Budget Hearing #2

001President Harden, before you begin today's public hearing, I would like to read a few announcements. Good afternoon. Welcome to the August 19, 2025 FY26 budget hearing. Before we start the hearing, I would like to share a few safety points and next meeting announcements. Please note that the primary exit and entrance to the boardroom is the door at which you used to enter this afternoon. If you are leaving the room, please use this door. The restrooms are outside the boardroom doors to your left. During the meeting, we ask that you keep all aisles and exits clear. If you need any assistance during the hearing, please wave the attention of one of our security officers. Mark your calendars for the upcoming meeting. The next board meeting is scheduled for Thursday, August 28th, 2025 at 3 p.m. Please

002note the the later start time. The board meeting will be held at 42 West Madison Street Garden level boardroom. For details on how to register to speak or observe at the board meeting and to learn about the speaker lottery process, please visit the Chicago Board of Education website cpsb.org. If you have any questions about registration or public participation, please contact the board office for assistance. Thank you for joining us today. President Harden, we are now ready for you to begin the public public hearing. Good afternoon everyone. Okay, I thought I was by myself a minute. All right, I'm Sean Behard. On behalf of my fellow board members, welcome to the second fiscal year 26 budget hearing. Today is August 19th, 2025. We are holding the second budget hearing in the boardroom, 42 West Madison Street

003Garden level. And I would like to note that board members and senior leadership are physically present in the boardroom. Registered speakers may join us in person or virtually if they've opted to do so. The purpose of this hearing is to comply with the school code provisions regarding the fiscical year 26 budget. Assistant Secretary, please state for the record the notice procedure for this hearing. >> Thank you, President Harden. Notice of this public hearing was published in the Chicago Sun Times, a newspaper of general circulation in the city of Chicago and posted at principal office 42 West Madison Street lobby on August 13, 2025. Notice was also posted on the cpsb.org and cps.edu websites on August 13th. I will now read for the record the public noticed as published. Notice public hearings FY26 budget for the

0042025 2026 fiscal year. Chicago Board of Education commonly known as Chicago Public Schools to whom it may concern. Public notice is hereby given by the Chicago Board of Education that it has prepared a FY26 budget for the 2025 fiscal year in tentative form and that by five copies thereof available for public inspection have been filed and are now on file in the office of the board of education of the city of Chicago commonly known as Chicago public schools 42 West Madison Street Garden level Chicago Illinois 60602 and available at www. ww.cps.edu/budget. And that said, Board of Education will hold two public hearings upon said budget on Tuesday, August 19th, 2025. Date, Tuesday, August 19th, 2025. Hearing time, 1 p.m. to 2:30 p.m. Board, room 42 West Madison Street, Garden Level, Chicago, Illinois 60602. Date Tuesday,

005August 19th, 2025. Hearing time 4:30 p.m. 6 p.m. Board Room 42 West Madison Street, Garden Level, Chicago, Illinois 60602. Registered speakers who wish to present during public participation may have the option to participate in person at the location of the public hearing or virtually via an electronic platform. The public will have access to the meeting via liveream at cpsb.org. For those for these two public hearings, advanced registration to speak will begin on Wednesday, August 13, 2025 at 5:00 pm and will close on Friday, August 15, 2025 at 5:00 p.m. Anyone interested in speaking can sign up. After the 48 registration period, a lottery will randomly select a set number of speakers from those who registered. For example, if 100 people registered, the lottery might select 15 of them to speak. This process gives anyone a

006fair chance to address the board. Advanced registration during this period is available by the following methods. www.cpsbboe.org or by phone 773-553160. To ensure equity of access to address the board, an individual may not speak at back-toback meetings and more than one meeting per month. If you registered for back-to-back meetings and more than one meeting per month, you will not be included for the meeting lottery. In the event of an individual registers to speak at the consecutive meeting, the individual will not be called to address the board. Advanced registration to observe will also be available beginning Wednesday, August 13th, 2025 at 5:00 p.m. and will close on Friday, August 15, 2025 at 5:00 p.m. or until all slots are filled. Advanced registration during the period is available by the following methods. www.cpsb.org or by phone 773553160

0070. The public participation segment of the public hearings will conclude after the last person who has registered to speak has spoken or at 2:30 p.m. for the first hearing on August 19th and 6 p.m. for the second hearing on August 19th, whichever occurs first. Members of the public may submit written comments related to the FY26 tenative budget via the written comments form on the board's website at cpsb.org or mailed at 42 West Madison Street Garden level by 5:00 p.m. August 20, 2025. Dated at Chicago, Illinois, August 13, 2025 Chicago Board of Education by Shaun B. Harden, president attested by Susan Jaho, secretary. All right. I would like to note for the record the members present here today. Board member Loausano, member Smith, member Lopez, member Bole, member Wallace, member Kuster, member Rosenfeld, member Rivas, member

008Rio, Rios Sierra who is joining us virtually. Member Bannon, member Biggs, member Zachor, member Dary, board member Gutierrez, and Vice President Bautista who is joining us virtually, and President Harden say. >> Yeah. All right. I would also like to acknowledge Dr. Meline King, interim superintendent, chief executive officer. Elizabeth K. Barton, acting general counsel who are present here in this meeting. Okay, we will begin with today's public comment segment. Thank you for joining to share your comments with us. In compliance with the Illinois Open Meetings Act, public participation, sometimes referred to as public comment, is the portion of the board meeting or hearing that grants district stakeholders, the opportunity to address the board with their concerns and comments. Note that public participation is the time for the board and CPS senior leadership to listen and hear

009from you rather than a time for dialogue with board members during or after your remarks. While we can't disc discuss personnel matters, public participation is a key component of transparent governance and provides us as board members as well as senior leadership an opportunity to listen to everyone who has signed to speak. This board takes equity of voice seriously. And while we may not address your comments directly during public participation, CPS leadership is always present at our meetings and are always able to address concerns as follow-ups after the meeting. As a district and as a board, we also have many other spaces for authentic dialogue. For example, each and every one of our board members host board office hours so that they can have a conversation. Please use our website cpsb.org if you want to meet

010with the board member during office hours. We encourage you to take advantage of the opportunity to meet with board members outside of a board meeting. Thank you for your attention and consideration. And as a reminder, union representatives will be allotted five minutes to speak before public participation and elected officials will be allotted five minutes to speak after the conclusion of public participation. Assistant Secretary, please share the rules of public participation. >> Thank you, President Harden. Before I begin, I would like to put in the record that board member Blae is here in person. Members of the public who registered to speak were given the option to attend in person or via an electronic format. For those who preferred to attend via an electronic format, they were given information to access this meeting by dialing a

011number and using their phone. We did this so that speakers with limited or no access to the internet or who may have weak internet connection could still participate using their phones. Also, members of the public may submit written comments for the board of education hearings via the written comments form on the board's website at cpsboe.org or mail to 42 West Madison Street, Garden Level. Written comments received between the day of the public agenda are posted through 5:00 p.m. the day of the board of education. Hearings will be submitted to the board and published within five business days in our website at cpsb.org. Speakers, please listen while I provide directions of the public participation. I will call your name and number when it is your turn to speak. For speakers joining virtually, as a reminder to

012unmute, please press star six. Once you hear your name, please state your name for the record. I will then start the two-minut timer. When there are 30 seconds remaining, I will inform you so that you can be so you can proceed to conclude your remarks to allow the next speaker to begin. For anyone standing with the speaker, note that in order to comply with the city's fire code, please stand along the glass partitions on the marked spots and keep aisles clear. Thank you, President Harden. Before we begin calling registered speakers from the speakers list, we do have a few union reps who would like to address the board. All right, we do have uh union rep. Jackson Potter, CTU vice president here in person. Good afternoon. I know you're all saying, "I just saw you

