001e board secretary we're ready to begin thank you president Harden before you begin today's public hearing I would like to read a few announcements good morning welcome to the March 14th 2025 fy2 amended 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 which you use to enter this morning if you are leaving the room please use this door the restrooms are outside the boardroom doors to your left during the hearing 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 please mark your calendars for the upcoming meeting the next board meeting is
002scheduled for Thursday March 20th 2025 at 3:00 p.m. to be held at 42 West Madison Street Garden level boardroom for details on how to register to speak or observe at the meetings 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 hearing morning everyone I'm Sean V Harden on behalf of my fellow board members welcome to the second fy2 amended budget hearing today is March 14th we are holding the second fy2 amended budget hearing in the boardroom 42 West Madison Street Garden level I like to note that the board members and Senior leadership
003are physically present in the boardroom registered speakers may join us in person or V virtually if they've opted to do so the purpose of this meeting is to comply with the second school code Provisions regarding the fy2 amended budget board 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 office 42 West Madison Street lobby on March 5th 2025 notice was also posted on the CPS boe.org and cps.edu websites on March 5th 2025 I will now read into the record the public notice as published notice public hearings fy20 fy2 amended budget for the 2024 2025 fiscal year Chicago Board of Education commonly
004known 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 fy2 amended budget for the 2024 2025 fiscal year in tenative form and that 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 one North Dearborn sweet 950 Chicago Illinois 60602 and available at cps.edu budget and that said Board of Education will hold two public hearings on said amended Budget on Thursday March 13th 2025 and Friday March 14 2025 10:30 a.m. to 12:00 noon Chicago Public Schools Loop office 42 West Madison Street Garden level boardroom Chicago Illinois 60602 registered speakers who wish to present during public
005participation 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 live stream at CP P sboe.org for these two public hearings Advanced registration to speak will be available beginning Monday March 10th at 10:30 a.m. and will be will close on Tuesday March 11th at 10:30 a.m. anyone interested in speaking can sign up after the 24-hour registration period a Lottery lottery will randomly select a set number of speakers from those who registered for example if 100 people register the lottery might select 30 of them to speak this process gives everyone a fair chance to address the board Advance registration during this period is available by the following methods online cpsb.org or by phone 773 55316 to
006ensure Equity of access to address the board an individual may not speak at back-to-back meetings at more than one meeting per month if you've registered for back-to-back meetings and more more than one meeting per month you will not be included in that meeting lottery in the event an individual register to speak at a consecutive meeting the individual will not be called to address the board Advanced registration to observe will also be available beginning Monday March 10th at 10:30 a.m. and will close on Tuesday March 11th at 5:00 p.m. or until all slots are filled Advanced registration during this period is available by by the following methods online cpsb.org or phone 773 55316 although Advance registration is recommended you can also register to observe a meeting on the day of the fy2 amended budget hearings via
007same day in person Observer registration at 42 West Madison Street lobby registration time opens at 10:15 a.m. and will remain open for the duration of the fy2 amended budget hearings same date in person of Observer registrations are taken on a first Comer basis and seats become available the Public Public participation segment of the public hearings will conclude after the last person who has registered to speak has spoken or at 12:00 noon on March uh 13th and 14th whichever occurs first members of the public May submit written comments related to the fy2 amended budget via the written comments form on the board's website at cpsb.org or mailed to one North Dearborn suet 950 by 5:00 p.m. March 17 2025 dated at Chicago Illinois March 5th 2025 Chicago Board of Education by Shan B Harden president president
008and attest Susan J naho secretary I'd also like to note for the record the members present here today member Smith member Lopez member Thomas member Bole member Wallace member kuster member Pope member Rosenfeld member Rivas member R siero Sierra member Brown member Bannon member gutiz member bigs member thakura member blae member zachor and I believe leave can um I'm sorry member DeBerry has joined virtually via [Music] Zoom those are the members present thank you I'd also like to recognize Pedro Martinez chief executive officer ruchie Verma general counsel and Charles Mayfield Chief Operating Officer thank you okay let's begin with today's public comment segment thank you for joining to share your comments with the board in compliance with the Illinois open meetings ACT public participation sometimes referred to as public comment is a portion of the
009board 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 from you rather than a time for dialogue with board members during or after your remarks while we can't 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 while we may not address your comments directly during public participation CPS leadership is always present at our meetings and are able to address concerns as follow-ups after the meeting as a district and as a board we also have many other spaces
010for authentic dialogue for example each and every one of you each and every one of our board members host Board office hours so that we can have a conversation please use our website cpsb.org if you want to meet with 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 allowed five minutes to speak before public participation and any elected officials will be allowed at five minutes to speak after the conclusion of public participation board secretary please share the rules of public participation before I start with the rules of public participation I do want to uh note for the record that I did not announce that
