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Barbara Byrd Bennett adds to schools' confusion with new 'budget' claims (and a small increase in dollars)... Then she repeats the lie that CPS has 'cut' $600 million from central office, while continuing the claim that America's third largest school system faces $1 billion 'deficit'

How many lies add up to and end to Rahm's rule over Chicago schools? As July 2013 moved forward, more than 600 Chicago school principals and local school councils -- along with nearly a million families, children, parents, teachers and others working in the schools -- continued to be caught in the middle. Officials in the nation's third largest school system repeated false talking points about the state of CPS finances. Chicago's public schools has a "one billion dollar deficit". Since Rahm Emanuel took over the schools, his "team" has cut $600 million in bureaucracy (or "central office" or something like that). And of course, "revenues are flat..."

Above, CPS "Chief Administrative Officer" Tim Cawley (far left) sat during the February 27, 2013 Board of Education meeting. Alongside Cawley are some of the members of the current Chicago Public Schools leadership "team," virtually all of whom come from outside Chicago's schools with no teaching or local school (principal) administrative experience, training or certification. Moving right from Cawley (above) are Alicia Winckler, the CPS human resources chief, who came from Sears; Todd Babbitz, "Chief Transformation Officer" for the past year, who came to CPS from corporate consulting; and Bob Boik, Barbara Byrd Bennett's Chief of Staff, who came with Byrd Bennett to Chicago from Detroit. Substance photo by George N. Schmidt. For decades the Chicago Board of Education issued its annual proposed budget in June, held two or three hearings, and then voted at its June meeting to approve the budget for the next fiscal year, which begins July 1. But as the schools continued trying to deal with the various statements from CPS officials about the "budget crisis" in mid-July, Barbara Byrd Bennett, a Cleveland resident who was undermining public education in Detroit 18 months ago, continued repeating nonsense. But since the CPS "communications" set up in 2013 has chocked off all give-and-take press conferences between CPS and reporters, no hard questions are being asked for actual numbers. And since it appears that CPS is simply going to ignore the law and refuse to provide the public with a 'Proposed Budget' (and hearings) until as late as possible, the confusion grows.

Continuing to deploy confusion about the state of the Chicago Board of Education's "deficit" and refusing to prepare and distribute a Proposed Budget as required by law, Chicago Public Schools Chief Executive Officer Barbara Byrd Bennett released additional money to the schools, told the principals to (again) revise their budgets for the 2013 - 2014 school year, and continued a year-long refusal to hold open press conferences and answer accurately questions about the school system's finances.

On July 11, 2013, Barbara Byrd Bennett followed a press release (see news reports below). She followed with the following memo to principals:

July 10, 2013

Dear Principals,

Over the past several months, I have shared with you the devastating financial crisis facing our District. We are confronted with nearly a $1 billion deficit. I, the Board and our Central Office team have worked to identify every opportunity to keep this crisis as far away from our classrooms as possible. Nevertheless, we are not in an ideal position. While we have reduced central office, administrative and operations spending by nearly $600 million since 2011, we will not be able to cut our way out of this deficit. With the failure of pension reform in Springfield and revenue resources that remain flat or declining, we will likely be forced to use one-time reserves to help close our deficit.

While this is not the fiscally responsible thing to do, it’s the only option to keep as much pain as possible away from our children. The implementation of Student Based Budgeting represents a major reform that provides unprecedented autonomy around how you can spend core education dollars and how you build your staffing plans.

As a former principal, I know the importance every dollar and every resource can be to educate our children. In these challenging times, your advice and guidance on how we can best support you as you prepare your budgets for the year has been extremely helpful and I have heard you. I also understand this has been a challenging process and I want to continue working with you as you finalize your budgets.

Barbara Byrd Bennett devoted much of her time for the six months prior to the historical May 22 vote engineering the propaganda campaign around the school closings. Above, Byrd Bennett at the April 24, 2013 meeting of the Board of Education. Substance photo by George Schmidt.As I have said many times before, everything is on the table as we work to finalize our budget and close this deficit. I have decided, with concurrence from the Board, to act immediately on a long overdue reform to our budget process. I have directed our Chief Administrative Officer to release $36 million in Supplemental General State Aid (SGSA) by July 15. These dollars, which normally have been issued to schools in October or November of every year, will better enable you to plan for your budget in advance of the school year and to offset some of the negative impacts. This will represent a permanent reform to our budget process moving forward. You will receive an email tomorrow from our budget team with further details regarding these funds. I want to again thank you for your patience, solution solving cooperation and your understanding during this very challenging time. Know that I stand with you and will support you in every way possible to ensure that we continue the steady progress on behalf of our children. Sincerely, Barbara Byrd-Bennett, Chief Executive Officer, Chicago Public Schools

Additional detail was sent to principals by "Chief Administrative Officer" Tim Cawley:

Principals As you heard yesterday from Barbara Byrd-Bennett, we will release additional SGSA funds to you now so that you can use them to revise your FY14 budget. This release is composed of two parts: 1. Your estimated carryover funds from last year, if you have carryover (very few schools have none). This is a significant acceleration from the past, when access to your carryover wasn’t possible until October or November, and reflects our desire to give you as much flexibility as possible this year. These were always your school’s funds, and we want you to be able to use them now.

