The Chicago Board of Education has passed an amended $9.96 billion budget for fiscal year 2027 that hinges on $150 million in state funds which have not yet been approved. This move comes despite warnings from CPS CEO Pedro Martinez King against balancing the budget on "unrealized state revenue." The Chicago Teachers Union (CTU) and some board members assert that the state's evidence-based funding formula dictates CPS is owed an additional $2 billion, putting pressure on state lawmakers and the governor to provide more money.
The district faces a significant liquidity crunch, with officials stating that without an approved budget, they may not be able to make payroll by September. To secure a necessary short-term loan, known as Tax Anticipation Notes (TANs), lenders require an approved budget and tax levy. CPS's reliance on TANs has increased, with approximately $2.09 billion in TANs reported in fiscal 2026 and a negative net cash position of about $587 million at year-end. The current $1.25 billion authorization for TANs will be exhausted in August.
The approved budget also includes $285 million from special taxing districts (TIFs), which requires approval from the Chicago City Council. This TIF figure was revised up from an initial $200 million estimate. Critics like Lisa Washburn, managing director at Municipal Market Analytics, caution that budgeting based on uncertain revenues could lead to higher interest costs for CPS, which already carries one of the highest debt burdens among U.S. school districts. The district also faces delays in property tax revenue, with the second installment from Cook County expected to be delayed by about two months, contributing to liquidity concerns and costing the district millions in interest and penalties annually.
The budget aims to close a $732 million gap through $330 million in structural deficit reduction and includes measures like freezing some spending in 2027 and cutting over 700 teacher positions. While originally including five furlough days for employees, this measure was later reversed. The Civic Federation's Ferguson emphasized the urgency of passing the budget by July 30, highlighting that the district's need for a short-term loan is critical and not a negotiation tactic, essential for maintaining financial flexibility and operations.