013last week. Aren't you violating the two meeting rule?" But you guys have too many dang meetings. So, here I am again. There are symbiotic relationships between the city and the schools. It's always been the case. Think about crossing guards. The city used to pay for them. There's no statutory obligation for the schools to pay for them and yet you do now. Similar was school resource officers. Similar this argument that has turned into a political hot potato around MEABF. And as the district's becoming increasingly independent, first hybrid board budget you'll be voting on, those costs will be assumed fully. So, it's important to plan for that and realize that there is a communication, a relationship, a way to negotiate these things back and forth because those fates are tied, have been, will continue to be. And

014so I want to point out that some of the people advocating the strongest for, hey, don't make that payment to the lowest paid black and brown women in the system for their pensions are the same people who have banks on their boards who are part of the financing short-term in your budget currently that's being proposed. PNC Bank sits on the board of the Civic Federation and is going to benefit mightily from the district's financial straits. The Civic Committee of the Commercial Club of Chicago, all kinds of banking capital on there that have profited mightily from the bad deals of the past. Are any of those groups, Kids First Chicago Civic Federation saying, "We are going to go to the people who pay our bills to renegotiate the debt we unfairly imposed on the district years

015ago." Because if they're not saying that, then they don't mean what they say in terms of ensuring students are fully funded and get everything they need and deserve. And if they're not saying it, you better damn sure well say it. And in this budget, I would encourage some initiative around affirmative litigation to make those banks pay for the crimes of the past. And by crimes, I mean crimes. They violated the law. They knew the market was going to fall out. They knew they were going to profit incredibly from this the systems inability to pay and go to market. So those are things you can get money back on and you can renegotiate the debt simultaneously. I would really highly encourage that we can give you a briefing. We have lawyers that are litigating currently in

016California around the same things because they did it everywhere. Uh lastly, I have heard uh from a colleague in a neighboring district that today they were informed by the federal government that their title funding will be frozen. You are dealing with an uncertainty in this climate environment that is unprecedented. And it means you need an emergency plan, a contingency upon which if the tiff dollars don't come in because the budget crisis expands at the city level and they can't do it for whatever reason, you don't have to double the number of cuts midyear. A hund00 million if you are short midyear would be about a thousand teaching positions normally, but doing it midyear makes it 2,000. Think of the instability, the chaos, the harm to children that that would cause. If you don't have a

017contingency plan and this madman in the White House comes down and slashes more SNAP benefits, school lunches, you name it, then we are in deep trouble. So there are harms that are bad and then there are harms that are worse. I'm not saying you have great choices, but some are better than others. So measure them twice. Uh lastly, and I know I just said that, but one last thing is that if you took 0.25% of the 8 billion dollars in tax relief the wealthiest 5% of people in Illinois just received from the Trump administration, you could restore all the SNAP benefits. If you took and taxed the rest of that amount, we'd be in surplus. So would the rest of the school districts in the state. We'd finish and finalize a transit plan to fill

018in the gaps. We'd restore Medicaid f funding for our most vulnerable students and families and we'd have additional resources for other needs that are critical. So I ask you to really talk to one another. You're not in an enviable situation, but you didn't sign up for that either. Thank you. >> And I do appreciate there's unity on this board around no cuts to the classroom. That is remarkable, necessary, admirable, and insufficient. So, um, hope you get your heads together, uh, and we can figure out a way to walk this tightrobe collectively while we demand full funding from the state, JB Pritsker, and do that together. A campaign plan for that goal should be attached to any budget. Thank you. >> Thank you for your comments. Before we begin with the next speaker, I would like

019to acknowledge uh Charles Mayfield, chief operating officer, who joined us at 4:47 in person. The next union rep is Jen Kent, CTU Charter Division Chair, who is here in person. Good afternoon, members of the board. It's good to see you all again. As you know, I'm Jen Conant, a longtime charter educator and the chair of C2's charter division. I know that you all are facing challenging decisions regarding the budget. There are a lot of unknowns right now about where additional funding may come from and who needs to make the pension payment. I'm here to say that your guiding principle in all of these questions and decisions is to mitigate negative impact on students and to leave yourself as many options as possible. Over the past few years, but especially last year, we saw the devastating

020impact of school and program closures in the charter space at Aero, Aspira, and the prek program at passages. This board took action to ensure that the number of closures were reduced and that students came first by doing something CPS has not done before, taking over management of five schools starting next year. This board was committed to keeping our school communities whole. I'm calling on this board to do the same thing now. Keep our school communities whole. Cuts to hot lunches, crossing guards, and to custodial staff are painful for our school communities. We need to fight for additional funding so that our students don't go without h hot lunches and essential services. And so that our school buildings remain clean and functional. We have to call on the Illinois General Assembly and the governor to provide

021funding for our students and that our schools deserve. All students deserve a fully funded education. And while advocacy for funding is essential, we cannot bank on it. If we don't receive additional funds, the district's budgeting issues should not fall on our students backs with additional cuts to staffing and furlow days midyear. Please ensure that you have options to keep our school communities whole without cuts, just like you stepped in to keep our charter school communities whole. Thank you. >> Thank you for your comments. Before we begin with the next speaker, I would like to for the record um share board member Pope joined us at 4:49 p.m. in person. The next union rep is Tummaine Reeves, SEIU Local 73, director of the CPS division, who is joining us in person. Good afternoon everyone. had a

022chance to share with you all uh the earlier uh pretty much going to share and re-emphasize the same thing uh but I'll I'll make it more brief but basically months ago I believe on or around March this board passed a resolution uh outlining the the qualifications for the CEO of Chicago public schools moving forward based on that SEIU sent a letter uh stressing the need for a fair process and our hope for the most qualified person to fill the role of interim CEO of Chicago public schools. Dr. Meline King was the mayor's office choice of who they thought was the most qualified uh to fill that role. Since then, Dr. King dove right in hosting community meetings where parents and labor partners were able to voice their concerns around the budget deficit, uh their concerns

023around the shuffling of seeks, uh with the cluster program, which is still an outlying issue for us. um the impact of decisions um and that they have on the students. So now when it comes to the budget deficit, Dr. King has proposed a budget that was thoughtful of all of those factors and she presented one that does not call for additional cuts to the classrooms, to the schools. That we all agree on. What we don't agree on is her methodology. And that's what's concerning. If the most qualified person in the mayor's eyes has presented a budget that does not call for additional cuts, I don't understand the need to want to reject that proposed budget and take a risk on taking out a loan. where history has shown CPS that when taking out a loan,

024it is the workers that suffers because when it's time to annie up or pay up, the workers are asked to take wage freezes in in the economy like this that's devastating to families, to working families. The workers are asked to take furlow days and an economy like this, again, devastating to working families. So, we would ask that you do the responsible thing and you trust the mayor's opinion of the most qualified person to fill this role. You trust her proposed budget that does not call for that risk. Do not take out a loan that will harm workers in the long run and dig CPS in a deeper hole. Do not take out a loan that's going to harm working families and harm ultimately harm students. and do not reimburse the city for making the pension

025payment that is has historically always paid up until Mayor Lightfoot. So again, Dr. King, when you're doing the right thing, which is with this, you've shown our union that you are willing to listen to families and you are willing to listen to lo to workers. When you're doing that, we will support that action. Thank you. >> Thank you for your comments, President Harden. We are now ready to call speakers from the speakers list. We have Roy Balden, speaker number one, who is here in person. Good afternoon, members of the board. I hope I don't have a headache when I leave this meeting, but I will say this as a former LSC. Well, first of all, let me clear something for the record. I see where it had me down as speaker representing Marshall High School.

