By all accounts, Chicago Public Schools has made significant academic progress over the last 15 years. Since 2003 the district's proficiency rates on the National Assessment of Educational Progress exam have more than doubled in math and have nearly doubled in reading.
Rising debt service costs are beginning to take a real bite out of district resources [in Chicago].
But this progress is now threatened by severe financial mismanagement. The district faces a budget crisis driven by the rising cost of past, unpaid bills that is crowding out spending on today's teachers and students.
CPS' budget crisis was not created overnight. For more than a decade, the district has struggled with a widening structural budget deficit. Since 2001, inflation-adjusted spending per pupil increased by nearly 40 percent. In 2001, CPS spent close to $12,000 per student; in 2015, $16,432. Yet revenue has not kept pace: CPS per-pupil revenue has not matched per-pupil spending, with revenue falling short, on average, by $1,000 per pupil since 2001. More recently, the revenue gap has widened to nearly $3,000 per year.
CPS has papered over its annual shortfalls by borrowing vast sums from bond markets. As a result, CPS bonds are now rated as “junk” and the district has to pay a huge premium to get anyone to buy them (three times the rate for benchmark government bonds).
What's more, by failing to make the necessary pension contributions, CPS has borrowed even larger amounts from its current and former teachers through the pension fund—today the district owes the fund billions upon billions. CPS owes bondholders and the pension fund more than $38,000 for every student, up from less than $10,000 in 2001.
Rising debt service costs are beginning to take a real bite out of district resources. And CPS has scrambled to keep pace while protecting classroom spending. Since 2011, CPS has made nearly three-quarters of a billion dollars in budget cuts “away from the classroom”...