2. Additional SGSA funds that we had held back for distribution after the 10th day. As communicated in the budget meetings, this holdback was to fund increases at schools with higher-than-projected enrollment once schools open, without having to deduct funds at schools with lower enrollment on the 10th day (which is Sept 11 this year). However, we have decided to release these funds now to help offset other cuts you may have received, although with the caution that you should be conservative in spending these funds if you believe your enrollment projection may be optimistic. As you consider how to build these funds into your budget, you should know the following: - You will receive an email today from the School Support Center with instructions for how to find out how much your school will receive in additional SGSA funds.

- The carryover estimate is based on your balance on June 30, and will be reduced on the 10th day if you have spent against this total since then (e.g., with an unpaid bill or open P.O. at that date). We believe this will not apply to most schools, but you are the best judge of whether or not you spent some of those funds, so plan accordingly.

- We do know that this budget revision will need to occur in a short timeframe, and that you will need to ensure your revised budget is still in balance after these changes. But, we feel that these extra funds will help you ensure success for your school this year, and want to give you the opportunity to use them.

- With both pieces of information, you will be able to decide whether or not to add back any positions next year. You will need to quickly decide how to utilize those funds and which position(s), if any, to reinstate in your budget. You will need to inform and gain approval from your LSC as necessary for transactions related to discretionary funding.

- From Monday July 15 to Wednesday July 17, you should revise your budget to determine which position(s), if any, on the “talent impact report” you would like to retain. Your talent generalist needs to be a part of that decision to ensure that you are making a decision that is consistent with our staffing principles and union contract. And you should rely on your SSC finance specialist to ensure that you have sufficient funding for the position you wish to retain.

- Given these budget adjustments, layoff conversations and hiring will be delayed.

- The talent team will be hosting webinars regarding support for your layoff dialogues on July 18. No conversations should occur prior to this date.

- Hiring will now open on July 22. We do know that this budget revision will need to occur in a short timeframe, and that that will put added pressure on you to ensure your revised budget is still in balance after these changes. But, we feel that these extra funds will help you ensure success for your school this year, and want to give you the opportunity to use them. Your support staff at the SSC’s, both in talent and Finance, are familiar with this plan and are there to help. Please call them with any questions.

TRIBUNE REPORT ON BYRD BENNETT'S 'ADDED MONEY' ANNOUNCEMENT:

By Noreen S. Ahmed-Ullah, Chicago Tribune reporter. 8:29 p.m. CDT, July 10, 2013

After weeks of complaints from principals and parents about budget cuts, Chicago Public Schools released an additional $36 million to schools Wednesday.

In a letter to principals released late in the day, schools CEO Barbara Byrd-Bennett said supplemental general state aid would be doled out to schools by July 15.

Typically that state money, which is based on the number of students at the poverty level, is distributed in October and November once schools determine total student enrollment and the number of low-income students in their buildings.

Last month the district released budgets for individual schools under a new per-pupil funding formula. Many principals found themselves forced to cut programs like art and music based on the amount they were given. The early release of the state money is intended to alleviate that pain, Byrd-Bennett said in her letter to principals.

"These dollars, which normally have been issued to schools in October or November of every year, will better enable you to plan for your budget in advance of the school year and to offset some of the negative impacts," Byrd-Bennett wrote. "This will represent a permanent reform to our budget process moving forward."

The district has said it is facing a budget deficit for the fiscal year that began July 1 of nearly $1 billion, which it largely blames on the failure of pension reform in Springfield. In her letter, Byrd-Bennett said the district again plans to use one-time reserves to help close the gap. The district has yet to release its overall budget, which has to be approved by the end of August.

The budget cuts have led to the formation of a coalition of Local School Councils — many from middle class communities on the North Side — to fight the cuts.

nahmed@tribune.com



Comments:

July 12, 2013 at 4:00 PM

By: Rod Estvan

CPS deficits -- reality and fiction

George Schmidt's article on CPS budget deficit claims merits some discussion as we enter into the CPS budget season. George is in many ways a repository of historical knowledge in relation to the numerous machinations of suposed CPS budget disasters. Sarah Karp's excellent July 10, 2013 article (at Catalyst) on the CPS' claim that it “has cut Central Office spending by nearly $600 million since 2011,” exposed how CPS created this figure and got some great stuff out of CPS where they backtracked on this claim.