026I'm not here to represent Marshall. I'm just here to speak on the budget. I had an opportunity to attend one of the meetings on the west side of Chicago for the budget. That's something that had never been done before in CPS during the time that I served on LSC's where the community was allowed to come in and work with you all on the budget to give ideas. I heard a lot of interesting ideas. And I will say this, for the 22 years that I had served on LSC's on several LSC's, there were many times that we did not agree with a lot of things in the budget, but we got it done. And I'm hoping that this board can do the same thing. Now, I'm listening to a lot of the funding sources. I'm trying

027to understand where is the money going to come from or if it's going to actually come in because I'm hearing different stories in the media about monies that we're anticipating on coming in that we're not getting yet. Make it happen. The thing that bothered me earlier today, I was listening to some parents and some students that make comments and you know, we don't really want to hear things like this from the individuals. Well, they don't have any money. They might close the schools. Well, don't think like that because that's not what we're trying to think about. But I just want you guys to work together and get this done any way you possibly can, which is what we did with LSC's. And I'm hoping that you can get to that. Thank you. >> Thank you

028for your comments. The next speaker, Michael Brunson, speaker number two, will be joining us in person. This my hero. I just met my hero, y'all. Okay. Uh, look, talk about this budget fiasco and I just want to remind everybody that uh this is essentially a political issue. Can everybody hear me? I I don't want to always come true clear. And I want to submit that there is a direct connection between a failing and cashstrapped education system and poverty in the city and civic disruption, crime, and the horrendous violence that's occurring in this city. We have to fix this educational system. Right now, CPS is crying broke and reducing services. Meanwhile, billions of dollars are being traded right down the street at the Chicago Board of Trade unted. And so, what I'm saying is you need

029to find, you know, another revenue stream. And I say the biggest the mother load the one that you need to go after is the is a financial transaction tax. Now you didn't always have money coming in from the lottery but it happened. You didn't always have that a financial transa what what is that other thing that you're getting from the city that other tax that you're getting from the city that came about. It's time for a financial transaction tax. Chicago Board of Trade sits in there. They have thousands of transactions, billions of dollars flying through there every day. >> You have 30 seconds remaining. >> And just because one man says that he's going to stop it, if it tries to go into law, everybody stands down. We outnumber him. I think everybody needs to

030get on board with that and we need to stop fooling around and go for the big money. And that money is right there at the Chicago Board of Trade and we need to institute a financial transaction tax so we can finally get enough money to fix our schools. Thank you. >> Thank you for your comments. The next speaker, Michelle Lewick, speaker number three, is joining us in person. Good afternoon board members. My name is Michelle Lewig. I'm a teacher at Depeste Elementary School on the west side. I am a proud product of Illinois public education from kindergarten all the way through grad school. I played clarinet and tenor saxophone in band, competed in sports, and attended journalism events in high school. My college education was funded by MAP and PEL grants. I had an enriching

031and joyful education experience. My CPS students deserve to have the same. Therefore, we cannot choose to cut positions and programs. Please do not cut any more teaching positions. IEP minutes are not being met due to special education cuts. Opportunities to be creative are lost when cuts are made to art, music, and library. How does CPS expect to recruit and retain teachers when they may be laid off or experience burnout due to working with bare minimum resources? Do not cut cafeteria workers and food supplies. Our students deserve warm, healthy meals multiple times a day. Do not cut safe passage workers. The federal agents are coming. They will be here sooner rather than later. They will not make our communities safer. It is our own community members who make communities safer. Let's invest in our communities, especially

032on the south and west sides. Let's invest in sustainable community schools. Let's become a sustainable community schools school district and let's tax the rich. If I can pay $10,000 in taxes each year, there's no reason why a billionaire can't. They make 10,000 times my salary. They can pay. So stop giving them tax breaks. Let's go to Springfield together. Let's demand our schools are equitably funded. Board members, I urge you to pass a budget that fully funds our schools and gives our students what they deserve. Thank you. >> Thank you for your comments. The next speaker is Chenise Stevens, speaker number five, who's joining us in person. Hi, I am Chenise Stevens, a proud product of CPS, a parent of CPS students, and a math teacher at Duke Ellington Elementary. Today, I emphasize the urgent need

033for equitable funding across Chicago public schools. If I ever speak to someone and they tell me they do not understand, it's not their fault. It's because our schools have been underfunded. Education is the foundation of communication, knowledge, and opportunity. When we allow chronic disinvestment, we deny our young people the tools they need to thrive. When communities face despair, schools must be the hope. Schools must be the place where students discover their power, learn to think critically, and prepare to lead with integrity. But this hope cannot exist without resources. We must unite, take a stand, and come together to ensure that every student in CPS receives the education they deserve. Our students should be learning about biases, about civic responsibility, and how to vote for leaders who serve the good of all and not just the

034wealthy few. That means we must send a direct message to everyone in Illinois. Education must come first. This commitment must be begin with a fair budget. This is our moment to put education first, not as a slogan, but as a promise as elections come to speak, speak to your constituents, yourselves, and make sure they advocate to the state to provide $1.6 billion dollars to schools across Illinois. Students are washing and they deserve nothing less. Let's not allow CPS to be a part of the Hunger Games. Thank you for your comments. The next speaker, Andrea Parker, is joining us virtually. Andrea, please press star six to unmute. >> Hello. Hello. Can you all hear me? >> Yes, we can. >> Okay. Um, thank you board of education for um the work that you are doing. I

035am Andrea Parker. I am an alumni of High Park Career Academy um now which is High Park Academy. myster career. I am also a parent of a CPS alum who also went to High Park and I'm currently a reading teacher for Robert Fuls Elementary and I have been a CPS teacher for nearly 22 years. And I just pray that my words here at the board of education meeting would not be in vain. I pray that my words will settle in your spirits and I pray that it will provoke change. Um because I am tired of the status quo. I am tired of rubber stamps. I am tired of coming to meetings and hearing meetings of of us imploring you to make changes on behalf of our students and there is not. So I am praying

036that this will be a change in the way that we do things at the board and I just pray that we will hold those who have money which is the rich accountable for not for paying taxes and I pray that you tell them that taxes is not something that is some that is being taken away from them. is their contribution to the next generation of people who is going to make this country great. I am tired of all the resources annually being taken away from our children. And what happens to children that have no resources, that lack the education, that lack the skills that teachers give them? You create an opportunity gap. And when there is an opportunity gap, our students go to school and they don't know what they want to do with their

037lives. They don't know what career they want to have because they have not been exposed. So our children can't get the scholarships they need because they can't compete. They don't get the jobs they want because they cannot compete. And what do you do? You create marginalized communities. You create generations of people who are not reaching their dreams, who are hopeless and are teaching their children the same thing. So, I hope that we tax the rich, that we find creative revenue to keep our students educated to the best of your ability. I do not want this again, like the previous speaker said, to be a slogan. I pray that we put our children first. And I don't want to be here next year again crying and begging you to create a budget that is equitable for

038all of our children. Our children deserve the best. our children deserve all the resources they need to be successful and to >> please conclude your remarks. >> So, um please take my words seriously. Take all of what we're saying seriously and make us um make CPS again a school that is worth. >> Thank you for your remarks. >> Our next speaker, Merrick Fitzgerald, speaker number nine, is joining us in person. Right. Hello, my name is McCerrick Fitzgerald. I'm a graduate of Lane High School. I'm currently a special education classroom assistant at Harriet Tubman Elementary, and I'm a proud member of SEIU Local 73. I'm here today because my colleagues and I were told that changes to the budget were not cuts, but instead considerations. I'm calling BS. Cutting 600 SECA positions is not a staffing

039consideration. It's hanging already vulnerable communities out to dry. Also, cuts to transportation, lunches, crossing guards, and custodial staff are jeopardizing the health and safety of our students on a daily basis. Our students do not need less. They deserve more and they need more, especially under the constant attacks from the Trump administration. I'm here to call BS on JB Pritsker and the Democrats. Pritsker could be taxing the rich, but instead he's giving himself and the rest of them tax breaks. All the while, Chicago's students and educators are owed $1.6 billion. Board of Education, what I'm asking of you is not radical. It's simple. Do your job. Get down to Springfield and demand the schools that our students deserve. Thank you. >> Thank you for your comments. Our next speaker, Perie Nandan, speaker number 10, is joining