011President Harden is um here at the hearing and I announced that member Lopez is here but she has not arrived yet so for the record um please uh note that she is not here yet thank you speakers please listen while I provide directions for public participation I will call your name and number when it is your turn to speak for speakers joining us virtually as a reminder to unmute please enter star six when you hear your name please state your name for the record I will then start the two-minute timer when there are 30 seconds remaining I will inform you so that you can proceed to conclude your remarks to allow for the next speaker to begin for anyone standing with the speaker please stand along the glass partitions to keep aisles clear thank you
012and president Harden before we begin calling speakers from the speakers list we do have a union rep who would like to address the board we'll start with Crystal Williams recording Secretary of CTU want to make sure it's on in case I want to sing a song good morning everyone I am Crystal Williams recording Secretary of the Chicago Teachers Union and um a psrp well known for life I'm also the mother of a former School Clerk and a second generation School clerk my mom was a school clerk for 28 years is now retired and receiving her pension benefits I worked in Chicago public schools for over 17 years I'm at my 31st year right now providing invaluable education and support and guidance to CPS students and families like thousands of my fellow PA professionals we are
013predominantly black and brown women we do the work that holds our schools together we are the backbone of our school communities and like other types of work done prominently by by women our work is often unvalued you underrecognized and underpaid board members you have the power and the responsibility to change that board members as you begin your second day of public hearings on the budget amendment I am here to remind you that the budgets are moral documents they reflect our promis our priorities they show we our value as we prepare to as you prepare to vote on the budget amendment next week you will be showing your constituents the students families and workers of CPS what this board values CPS Martinez CP CEO Martinez has failed his assignment back in July he put forward an
014incomplete budget his budget did not account for the cost of principal's contracts CTU contract and cps's Portion to the pension payment so here we are it is now your responsibility to make it right as you pass the budget amendment you also need to help settle a just and fair contract with CTU as you heard from our members yesterday there are four major sticking points left in bargaining they are a better elementary school day and preparation time needed so that students receive the most robust and engaging lessons possible and the racially discriminatory practices in the school's evaluation system reach safe and in enforcable class sizes for all students in all groups Key Staffing for core needs to increase the number of librarians counselors nurses clinicians teacher assistants and support to our students needs fair paay for
015veterans Educators teachers clinicians PA professionals and staff to keep them in our district long term we have heard from CEO Martinez here in this room and his many emails to CPS families that were um that were close we believe we are close as well we need your help to get this done with the wolf howling at the door as Donald Trump and Elon Musk bring chaos and destruction to our public institutions including our Public Schools we need to settle the contract so we can unite a real fight ahead I call on you today to commit to the budget amendments that invest in our students and our school workers you have the opportunity to vote for a budget amendment that allows us to build our past wins and improvements that have come to our students as
016a result do not vote for cuts that will cause Mass disruption and send us reeling backwards as and lastly I want to talk to you about the much discussed pension payment as I hear it being talked about in this room and in the news it seems as though people have forgotten that the payment is a promise a promise and an obligation made to workers thousands of workers who run the schools every day the pension payment is compensation for the hard work done by par professionals security guards lunchroom staff building Engineers administrative staff among others these are our some sometimes more our lowest paid workers in CPS these are a majority of black and brown workers they are the taxpayers they are the parents and the grandparents of CPS they are have 30 seconds remaining and
017this is not the first time that the elected official administrators have tried to deny our pension we've been through this before when Romy Emanuel tried to take it away our school staff should not have to be dealing with the the trauma of this decision but now that we are here we need to seek commitment that pension payments will be made we are we are here to say stop playing games with our pension and as a matter of fact I will be retiring this year and I'm looking forward to my pension payments it would be unbelievable to me that any board member that was previously an educator would think that it would be a disinvestment for us par professionals who run your school daily who teachers depend on to be in place when they need them
018to think that this is not necessary don't put us in a bond we look forward to these pension payments this is what we're survive on once we're done working and doing the hard work that we provide to you every day Chicago Public Schools thank you thank you for your comments president Harden we are now ready to call speakers from the speakers list and we'll begin with Peter Collins speaker number one I'm Peter Collins I'm a teacher at Victoria stto High School and Aero school thank you all for the opportunity to speak to you today and first I want to thank those of you who voted last month to keep schools open and I remind I want to remind those of you who didn't that you will be facing the voters very soon over the last
019few weeks several board members have made comments to the effect of well there's nothing we can do to stop a Sero from closing schools some members of this board even spoke with mothers from misso and told them they would not vote to be closing schools only to lose the courage of their convictions the day of the vote it seems maybe their desire to keep the schools open took SEC took back seat to their desires to the desires of the men who write their campaign checks again members of this board Pedro Martinez Alonso Carmona have all said they're disappointed in aero's decision to close p and Cruz but that's a CH aero's choice and not their responsibility but my question is who renewed aero's Charter just two years ago Pedro Martinez and his school board who
