Chicago’s school board voted to reverse layoffs with uncertain money. What’s next for schools?

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A divided Chicago school board passed a nearly $10 billion budget late Thursday that preserves jobs but relies on an additional $150 million in state funding that may not materialize.

Chicago Public Schools CEO Macquline King, whose proposal included cuts that the board amended, swiftly sent an email to parents sounding an alarm and floating the possibility that school may not start on time Aug. 24.

“As it stands right now, though, we do not know if we will be able to secure the short-term financing needed to pay our employees in September, which would effectively shut down the district just as staff and students are set to return,” King said in her Thursday night email to families.

Multiple financial experts say that is unlikely because the district should be able to secure a short-term loan, albeit with high interest.

Last year’s budget avoided cuts to the classroom. This year’s budget drama is set against a larger political backdrop. CPS has long argued that the state underfunds the district under Illinois’ school funding formula. A majority of board members, most appointed by Mayor Brandon Johnson, are betting the state will act. But state lawmakers and the governor have already approved a budget, and changes now would be difficult.

Coming months before a November election in which every seat on the school board will be on the ballot, competing views over the budget could prove to be a core campaign issue.

Here’s what parents should know about what’s happening, what it could mean for schools, and what might happen next.

Will school start on time?

CPS did not respond to questions about why schools might not open as scheduled. But a delayed opening is unlikely and unprecedented.

Previously, CPS said that passing a budget Thursday would allow the district to secure short-term borrowing by Sept. 2, just in time to make the Sept. 4 payroll.

CPS needs the loan to make up for late county property tax payments. That loan, designed for government bodies facing short-term cash flow needs, would help cover a missing $400 million of $700 million the district needs for operations in September, according to a memo CPS sent board members this week that Chalkbeat obtained.

Experts said the district will probably be able to secure loans in the time frame it needs.

But, it’s going to cost the district more in interest.

“It’s probable, if not almost a near certainty, that they’ll end up paying more for it because of the budget as well as the short time frame,” said Lisa Washburn, managing director at Municipal Market Analytics, Inc., a market and credit analysis research firm.

Lenders may want to scrutinize CPS’ finances more than usual because the approved budget relies on uncertain money, which could slow down the process, said Justin Marlowe, a municipal finance expert at the University of Chicago’s Harris School of Public Policy.

“(Investors) haven’t done that so far, but a budget that assumes a bunch of state revenue that may or may not arrive is good reason to ask tough questions you’ve never asked before,” Marlowe said in an email.

What if CPS doesn’t have the cash it needs to pay staff?

There are legal consequences for missing payroll, including violations of multiple state labor laws and union contracts that could result in lawsuits and criminal charges, the district wrote in its memo.

It could also mean no school.

“Because employees cannot be compelled to work without compensation, missed payroll will likely result in immediate strikes, walkouts, or work refusals that will halt district operations,” the memo said.

The district could ask its unions for grace on paychecks. CTU and the principals union supported the modified budget plan, but SEIU Local 73, which represents thousands of support staffers who are among the district’s lowest paid, opposed it.

In 1980, Chicago Public Schools was locked out of the bond markets and failed to make payroll multiple times. Then-Gov. Jim Thompson convened city leaders, school officials, unions, and bankers to broker a deal to bail out the troubled school system. They created a separate body known as the School Finance Authority, which could access the markets and get the district the money it needed. This became the precursor to mayoral control in 1995.

Now, CPS is transitioning back to local control, with a hybrid school board made up of 11 mayoral appointees and 10 members elected in 2024. All 21 seats are also on the ballot this Nov. 3, adding a layer of electoral politics to the tensions.

What are the chances the state sends CPS more money?

Revising state revenue for Chicago schools upward by $150 million would require an amendment to the state budget, which passed in May. Any changes require a three-fifths majority of state lawmakers. That’s 36 votes in the Senate and 71 votes in the House, including legislators who don’t represent Chicago and would likely seek funding for their districts, too.

Gov. JB Pritzker said Friday that state funding for school districts is already a “known quantity,” and that if Illinois House Speaker Emanuel “Chris” Welch has a plan for adding supplemental funding, as he implied Wednesday, the governor hasn’t seen it.

“He seems to have a plan or is planning to put something together, and so I look forward to seeing that,” Pritzker said.

It’s not clear whether there are enough votes for such a measure to pass during a veto session in November. Even if it did, that money would likely come through later in the school year.

Pritzker noted that the state has increased K-12 education funding by about $3 billion since he took office in 2018. CPS has seen state revenue increase by nearly $1 billion in that time. The district’s budget has grown from about $6 billion in 2018 to just under $10 billion this year.

CTU and aligned school board members argue that the state’s formula for distributing money to schools, which changed in 2017 before Pritzker took office, promised to get all schools to an adequate funding level by 2027. The state is not on track to hit that goal but the union is putting pressure on Pritzker, Welch, and other state lawmakers to do so.

Will teachers who were laid off from my school be rehired?

The modified budget plan calls for spending $100 million to rescind layoffs that happened earlier this month. Another $50 million would go toward easing a hiring and spending freeze later in the school year.

Nelsen Gerew, chief of internal and public affairs at the Chicago Fund for Public Education, said CPS could give money back to schools and let them handle rehiring, or the district could reverse its own cuts, which would be more complicated.

“Is the idea that we’ll try to get schools back to where they were (last school year)?” Gerew said.

Principals have been working with budgets approved in June and have likely rearranged class schedules for the upcoming year. Teachers who were laid off may have been rehired elsewhere. The CTU contract allows a tenured teacher who has been laid off to return to a school within 10 months if there’s a vacancy and they’re rated proficient or higher.

Will there be midyear cuts at my school?

If the money the school board is expecting from the state doesn’t come through, schools may be forced to cut staff and other resources in the middle of the year to make up the difference.

However, other sources of revenue could increase. Chicago Mayor Brandon Johnson could declare a larger surplus from special taxing districts known as TIF, or tax increment financing, meant to spur economic development. Last year, he did, and CPS got $576 million. This year, CPS initially projected $200 million in TIF surplus and revised it earlier this week to $285 million. This revision allowed them to remove furloughs from its initial budget plan.

Johnson faces reelection in February 2027, although he has yet to announce his intentions.

Reema Amin is a reporter covering Chicago Public Schools. Contact Reema at ramin@chalkbeat.org.