040us in person. Hi y'all. My name is Kiy. I'm a special education teacher. Um, and it's day two. And as a special education teacher, I can tell you that our pair professionals are already frustrated. Breaks are being eaten into. Lunches are not being given. Our school has a shortage of five pair professional positions. And we're being told that they're not cuts being made to the classroom. It's day two and we already having kids that only place that they can get a hot meal is school. And those are being taken away. And we're being told that they're not cuts to the classroom. I come from a district where I've literally met parents whose kids have been hit by cars and you're taking away crossing guards and telling us that they're not cuts to the classroom. So,

041it's a little frustrating to keep hearing this message being told to us that they're not cuts being made to the classroom when these things that are being cut are cuts to our students and are cuts to the classroom. And it doesn't stop there. Even things like having custodians to keep our classrooms clean for our students. We're being told that, oh, we we don't have enough staff. They're already working overtime and now we're being those positions are being cut and then they're telling us they're not cuts to the classrooms. So, I guess as a teacher, what we need from you as a district is to not keep spinning this and keep telling us that these aren't cuts to the classroom. They are. And instead, what we need is for you to fight, please. We fight every

042day for our kids. We need to see you fighting just as hard for more funding. Lobby in Springfield. Show up with these legislators. Push back and demand the billions of dollars that you are owed with the formula that they gave you. Fight for this money. Fund and tax these billionaires. Fund the schools and tax the billionaires. Don't tell us to keep fighting for the kids and then turn around and cut resources from them. wanting our kids to have warm meals, clean classrooms for them to learn in, safe water for them to drink. None of that is too much. Stop telling us these aren't cuts in the classroom. They are. Our kids deserve better. Thank you. >> Thank you for your comments. Our next speaker, Carla Rivera, speaker number 11, is joining us in person. Good

043afternoon board members. My name is Carla Rivera. I am a mother of a second grade uh student at Virgil Griome and a preK4 uh student at Wendell um Smith. Both located in the southeast. Um I'm also a parent uh a parent leader parent mentor uh leadership development program uh which works with dozens of parents from the east side in Hewitch H which South Verian Pullman community to increase their involvement in our neighborhood schools. For years parents in our communities have felt that our schools have been left behind when it comes to the district budget. As an example my son has an IEP. He needs to see a speech pathologist. This is an essential support that he needs in order to develop and be successful. It impacts his ability to communicate, to socialize, and to learn.

044Last year, he only was he only um he was only given 30 minutes a week due to a lack of resources. Imagine the burden that this place on me and my husband to fill in the gaps. Neither of us are trained speed pathologists, but we tried our best. My story is not unique. In black and brown communities, parents shoulder the burden of underfunded schools because parents will do anything to help their kids succeed. We stretch ourselves financially and emotionally to take on the roles of tutors when staff are cut to take the role of cooks of cooks when hot meals are cut to take on the role of libraries because our schools don't have any. These are burns that never show up in your budget line. >> You have 30 seconds remaining. Um, within with

045this in mind, I urge CBS and the board of uh and the board to only pass this budget if you can guarantee no cuts during the year. The budget must have must must leave room to borrow and take care of all CPS responsibilities. What if Trump cuts funding to the state or CPS? Does the budget include a plan to avoid midyear uh midyear cuts? If the answer is no, then it's not the budget that our kids deserve. >> Please conclude your remarks. I I am also uh willing to help you. Um if you want us to go to Springfield and fight for our kids, get a bus, get us there. I will get you as many parents as I can to advocate and to make sure that we get what we deserve. Please fight for

046the kids. Thank you. >> Thank you for your comments. Our next speaker, speaker Jesse Bostic, speaker number 13, is joining us in person. Good afternoon, members of the board, Dr. King. My name is Jesse Bostik and I teach fourth grade at Walt Disney Magnet School. I'm happy to be here to speak to all of you about my and my students experience in the classroom. As you can imagine, I'm pretty tired after a long day of routines, procedures, and beginning learning. So far, we've already chosen books from the classroom library that I want to grant to purchase. We played games to explore the difference between visual and numerical representations of numbers from a book that I received from a colleague. I don't know about you, but that's not something I remember doing the first week of

047fourth grade, nor is it the only example. All across this city, dedicated educators are building relationships and thinking of ways to challenge their students. The educators and students of the city have pushed student achievement to new heights despite the interruptions of the pandemic. This is a huge celebration for our district as well as a testament to what is possible with fully funded schools. Imagine what we could achieve by fully funding our schools, not on an emergency pandemic basis, but permanently. Although CPS has presented a budget that avoids furlow days and cuts to the classroom, the rhetoric has not changed. Let me be very clear. This is about children. This is not about no to this loan, maybe to that pension payment. This is about children's remaining This is about whether or not we have resources

048in our classrooms. Stop referring to my students and their learning conditions in dollars. You owe them fully funded, safe, and clean classrooms. If Governor Pritsker and the legislature come together to sustainably fund our schools with the law they passed, the governor can prove that his leadership is an example of successful democratic governance. I know he needs to look good for his upcoming presidential run. >> Please conclude your remarks. >> I appreciate your attention to this matter and I hope you will put our children ahead of the wealthy on your list of priorities when you consider this budget. Thank you. President Harden, we also have elected officials who would like to address the board. Elderman Andre Vasquez, 40th Ward, is here virtually. Please press star six to unmute. >> Elderman Andre Vasquez, please press star to

049mute. >> Yes, we can. >> Okay, thank you very much. Um, I'm Alder person Andre Vasquez of the 40th ward. Uh, currently served by two of the board members. uh board member Ebony Deberry and board member Debbie Pope. Um I'm calling first and foremost as a Chicago who has himself gone to four different public schools growing up as a result of gentrification and being displaced. And so um first I want to add my voice to all of those saying that we need to get more funding from the state. It's absolutely right that Springfield should put some funds towards what we see as a problem just the way they are for the CTA fiscal cliff. And I do think there are ways to do that related to who gets taxed and having the wealthiest pay their

050fair share in order to do so. Um I say that because I think there's large agreement on that. We all have concerns about the cuts that have been happening about members of SEIU Local 1 and SEIU 73 being made uh to being made to suffer cuts and having to be forced to get them into the rooms as far as conversations related to this. Um but I want to talk about city council's role and city government's role. We the city city hall is statemandated to cover the pension payments. That is law. It is not a policy. is not a decision. It is law. What occurred in the past term under Mayor Lightoot is she entered into an agreement with DPS where they would start paying back some of what we as a city are mandated to

051pay. Back then when Mayor Lifto was doing it, people looked at it as a bully tactic because what they realized is that the city has more ability to raise revenue and raise taxes than CPS does, which is currently capped at either 5% or CPI, whichever is lower. So, as we advocate for more funding from the state, we should also be advocating to raise the cap. Now that the board is duly elected, they can make the responsible decisions about raising revenue that every other elected official does. And we are happy to join in making those calls. Now, the reason why I mentioned Mayor Lightoot and how people called it a bully tactic is it is currently happening. Again, it does not make sense for the city to add a $175 million pension payment onto CPS, which

052is again capped as to how much revenue it can raise. And forcing them to potentially take out a loan, isn't solving any problem at all, it is delaying one and making it worse. What we will see in future years, should there be no revenue coming in and you take out a loan at an interest rate and have to pay it back is the same thing that happens to families that pay credit cards and max those out. you will continue to be in debt and have to make larger and deeper cuts. It could potentially bankrupt and ruin the school system. The same way you look at our city because of past irresponsibility by past mayors and that we now have to a billion dollar deficit every single year, doing this kind of step as a budget

053would have you joining our club, a billion dollar deficit every single year, not making it easier at all. Um, I heard that there was mention that the city council said that they wouldn't give tiff surplus. That is just not true. It is simply untrue to say that. The way it works is we have to solve our own budget. In order to solve our own budget, we need to take out a a tiff surplus. We need to drain those tiffs to be able to pay our own. And by the state mandate, whenever we do that, CPS is entitled to 52% of those funds. So, if you think that there's a way that we solve our budget without going into TIFF, we can go to a 101 course on what budgets are. Anyone who's telling you that