020gave them a three-year Charter renewal when they only had the funds to a three-year Charter renewal for 15 schools when they only had the funds to operate eight Pedro Martinez and his school board we've heard repeatedly that state law governs Charters but Pedro is the one who signed off on aero's Charter because of Pedro's frankly inexcusable decision to extend aero's Charter for 15 schools for 3 years despite their financial position is the reason we're in the mess we're in today if a Charter was up for Renewal this year does anyone really believe they would try to close seven schools absolutely not this result is a direct this mess is a direct result of Pedro Martinez's mess that's why it's up to you the board to fix it first what's the status of theou we've already
021seen Pedro and his team move behind this board's back to try to close schools that they wanted to keep open we need to be vigilant to make sure they don't do that again second we have two School communities that want to move together to maintain continuity what can this board offer them to make up for Pedro's calamitous are that forced these schools to move if Mr Martinez wants to pitch in money to donate to help buses I'm happy to do that once he gets his job in Nevada it is unfortunate that CPS is forced to endure these costs but again they're clearly Pedro Martinez's fault had he not made the disastrous decision to give s a three-year renewal knowing that this was a possibility please this would not happen he failed and it's up to
022you to clean up his mess thank you thank you for your comments our next speaker is Jesse shy speaker number three ladies and gentlemen of the board my name is Jesse shy uh it's good to see all of you it's been a while since I've been in this chamber um and I'm very happy to see a um a large board um with elected and appointed representatives and look um um look forward to what we're going to do uh in in in with the schools um I I speak to you as a person who's been deeply involved in the last three um CPS CTU contract settlements I was one of the last people at the table um in both 2012 2016 and 2019 um these contracts achieved a number of significant improvements for the public schools
023um and it played what I think is a key role role in improving student performance in the city of Chicago all of the things which we achieved in the schools have happened despite a narrative dominant narrative at the time that many of those improvements were impossible because of financial constraints faced by the schools in the city um prior to the settlement in 2012 the Board of Education and CEOs U warned that a pension cliff and impending billion dollar shortfall um would make it impossible to achieve improvements in the schools uh and in that contract we added recess for students art music instruction additional time to the student day preparation time and lunch for elementary school teachers and other improvements um prior to the settlement in 2016 the board and the CEO Claypool at the time
024warned of an impending Mass layoff that argued that it was necessary to cut 7% out of teacher compensation we didn't make that cut but we did uh expand counseling and created a cap on runaway Charter expansion um similarly in 19 um the uh the board and the mayor argued that there were certain commitments that we could that we could not make um but we wound up limiting class size providing an increase in Clinical Services I want to argue that the The Narrative that we cannot borrow to land this contract is just the latest installment of a narrative that we've heard every single contract settlement um it's and it's not a useful narrative and it's not useful because it's not true please conclude your remarks um the Board of Education um should vote Yes on the
025budget amendment please um that's necessary for improving our schools and locking improvements for the future thank you thank you for your comments our next speaker is Leonor Torres speaker number four good morning my name is Leno Torres and I'm both a CPS parent and a teacher I'm here because our contract fight isn't just about us it's about our kids and the future of our schools when I began teaching planning time was crucial our Educators need that time back our students also need to see teachers who look like them yet in a city as diverse as Chicago black and brown educators are being pushed out we need an evaluation system that values our teachers not one that punishes them for working in underresourced schools as a teacher I experienced how broken our evaluation system is 14
026years in I was moved into a new grade level with no support then unfairly rated under reach my administrator didn't show me any of my scores and reassured me that the number would work out that's not a fair system it's a way to push teachers out if we want Educators to stay we must value and support them as a former CPS student and mother of three AFR latino children currently in the district I've seen this firsthand as a student I had black Educators who connected us in ways that made learning more meaningful they exposed us to Opportunities beyond the classroom field trips clubs leadership roles that shaped who we became now as a parent my children's experiences are starkly different the need to bring joy to the classroom means take into account the children in
027front of us among my three I've been a parent at a total of five schools in those five my kids have had two Librarians one only till the first grade my children have had teachers who have come to Chicago from places where the exposure to black and brown children in a large Urban setting is in common and who have since left the system when my youngest kid started kindergarten he became so frustrated early on that he expressed wanting to be homeschooled his transition to a Traditional School setting was difficult for him he went from age appropriate play based prek to a classroom where he was expected to sit for an amount of time that was not develop developmentally age appropriate my kids experience in the district has me fewer Librarians fewer long-term Educators and more
