Chicago Public Schools (CPS) is in a precarious financial situation as it grapples with the challenge of distributing back pay owed to teachers and staff, following a contract agreement with the Chicago Teachers Union (CTU) reached in March.
The CTU negotiated 4% raises, alongside additional salary adjustments based on experience and advanced degrees.
With the previous contract expiring in June 2024, these raises will cost the district over $100 million, covering the entire previous school year.
Teachers and staff are eagerly anticipating the retroactive pay, which the district plans to deliver during the summer months.
Sean Harden, President of the Chicago Board of Education, expressed confidence in the district’s commitment to fulfill its financial obligations.
He stated, “The district has every intention of satisfying the obligation and will continue to work feverishly to do so.”
Harden urged that any delays should not be misconstrued as a lack of intention to pay.
However, CPS Chief Budget Officer Mike Sitkowski hinted that teachers might have to wait until fall to receive their back pay due to a cash flow issue.
This dilemma arises as CPS is awaiting the second installment of property tax revenue from Cook County.
CTU President Stacy Davis Gates expressed her belief that the district would honor the timeline for the retroactive pay this month, emphasizing, “Retro pay is wages that are already earned and owed to the educator who worked the entire school year in good faith without a contract.”
Sitkowski clarified last week that CPS currently lacks the immediate funds required to distribute the $100 million owed to CTU members.
The district occasionally relies on short-term loans to manage its cash flow, but Sitkowski acknowledged that the district has already maxed out its borrowing capacity for other expenses.
CPS receives property tax revenue twice a year from Cook County, typically in February or March and again in August.
The August installment is crucial for addressing outstanding bills and repaying previous fiscal year loans, even as its fiscal year concludes on June 30.
Unfortunately, Cook County has announced a delay in the upcoming August property tax distribution due to technological upgrades, with potential delays extending beyond the initially anticipated timeframe.
Sitkowski commented on the urgency of CPS’s cash situation, stating, “That’s just putting pressure on our cash situation, not our budget situation, as we head into the summer.”
He underscored that the timing of the retro pay is contingent upon the receipt of these property taxes, which are essential for covering the contracted raises.
Despite the contract’s expiration in June 2024, the agreement was reached at a time when the district had yet to allocate funds for salary raises in its budget.
In April, the Board of Education approved the CTU contract and subsequently amended the district’s budget to include the necessary funds for the raises.
Furthermore, the board directed CPS to utilize additional funding sourced from the city through special taxing districts, known as TIFs, to fulfill these salary obligations.
However, even with the infusion of extra funds, CPS continues to face significant financial challenges.
The district struggles to maintain adequate cash reserves for payroll and various costs, particularly as it closes out its fiscal year.
In addition to the immediate issues with retro pay, CPS is contending with a $730 million budget shortfall projected for the 2025-26 school year.
Macquline King, the interim CEO, has committed to scrutinizing the budget in search of efficiencies and plans to conduct hearings across the city to gather public input.
As CPS navigates these financial hurdles, it remains under pressure to fulfill its obligations to educators while addressing ongoing budgetary constraints.
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