054we're going to withhold a TIFF is lying to you. It is uh fake hostage. It's basic extortion. What we need to understand fully is that any choice that includes either the loan or the pension payment on this budget will lead to larger problems for CPS. When Pedro Martinez said this, he was a villain and a bad guy. And after that, he was fired and Mayor Johnson appointed CEO Meline King who looked at the numbers and looked at the homework and came to the exact same decision and that should be thought about. I know that a lot of neighbors out here want to make sure schools are fully funded. We all do. What we don't want to see is them to be put in worse condition because of debt and because of being made to take

055on payments that CPS cannot afford. So I would urge anyone here who cares about our children, who cares about the teachers, who cares about the staff, who doesn't want to see cuts to not go forward with taking on a payment that we should be paying as a city statemandated and not to take on a debt because it is going to lead to larger cuts down the line 73. >> It is why SEIU73 and other unions has made that clear. And so every member up here, you have a lot on your conscience because you have the future of our education and the future of our city in your hands. and I urge you to make the right choice. Thank you very much. >> Thank you for your comments. Our next speaker is Elderman Scott Waguspach from

056the 32nd ward. Please press star six to unmute. Alderman Scott Waggaspach, please press star six to unmute. Hello. Hello. Can you hear me? >> Yes, we can. >> Okay. Thank you very much. Uh, thank you everyone for taking the time to hear from other elected officials here today and uh earlier this uh this morning with a prior meeting. Um, as a city council member who's been part of the city council for some time now, I just want to say thank you to the CPS staff uh for the budget that has really taken on I think a different approach. Um, the uh, you know, the balanced approach that this one is taking is not something that everyone believes is the perfect choice, but it's as close as we can get. And I do support the priorities

057that CPS has tried to lay out with protecting the school budgets. I did look at the uh trimming that they did from the budget through the central office um that made sure to keep critical staff teachers programs that are needed for our children. Um, I also wanted to say that I think the idea that borrowing that has been pushed out there over the last few hours is wrongheaded and fiscally irresponsible. Um, it's not just bad fiscal policy, but it's repeated been repeated at the city level for the past couple years. And for those of you thinking that borrowing is a good approach, it will lead to a downgrade, higher interest rates and costs and push all those capital investments well out into the future which our children cannot afford. So I want to make sure

058that uh people who are saying that we have to go out there and borrow are uh taken on um in terms of this fiscal policy and make sure that we do not go down that path. In terms of um the reimbursement costs, many of us were led to believe that over the last couple years when the Johnson administration came in that they would work on the pension issue and disentangling the city from CPS. Now that we have a board of which all of you are on, we have to work together to make sure we figure this out. And I understand that CPS is looking for new revenue sources, but that really requires the Johnson administration as well as the board members to get down to Springfield and start fighting for what those revenue increases are.

059um not waiting until after the sessions to make comments, but really getting down and working on that to make sure that any classroom cuts, any layoffs, or any other choices, difficult choices we have to make are set aside so that we can get the funding that we do need from Springfield. However, I would want to make sure that people understand that this pension issue has to be resolved and that the promises that were made by this administration are followed through on. The other thing I want to talk about briefly is we are going to make sure that CPS gets the almost $380 million in tax increment financing surplus. It's just the law that when we surplus every other entity gets what their percentage is. And to hear people say that there's somehow going to be

060some kind of trick or there's somebody push back on what the tip surplus is going to be is again wrongheaded and an approach of fiscal policy that just doesn't come true uh either in sense or practicality. So please make sure you understand that the tiff surplus will be there. Um, I just urge all of you to uh, you know, applaud CPS for the work that they've done. I want to thank you for the opportunity to speak and I hope that the budget is passed aside from the unfounded rhetoric uh, that where none of our constituents that we share together now uh, want to keep hearing. They want to know that their children are going to be taught, that their teachers are going to be uh able to get the resources that they need, and that

061this budget um provides that for them. So, I want to thank you for that opportunity, and um good luck with passing the budget. Thank you very much. >> Thank you for your comments, President Harden. This concludes public participation. We'll now proceed with the FY26 budget presentation. >> Good afternoon, President Harden, members of the board. My name is Mike Sidkowski. I'm the chief budget officer for Chicago public schools. My presentation once again today will be about the FY26 CPS budget. Want to start with highlighting that this is a budget that protects our schools. Despite the challenges that we've that are posed by persistent revenue shortfalls for CPS, growing costs, and a deficit of $734 million, CPS has outlined a balanced $10.25 25 billion FY26 budget that will protect the progress made by our students. Our budget

062fully protects the level of school funding from the previous year. It funds all of our contractual commitments to our labor partners. It delivers on the promise to stabilize school budgets, eliminating the risk of cuts to classrooms both now and later in the school year. It includes only borrowing that provides current or future savings to the district and is required for necessary capital investments. And lastly, it allows for CPS to reimburse the city for MEABF with new state or local revenues, unlike the FY2025 budget that did not allow for this possibility. Want to talk for a second about the moment that we're in and why it's important for us to meet the urgency of this moment. We must protect our schools. This budget reflects many difficult decisions that were made in order to protect school funding

063now and into the future. Our schools are already underfunded. Putting schools at risk for cuts now or in the future sets us back even further and jeopardizes the over 1 billion dollars in funding gains we've made for our schools. We need to provide families with certainty. Recent budgets have bolstered confidence in the district's financial future, and we must maintain that confidence of our communities and build on our our progress. We also refuse to go back. We've lived through years of forced austerity. This budget takes necessary steps to protect our schools from reliving the past. CPS's proposal is also based on realistic expectations. First, around state funding. We've heard state lawmakers expressed interest in partnering with CPS on long-term reform to address underfunding, especially as we pres have presented a serious balanced FY26 budget proposal. However,

064state lawmakers have not committed to additional funding this year, and we cannot budget on unrealistic expectations. When we've made this mistake in the past, it has caused mid-year cuts, mass layoffs, furlow days, and billions in crisis borrowing that burden CPS today. Looking at city funding, CPS's expectation of additional TIFF surplus funding is reasonable. TIFF surpluses have increased steadily in recent years, and TIF balances remain one of the few viable options for a city facing a $1 billion deficit. Withholding TIFF surplus funding from CPS would contradict established city policy or violate state law and would hurt CPS students. We also cannot risk our future. Taking out debt when it is not absolutely necessary will send the district into a downward spiral that will have a real impact on our schools. Borrowing money today at the expense

065of tomorrow has always been shortsighted. The district did did this a decade ago when the state was actively working on funding solutions for CPS and it still resulted in downgrades, cuts, furls, and borrowing. No such proposals are under consideration today. CPS's $9 billion debt burden is already a drain on limited district resources. If we take on more debt when it is not needed, this compounds the financial pressures of the future and steals resources from our classrooms. Lastly, more borrowing may not even be possible. Banking on a risky strategy subjects our schools to the possibility of mid-year cuts. We've talked before about our $734 million deficit. And over the spring months, we made $165 million in progress in closing this gap. With these actions completed, we still needed to identify $569 million of additional strategies to

066balance the budget. A bit about that $165 million. This included 146 million in department budget reductions, including a $48 million cut to central office spending and a $96 million cut to citywide spending. This included a $34 million uh savings from school-based grant strategies and programming adjustments, $12 million in savings from a more targeted process for fall enrollment adjustments that'll be implemented in fiscal year 2025, and $23 million in projected savings from the district's $40 million fund to stay within contractual class size limits. Because we preserved our teacher staffing levels and the studenttoteer ratios in our funding model, we project that the full 40 million will not be needed for schools in this upcoming year, aside from some schools with unique situations that lead to oversized classrooms. During this time, we also identified two new liabilities

