report.