Ongoing tension over Chicago Public Schools’ $9.9 billion budget spilled into a new arena Thursday, with plans swirling in the City Council’s Budget Committee to grill district leaders on a $175 million pension payment that’s missing from the district’s spending plan.
With the city facing a $223 million budget gap by the end of the current year, CPS’ expected contribution to the Municipal Employees’ Annuity and Benefit Fund is at question, along with the leadership of CEO Pedro Martinez. The embattled schools chief has been the subject of mounting Chicago Teachers Union criticism, as well as support from school leaders and, in an open letter Wednesday, 15 aldermen.
MEABF payments to cover the pensions of non-teacher CPS retirees have shifted in part from the city to the district over the last four years as part of an effort to disentangle finances before CPS transitions to a fully elected school board. That this year’s MEABF payment was not included in CPS’ budget is among Mayor Brandon Johnson’s criticisms of the spending plan. The district and Johnson alike have signaled a forthcoming budget amendment is likely.
Now, Martinez could face questions at the City Council alongside school board president Jianan Shi next month, said Johnson’s hand-picked Budget Committee chair, Jason Ervin. In response to the renewed scrutiny, CPS pushed back on characterizations it has shirked responsibility.
CPS’s decision not to include the pension costs in its initial budget is a “hit to our bottom line,” Ervin said. “That either equates to cuts in other places or increases in needed revenue,” he said.
Next year, the city’s budget shortfall is projected to grow to $982 million, the Johnson administration announced last week.
“We need to get some understanding as to why they necessarily have absconded (from) their responsibility in making sure they are covering the pensions costs of their employees,” Ervin said.
In the past, the school district has just “laid this at our doorstep” with no conversation, added Ervin. In his criticism of Martinez, first reported by the Sun-Times, the 28th ward alderman described the exclusion of the pension payment from CPS’ budget as borderline malfeasance.
That narrative is false, according to the district, which also sought to maintain the diplomatic tone CPS has struck in response to criticism preceding the Board of Education’s approval of the budget in July.
Discussions between CPS and city officials regarding the pension payment have been ongoing for the past year, and the parties collaborated on developing and finalizing the district’s $9.9 billion budget before the spending plan was approved, a CPS spokesperson said Thursday.
By law, the district is required to have a balanced budget, with operating revenue matching expenses. In an emailed statement, CPS noted the district cut about $500 million in costs over the past year to propose a balanced budget “that aims to best support our students and staff, building on the District’s academic progress.”
The district’s prior contributions to the fund, made possible through TIF surplus and federal relief funding, were developed in collaboration with the city, CPS’ spokesperson added. Given caps on property taxes and a deficit of at least $500 million the district faces next year, CPS cannot fill the $175 million shortfall, or any other gaps in revenue, without external support, the district said.
Multiple Budget Committee members back Martinez
In an open letter Wednesday, 15 of Chicago’s 50 City Council members expressed their support for Martinez. Nine of the aldermen who signed the letter are members of the Budget Committee, including Vice Chair Ald. Nicole Lee, 11th.
“CEO Martinez has shown himself to be an effective and innovative leader with the best interests of our children at heart,” the Council members wrote. “It would be shameful and disheartening to see a man with such professional integrity become a casualty of political pressure.”
Ald. Marty Quinn, 13th, said Thursday that principals in his ward asked him to back Martinez. The school leaders fear disruption if the CEO is fired, Quinn said.
“The job comes with pressure, but Pedro in a short period of time has been really responsive,” he said.
Martinez has created “stable footing” for the district, evidenced by the Johnson-appointed school board siding with him over the mayor on pension payments, Lee said
“This is not a great time to create instability, right when we are facing such a big deficit,” Lee said. “It’s a really big challenge right now for whoever is in this job. I’m really glad that he is in it.”
Both Lee and Quinn declined to say whether CPS or the city should cover the pension cost, but praised efforts to summon Martinez to the City Council’s Budget Committee to discuss the payments.
But Ald. David Moore, 17th, said the school district should foot the bill.
“When you switch to an elected school board, it’s on you now,” he said. “They have to absorb that.”
Still, Moore credited Martinez with improvements in student performance and flagged the need for steadiness when asked why he signed the letter.
“There’s no clear reason why we should move on right now,” Moore said. “Stability is key. And as long as we are showing growth and going in a positive direction with our children, I think we have to maintain Pedro Martinez.”
Along with the pension payment, CPS will need to fund expected salary increases resulting from collective bargaining underway with the Chicago Teachers Union and the Chicago Principals and Administrators Association. The district didn’t address a request for the solutions it’s seeking to cover costs, saying only that CPS “will continue to work with all our partners to find solutions…so we can best support our students’ continued success.”