067that add to our FY26 deficit. $30 million that will be needed for a fund for new special education positions. the first time in years that we've been able to proactively budget for this growing student need and $20 million required in a reserve fund for district-wide IT projects, many of which will save the district significantly over the long term. At this point, we embarked on a community engagement process and this takes us to July. Under the leadership of our interim superintendent and CEO, Dr. King. The district spearheaded an extensive community engagement campaign to ensure that budget decisions were being driven by those who are most impacted by them. During the summer, CPS hosted information briefings, in-person and virtual feedback sessions, and an online survey where students, parents, educators, labor leaders, and community partners could grow their

068understanding of the district's financial situation and offer solutions on how best to reduce the deficit. Several themes emerged from these community conversations. By and large, stakeholders said they wanted the district to keep cuts of as far away from classrooms as possible and avoid cuts that would diminish the overall student experience. Work collaboratively with state and local partners to identify new streams of revenue to support schools. Ensure a more equitable distribution of resources across schools. resist any further borrowing that would drive up the district's exist existing debt or go reimbursing the city of Chicago for non-teer pensions and continue to engage the community around budget decisions. This leads us to the budget solutions that we have put forth that protect our schools. And following the community feedback and faced with the remaining deficit of 569 million,

069we have reviewed every line of our budget to develop a plan that protects our schools and protects our students. What we are proposing to balance the budget includes the following. $126 million in additional savings from the CLA away from the classroom. 149 million in additional available resources, $29 million through accelerating debt refunding savings, $90 million through leveraging one-time funding sources, and $175 million from defining that the reimbursement to the city for MEABF is contingent upon additional state revenue, additional TIFF surplus revenue, or other local revenues above our budgeted assumptions. first on the additional cuts away from the classroom that total $126 million. This is on top of the 146 million that we had already done in the spring and that we have identified line by line through what we provided you in briefings in recent

070recent weeks and months. We identified 126 million on top of this. That includes $50 million in savings from additional reductions to central office personnel, streamlining business operations, data teams, and professional development cost, and transferring some functions from the central office level to the network level to provide more direct support to schools. This includes $29 million in savings from repurposing existing state and federal grant dollars to cover existing costs. Includes $10 million in savings from a hiring freeze of central office staff. and we will only be filling vacancies that are missionritical or revenue related. This also includes a $10 million adjustment to our estimated cost for transitioning five Aero campuses to become CPS managed schools in the fall of 2026 as recent estimates have reduced this liability from $30 million to $20 million. We've saved $7

071million from delaying some centrally funded IT projects, $6 million in administrative reductions to departments and central programs that were substantially expanded during the CO 19 pandemic. $5 million from eliminating food and travel budgets for central staff. Four million from a savings from a negotiated increase in employee healthcare contributions for staff making over $90,000. $3 million in reductions to the CPS marketing budget and $2 million in savings from reducing the budget for nonUN employee raises. In addition to the cuts, we've identified 149 million in additional available revenues. This includes us applying $45 million in additional evidence-based funding from the state of Illinois that exceeded our initial projections. The beginning of August, the state released data for FY26 EBF allocations to all school districts. And what this showed is that CPS returned to tier 1, the tier

072of schools furthest from funding adequacy in the state's formula, providing CPS $76 million in new funding for FY26. This is a $45 million increase on what we had previously projected. We are also applying $25 million in projected grant carryover, which we project to have in terms of federal grant dollars available from FY25 to apply to FY26 expenses. And lastly, we are increasing our FY26 TIFF revenue assumption by $79 million. In our initial budget outline, CPS assumed that the city would once again supply 300 million in TIFF surplus revenue. At this point, we are now increasing the assumption by se an additional $79 million to be provided via TIFF surplus to match our final 2025 distributions and keep this funding source flat year-over-year. We are also anticipating $29 million in accelerating savings from an upcoming debt

073refunding. This year, we are planning to issue $1.8 8 billion in new debt to refund existing debt and provide future savings for the district. This is a process that we undertake annually to take advantage of any opportunities for savings in the debt market. And this year, the opportunity is higher as many bonds that we issued in high interest rates in the mid2010s are now callable. Our initial budget deficit of $734 million already assumed that we would take advantage of $100 million of these savings with additional savings targeted for future years. Due to the urgency of the situation that we're facing, we are accelerating $29 million of that savings targeted for FY27 to help close the FY26 budget gap. We're also relying on one-time funding sources totaling $90 million. And this is our continued effort to

074avoid cuts to schools and to avoid the option of furlow days as we work on long-term solutions for the district. These one-time funding sources include repurposing $65 million from our debt service stabilization fund. As a short-term strategy to help us avoid these cuts or unsustainable borrowing, we'll use up to 65 million here and onetime resources from these balances to help close this budget gap. This fund was established as a reserve fund to assist with interim fiscal year debt service expenses and temporary operating fund liquidity issues. It's previously been fully depleted and used to assist with operational expenses, but due to recent investment returns, it has grown enough to allow for this single use. We are also planning to leverage $25 million in existing philanthropic funding. And as we've looked at every option available to keep

075cuts away from schools, we're leveraging a donation that we received in 2023 to help close the FY26 budget deficit. Lastly, 26 budget defines that CPS reimbursing the city of Chicago for the municipal employees annuity and benefit fund or MEABF is contingent upon the district receiving additional FY26 state revenue. Additional FY26 TIFF surplus revenue from the city or other local resources beyond budgeted assumptions. Without a de dedicated revenue source for this cost and given the financial challenges facing the district, we cannot make this reimbursement absent addition additional revenue without short or long-term impact to our schools. Importantly, this budget does give us the ability to make the payment if these revenues materialize. want to talk about how this budget fulfills our labor commitments and the strategies that we've taken here ensure that we're able to meet

076all of our commitments to wages, staffing, and programming included in all of our labor contracts. On top of our negotiated wage increases for teachers, support staff, and administrators. This budget proudly commits to funding for new sustainable community schools, new dual language and world language programs, athletic programs, along with additional librarians, tech coordinators, case managers, bilingual coordinators, and other important investment. This budget also avoids furlow days as a saving strategy, one the district has looked to in the past when dealing with budget deficits. And this preserves staff wage gains and protects the important work that's happening across the district. This budget also counts on realistic revenues in the form of TIFF surplus funds. CPS has limited options to raise revenue and relies on a few key consistent revenue sources to continue our progress toward financial health

077and continued investments in our schools. While property taxes and state funding continue to grow and remain reliable sources of revenue for CPS, so does the amount of revenue diverted to TIFF accounts that can be surplused. TIFF revenues have grown 266% since 2014 and balances that have already been collected now exceed $3 billion. There's two charts on this slide. One shows the annual collections of property taxes paid into TIFF surplus funds and not paid to taxing bodies like CPS, the city, and other agencies. In 2024, the last year on this chart, based on the most recently available data, we've seen these collections reach a record high of $1.25 25 billion in 2024. We've also seen that these balances have reached record highs and at the end of 2024, these accounts had $3.2 billion in existing funds

078that had already been collected. In addition to the rapid growth of tiff collections and tiff surplus distributions, tiff surplus is governed by state law through the tiff act and a city policy through a 2013 executive order and an OBM policy adopted in 2019 and revised in 2025. The city's policy requires the city to regularly surplus unallocated amounts from tiff districts that meet the qu following qualifications. districts that are set to expire at the end of the following fiscal year, downtown or financial district tiffs, districts containing industrial corridors, and districts that are not created for a specific project or otherwise categorized as a neighborhood tiff. The unall allocated funds in these tiff districts are surplused according to the following formula. all funds in expiring TIFFs after a closeout date, the full balance of downtown TIFFs, and

079for all other TIFFs, the city uses a tiered structure that surpluses 100% of available funds over $2.5 million. 75% of available funds between 1.5 and 2.5 million. 25% of available funds between 750,000 and 1.5 million. And no, none of the available funds under 76 750,000. Beyond city policy, the TIFF Act and state law also requires that monies not required, pledged, earmarked, or otherwise designated for payment shall be calculated annually and deemed to be surplus funds. Once a surplus is declared, this law guarantees that the funds be distributed in proportion to the percentage of property taxes collected by taxing agencies with about 52% going to CPS and about 23% going to the city. This means that if the city uses TIFF surplus to close its billion dollar budget gap, CPS will automatically receive more than double