Effectively, Sarah Karp and Catalyst provided evidence for much of what George has been writing about claims of vast savings at the administrative level for many years in Substance.

Now to the billion dollar deficit figure. It's not hard to pad a deficit and it is equally not all that hard to create a fund balance on June 30 of a calendar year to make the CPS Comprehensive Annual Financial Report (CAFR) look better than it actually may be. In fact CPS has done both things on occasion and sometimes during the very same school year. None of this may be illegal or violate Governmental Accounting Standards Board (GASB) regulations.

There are some realities we must all face however. One of those realities is that the required CPS contributions to the pension fund in FY 2014 will be $612.7 million and in FY 2015 $631.5 million. Because of past pension holidays the Illinois General Assembly has granted CPS, the FY 2014 payment will represent a significant increase, an increase that is required by state law because Mayor Daley in his infinite wisdom took (with the approval of the legislature) direct property tax payments to the pension fund and funneled them into CPS. We also know that the Chicago Teachers Union, CPS, and the City of Chicago attempted to pass legislation this session to limit the increase in pension payments CPS would be faced with for two fiscal years because of the budgetary impact of those increases. I thought that legislation was a bad idea, but none the less I recognize we are talking real money here. Fortunately for once the General Assembly did not go down the delayed pension payment path that leads only to eventual default and disaster for retired teachers, administrators, and all tax payers eventually once the litigation ends.

Whatever the deficit number we need to recognize not just CPS but many districts in Illinois are operating in the red in the wake of the great recession. The question is how to address this situation. There have now been many politicians calling for a return of excess TIF funds to CPS, which by law requires these funds also be sent to other taxing bodies in Chicago too. But now the City is claiming only $10 million in such funds that could go back to CPS. I for one would like to see these same politicians calling for a return of TIF funds also get the current actual balances of the funds in these TIF districts publicly released. But no matter what the real numbers with TIFs it probably would be far less than what is needed just to cover the additional pension costs CPS will face next year.

Unfortunately one easy path way for additional funds has very little support and that is getting an exemption to the Property Tax Extension Limitation Act which limits the increases in any one year of the tax rate CPS and other taxing bodies (35 ILCS 200/18-185). The law makes it clear that the annual tax increase for PTELL funds is limited to 5 percent or the rate of inflation whichever is less. The overall property tax rate for Chicago homeowners is lower than in any Cook County suburb. In order for CPS to realize comparable tax collections to these suburban districts an exemption to PTELL has to be enacted. The CTU would be far wiser seeking a one year PTELL exemption that would allow CPS to increase its tax rate to a level comparable to the average for Cook County suburban school districts than spending time lobbying for a pension holiday. But such a stance might not prove to be popular among home owners living in the city, let alone the Mayor would become the champion of keeping the property tax rate low as a matter of political expediency.

It would be nice if more funds could be realized via the state income tax system, but that probably requires a move away from Illinois' constitutionally mandated flat income tax system. That project will take years if it is to happen at all.

I think it is important for teachers and parents to realize that the current fiscal deficit numbers may well be inflated but none the less CPS like many districts are indeed legitimately fiscally stressed. CPS like many other school districts make bad choices that cost money, they make what they think are cost saving moves like privatization that in the end cost more money than expected too, urban districts like CPS historically also have been overwhelmed by various forms of patronage contracting that cost and waste money, but all of those things do not eliminate the need for a sound foundation of fiscal resources based on tax policy. CPS currently lacks such a sound foundation.

Rod Estvan

July 22, 2013 at 2:28 AM

By: Valerie F. Leonard

The New Funding Formula

It seems to me that in order to accommodate the Gates Compact, which requires equal funding of district schools and charter schools, CPS has taken the path of least resistance. They probably could not get an increase for charters passed in Springfield in this environment. I bet, after doing some digging, we'll find that the District have cut the funding from their own schools, which does not require action in Springfield, down to the same level as charter schools. This sounds unethical at best. The Department of Education gives them X number of dollars to be allocated per student in Public Schools. Where will the funds that should rightfully be targeted toward our public schools going?

July 22, 2013 at 2:34 AM

By: Valerie F. Leonard

Does CPS Not Remember What They Say?

For the past year and a half, CPS has said there is a $1 billion dollar deficit. Last year, they told us they were depleting reserves to pay for teacher increases. If the reserves were depleted, how is it they will be going into reserves to close the deficit? If there was a billion dollar deficit for the entire 2012-2013 school year, and they are starting out with a billion dollar deficit projected for 2013-2014, how is it that schools have carryover funds from last year to be applied to this year?

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