080that amount. Want to spend some time on CPS and MEABF as well. The MEABF was established in 1921 to provide retirement benefits to qualified employees of the city of Chicago and non-teer CPS employees. Illinois law obligates the city, not CPS, to cover these funding obligations. Historically, Illinois statute required the city to contribute amounts that were substantially less than the actuarial determined amounts that would have kept the funding ratio from declining. And for nearly 100 years, the city did not request funding from CPS and CPS did not pay the city for their obligation. Beginning in 2020, the city requested that CPS reimburse the city from a portion of their costs with the commitment of additional TIFF surplus funding to help cover these costs. The funding that did not always materialize, but the district had esser funding

081available at the time to make up the difference. The first payment CPS made to the city was in their fiscal year 2020 for $60 million, followed by 100 million in 2021 and 175 million for each of 2022 and 2023. CPS did not reimburse the city in 2024. State law is clear that the obligation for MEABF resides with the city and that the obligation to fund must be met by the city. The city is an authorized property tax levy to raise funds to make the payment to the MEABF pension fund. And despite budgetary pressures and requests for increased funding from CPS since 2020, the city has not increased this levy to help cover these costs. CPS does not have the same authority to raise funding for this, hence the need for cuts or additional resources for

082CPS to be able to make this payment. In the spirit of partnership, CPS would support a change in state law as long as CPS was given any given authority similar to the city to raise revenues for this obligation. With that, I'll turn it over to our CFO, Mayor Slava. >> Thank you, Mike. And good afternoon, board members. As Mike says, CPS have not included adding to the district 9 billion debt burden as a strategy to close the fiscal year 26 gap. A market for additional debt for budgetary relief may not exist as the district is already issuing 2.4 billion in new long-term debt this year, including 1.8 8 billion in new debt to save 129 million through debt refinancing and reduce the district overall debt service cost 650 million in new debt for capital projects

083and to reimburse the district for capital expenditures already incur. If CPS planned to borrow for budgetary relief but could not ex execute on the transaction, schools could be forced to make mid-tier cuts. Most importantly, borrowing for operating expenses would send district in a downward spiral of credit downgrade, higher interest rates, and steeper cuts to staff, programs, and services in the future. When CPS engaged in this type of borrowing between 2016 and 2018, the district received 34 credit downgrades from Moody's, S&P, and Fish, going from double A rating to junk. CPS is now paying nearly 200 million per year for this crisis debt. If CPS has had access to this funding today, we could hire at least 2,000 additional teachers. So the graph uh the graph in front of you give uh give you a visual

084of all the credit downgrades that we have had since uh 2017 since 2019 that the district started having better financial results. We have received 14 credit downgrades. Not not even half of the downgrades that they gave us during those times. and still CPS is below investment grades. So borrowing for operating expenses likely to trigger rating downgrade. According to S&P report on April 17, quote, "We could consider a negative freighting action within the one-year outlook period if the board fails to implement sufficient structural budget balancing measures in its fiscal 2026 budget and pushes out significant budget imbalance into out years, resulting in recurrence of sizable operating deficits and materially weakened reserve and liquidity positions. that are no longer commiserate with current rating. Also on August 8 18th, Gene Juan, which is the credit rating for uh

085the Chicago public schools, was interviewed by Bloomberg. Quote, CPS structural stability appears to be on the downward trajectory. As such, any additional one-time solutions such as short-term loans would would be viewed as temporary fixes that are unlikely to support long-term credit quality. So based on conversations with CPS advisors and underwriting firms familiar with CPS debt portfolio, we expect such a downgrade will result in an increasing borrowing cost of at least 25% per year on every dollar borrow in 2025 and in the future. CPS is below investment grade and the impact could drive our rating even lower. This would impact the 1.8 8 billion refinancing transaction necessary to produce the 129 million in savings that we have already included in the 2026 budget. The 660 million transaction planned this fall for capital funds, the potential borrowing

086related to the MEABA payment and all future general obligation transactions. So refinancing savings declines an estimated 1.2 million for every 0.01% increase in CPS borrowing cost. So assuming a 0.25% increase in borrowing cost impacts will include we will lose almost all the savings that we were accelerated uh from 2027 to 2026 by one uh by 30 million that is already included in the 2026 um budget. So it will create a deficit of 30 million 30 13 million in fewer dollars available for capital in 2026. The need to borrow these amounts in addition to the MEAB MEABA contribution to overcome the 2026 deficit. Additional amounts borrowed for capital interest to avoid further additions to the 26 deficit resulting from a larger borrowing to cover operating costs. So the chart in front of you give you a

087visual of how how these loans will work over time. So if we take a 200 million loan for a 15-year term of 200 million, we will have annual deficit increase of 12 to 46 millions, which is the debt service for that loan. And over a 15-year period, we will be paying 324 million. In addition because um we lost 30 million in savings and 13 million in capital we will has to get a loan for those 43 million will generate a debt service of 6 million and in a in a 11.5 year term average year term it will generate 70 million. So in all during those years, a $243 million debt will will need to be paid back a total of 394 million. So CPS CPS's market penalty for not being AAA issued in res recent

088months has been approximately 145 basis point to 160 basis points as measured by evaluating the price investors pay to buy or to sell from each other. CPS saw market penalties in 2015 to 18 that were two to three times this amount. As a reminder, CPS is now paying nearly 200 million per year for this crisis debt. Even with a half decade of every strong financial performance, CPS struggles with market market credibility given the legacy of financing for operating expenses a decade ago. the penalty charged by investors could be higher. So CPS is already facing a large deficit in 2027 and beyond. So what we've been requested is to do an scoop and toss effectively effectively borrows money today instead of making the December 2025 interest payment shifting repayment obligation off to the future with the

089paying of additional high cost interest due to those years. The total impact of the proposed 200 million in financing today creates 400 million of additional budget gap to overcome in future years. CPS borrows 600 to 650 million annually for capital creating compounded impact to avoid a loss of purchasing power. Future capital borrowings will also suffer a 25 basing points increase in borrowing cost increasing interest cost by an estimated 37 million for each new financing. This increment accumulates with each year CPS issue new capital bonds. I'm going to turn it over to you, Mike. >> Thank you, Mayor Slava. So, I want to highlight what this budget also does in the long term. We've talked about FY26 and how we balanced, but prior to this budget process, we were looking at projected deficits reaching nearly $1

090billion in FY27 and exceeding that in future years. After closing the projected FY26 deficit in a responsible manner that protects schools and protects labor commitments, our long-term budget outlook is improved by $468 million in FY27 and similar levels in future years. There's three components to this. The first is actions taken by CPS to balance the budget that reflect a net of 263 million of structural deficit relief, primarily from structural cuts to district spending away from the classroom and increased structural funding from the state. Second, because this budget defines that the reimbursement to the city for MEABF is contingent on additional TIFF surplus or additional state revenue above our budgeted assumptions, future year deficits are reduced by another $175 million. Lastly, CPS's jump back into tier one of the state's evidence-based funding formula earlier than expected

091adds another $30 million to projected revenue increases in FY27 and beyond. So, we're still in a place where we require long-term revenue solutions. And what you see here is our previous five-year forecast before we embarked on on the actions that we've taken to close this budget. We see the $734 million deficit in 26 and those that that grows beyond. Based on the actions that we've taken here, we've closed the FY26 budget gap and reduced the FY26 FY27 budget by nearly $500 million, almost cutting it in half, giving us a $520 million deficit to deal with. That's still a big deficit and we still need long-term structural solutions, but it gives us a fighting chance to be able to protect our schools moving forward. To recap some things in the FY26 proposed budget, over the last

092few months, we have worked to close our budget gap and propose a budget that protects our schools both today and into the future. This budget fully protects the level of school funding from the previous year. It funds all of our contractual commitments to the district's labor partners. It delivers on the promise to stabilize school budgets, eliminating the risk of cuts to classrooms both now and later in the school year. It only includes borrowing that provides current or future savings to the district or borrowing that is required for necessary capital investments. And lastly, it allows for CPS to reimburse the city for MEABF with new state or local revenues unlike the FY2025 budget that did not allow for this possibility. Looking forward, uh we will be presenting the balanced budget at the board meeting on August

09328th for your approval. That concludes my presentation and I'm happy to take questions. >> Members Bannon, then Kuster. >> Um, thanks budget director Skowski for uh your second presentation of the day and probably your 20th presentation on on this budget. Um, I know it's been a long day. Um, but I just want to ask a few questions. um the $79 million um additional TIFF surplus money can that came available in recent weeks. >> Yes, that was recently that was in recent recent weeks delivered to CPS as part of the 2025 surplus. >> Can you talk about how that came about just so we can get a sense of is that an ongoing source? is that um it just cuz it from my perspective it came about differently than usual. So um could was it from

094you know new property that came on the tax roles and what where how did it come come about? So my understanding is this was aligned with some expiring tiffs that the city had not projected in their initial tiff surplus that allowed them within their existing policy to surplus more than they initially anticipated thus generating an additional $79 million for CPS. >> Okay. So it was tiffs that were expiring that they for what reason hadn't included. I believe I believe that's the case but we don't have that level of visibility into um exactly how but we know the mechanisms that exist and how the money goes after the a after it's surplus. >> Um so my other question is about the tiff policy about surplusing. Um I don't know if you can go back to that

095slide. I think it was page 18 or slide 18. that one. Go back, get that one where Yeah, there's that kind of exact calculation on how surpluses are calculated. Um, is that where did that formula come from? >> This is what's published in the city's budget book >> in their like latest budget book or annually. This is their stated annual policy on how they declare to surplus. >> Yes. >> Okay. >> Member Kuster. >> Thank you. Um actually I was wondering if you could go I think it's slide 28 where you guys had the bond um or the potential loan projections. Um so I understand that debt refunding is a common practice, right? We do that to refinance so we can get a lower interest rate on our payments. Um well maybe it's the next

096one. Yep. Thank you. Um we don't actually know the interest rate for a potential like this for 200 million in borrowing because there is a possibility that if there is not a lot of interest in the market and we have to continue to go back and find people um that are willing to give it to us that the interest rates that are projected here could potentially be higher. Is that correct? or do we know that this is the interest rate if we borrow 200 million? >> Mayor Slava, do you want to take that question? >> Yes. So, this is uh board member Kuster. This is the projection that the uh financial advisors and the investment bankers that are currently working with us have given us. If we need to go to the market with 200

097at at a given time, we will be seeing is is kind of like a penalty over the current interest rate. >> Okay. All right. But we don't we don't have a projection of the actual interest rate on that potential 200 million of borrowing because we don't know the interest in the market. Is that correct? >> No, they estimate an interest. That's why you know when we put in the charge is 200 million and we generate uh interest payments from uh you know 12 million to 46 million the interest rate is calculated there. So for example right now when we were doing the working in the 650 million we were looking at kind of low five 525 5 something you know if you put a 25% now we are looking at higher than 550. Okay. >>

098So now that's how we calculated what the debt service will be. We'll start with 12. We will capitalize some interest. We start with 12 which is only going to be interest. And we wait when we get to 46 then we're advertising interest and capital. >> Understood. Thank you. >> Are there any more questions or comments from the board? Member Biggs. >> Thank you, President Harden. Um, thank you, Mike. You know, we've heard a lot about the state of Illinois's responsibility today and in previous weeks, but I also know that we've heard uh the state express that they really are interested in seeing some long-term reform before they come to the district's aid. And it's really clear to me that this budget does just that. So, um, Dr. King, Mike team, um you've really presented us

099with a serious balanced budget. So, thank you. Um we also heard from city council members today that they too support this budget. Um we've heard that our TIFF assumptions are in fact reasonable. Um we've heard that we should not reimburse for any amount of MEABF if it requires borrowing. Um I think it's notable that that sentiment is in line with public consensus that only 8% of Chicagoans support borrowing. um and it seems to be in line with the decision uh not to reimburse MEABF without a dedicated revenue source um to be in line with state law as well. So, I'm really proud uh to be here in this moment as an elected member um and see democracy at work. I know a lot of people fought to make this happen and I thank you all

100for your hard work and I'm eager to cast my vote in support of a really thoughtful budget that does center and protect students. So thanks >> member Paul. >> Yes. Uh I appreciate your work and Mayor Slava's work and Dr. King's work very much on this and I thank the public members who uh made comment today. My biggest concern and I've now listened to this presentation twice is I don't have a crystal ball. You don't have a crystal ball. We do not know what kind of a tiff surplus we're going to get from the city. I have heard several indications that say that the city is not going to do that much tiff surplusing and that they figured out other ways to uh deal with some of their budget issues. So what happens if we

101don't get this super record tiff surplus? Then how are we going to balance the budget? Don't we need some kind of a contingency in there that says that if we don't get that money, we will take out a loan so that we are balancing the budget not on the backs of our neediest and most uh far from opportunity students, but that we are doing what we need to do to protect those very students. So that's really my only question and concern here. >> So I think to that question, I think there's a few things that are true. One, we know that the money is there. Two, we know that this is not a long-term solution, but it's the best option that we have available at this time, and this is a budget where we've used

102every tool that we have in our toolkit. What I will say is that borrowing also when it's unnecessary shows that we are not serious partners with the state, that we're not serious about how we're going to be treated by the rating agencies, seeing the impacts there. So, I would hope that with the money available, I believe our families have expectations that our city leaders will stand up for city schools on this and make sure that we get this funding. >> Member Gutierrez. Yeah, I think uh I would echo uh board member Biggs in um all the hard work that was done, but I think it h also this budget highlights the community's sentiment, right? the community wanting to ensure that no additional cuts happen in the classroom that we do not take on additional debt

103that will burden us moving forward. It pays a substantial amount in terms of our long-term stability as a district. Um, and then third, in every poll you see, everyone tells us not to pay the MEABF. And you heard it today from both a progressive alder and a former finance chair alder um in letting us know not to pay it. So, I too uh am looking forward to supporting and getting this budget past its finish line. I'll just say again in closing um echo the other board members are saying this is just a herculean task to try to deal with the budget and the challenges that are attached to it. Um my concern that I stated earlier is the same that I have now is as much as you know we hear from alers offering support

104and commitment for tiff you know until it's an IGA that affirms exactly what it is there concerns that we have of whether or not it will either meet our our total need because with it being a variable that doesn't really get factored for another 3 months that there's a risk associated with that and even with the calls from alders today saying yes you can move forward with it. You know, at the end of the day, we have a commitment as a board to use the tools and resources that are available to us today. Uh, and not make commitments based on what is being said to us when we can't underscore that with or undergur that with some level of hard confidence. Um, and so I just implore us to think contingency. uh in the event

105that we don't have to use it, fantastic. Uh to be clear, no one is citing that that should be the top thing that we do. We recognize the risk and all I mean there have been 15 slides that went into the risk associated with with doing so. Uh but we should have the same level of you know investigation on ways to mitigate it. Um, you know, so this type of presentation should also spend time looking at what are ways if we do have to do that, we can retire the debt sooner. What other strategies could we employ at the same time? I get concerned about pushing all of our eggs in one basket either one way or the other. Uh, so that that's just a a commentary. It's not an indictment on the work that's

106been done. It's an ideal budget, but we work in a realistic environment where things don't happen in the way that we want and we just want to be protected against factors that we don't have full control over. Thank you for your work on this, Mike. >> Thank you. >> This concludes our budget hearing. Thank you very much.