028teachers unfamiliar with our communities please stability and Trust matter in a child's education and we're losing that our kids deserve stable well supported teachers who understand them that's what this contract is about thank you thank you for your comments next speaker is Jed sheny speaker number six not perfect but you were close um it's a tough name uh so good morning everyone my name is Jed Shanker I'm a current uh Chicago Teachers Union field rup I was at CPS Elementary School teacher for eight years at both Fisk and fingle elementary schools and am the father of two current CPS students I'm here before you to communicate the need to settle this contract and for it to include additional preparation time for elementary school teachers teachers I wasn't a teacher before the 2012 contract campaign but
029I can tell you from speaking with veteran teachers that the workload of an elementary school teacher has become increasingly untenable ever since elementary school teachers worked shorter days and had more prep time including a 30 minute block before students even entered the building now and when I became a teacher teachers must start their work day at the same time students come to school with many students arriving arriving earlier because their familyes work long and inflexible hours and depend on schools to support their children in order for me to be prepared for instruction for my students the minute that I arrive in the building which includes ever increasing non-negotiables like writing out entire wordy learning standards on the Whiteboard I must arrive at least 15 minutes early aside from genuinely wanting our students to walk into
030prepared classroom teachers like me know that not doing so puts us at a risk to be reprimanded for not being prepared if the supervisor was a drop in a classroom unannounced and see a blank or outdated whiteboard as a CPS parent I want my children's teachers to have the the time they need to deliver impactful instruction 30 seconds remaining which is accomplished through planning and collaboration CPS knows that teachers across the city do this unpaid work regularly and in small group bargaining sessions have agreed that that's unacceptable and yet their only suggestion to resolve this is for teachers to work longer days without extra pay this is only one example of why members across the city both in Elementary and high schools have agreed that we need real movement on this issue from CPS in
031order to secure a truly transformative contract our proposal for more prep time doesn't cost the district additional funds let's get this done thank you thank you for your comments our next speaker is Stephanie Collins speaker number eight good morning my name is Stephanie Collins and I dedicated 32 years of my life to teaching at talcot Fine Arts and Museum Academy I hold a ba in communication with a focus in Social Linguistics an MA in Multicultural education and multiple certifications in Reading specialization social studies and English language learning I have studied and worked with Educators in India and Tha land and was part of a program at UIC dedicated to Bridging the Gap for English language Learners I spent my life not just teaching but learning because great Educators never stop learning that is why I'm
032here today this contract must be settled now I have seen firsthand what happens when we invest in our schools and I have seen what happens when we don't every Improvement in this District brags about about smaller class sizes air conditioning access to Arts and Music only happened because Educators fought for them but instead of moving forward we are once again being told to accept less less investment fewer resources and larger class sizes I am here to say absolutely not our children deserve more they need libraries books computers and the Arts they need smaller class sizes so they can get the attention they deserve they need teachers who are supported not overworked and undervalued you have let's not forget the teachers aren't just Educators we are mentors social workers caregivers and Advocates too often we are
033the ones making sure a child has something to eat a coat in the winter or just someone to listen but our dedication cannot be an excuse for this District to underfund our school board members you would not send your own child to a school without a nurse or Library so why should Chicago's children go without after 32 years in the classroom my greatest evaluation didn't come from a test it came from my students many of whom are now grown raising their own children and still reaching out to me to tell me the difference I made in their lives please conclude your remarks that is what investment in public education looks like that is what we must fight for settle this contract invest in our teachers invest in our children invest in the future of Chicago
034school board members you can do this thank you thank you for your comments our next speaker is Kathleen Murray speaker number nine who's joining us virtually please enter star 6 to unmute Kathleen Murray speaker number nine please enter star 6 to unmute hello good morning can you can you hear me yes please proceed oh excellent thank you thank you I'm Kathleen Murray Field rep at the Chicago Teachers Union I was a kindergarten teacher in CPS and the south suburbs for 17 years while at CPS I worked at Henry Clay Elementary School songy elementary school and Owen Scholastic Academy during my time working in the Chicago public schools and and in the Suburban School District we had schedules and our elementary schools that allowed for ample prep time throughout the school day and through the week
035we also had morning preps when I taught in the Chicago Public Schools we had a 30 minute morning prep blocked for the entire teaching staff that gave the principal time to talk with us that gave parents a time to come in and speak with the teachers and Educators to support their student needs daily preps made me a better teacher and allowed for the and allowed that us to prepare robust lessons preps are valued work I urge this board of education to please invest in the schools please support this budget amendment for the schools and the city that Chicago deserves I also want to sayate years ago I spoke with a reporter who asked me why do teachers need so many preps and I replied to that reporter well the time you're working isn't only when
036we see you on TV it takes a lot of time to prepare your investigative reports behind the scenes prep time is time behind 30 seconds remaining thank you it's time for the teachers to evaluate data raid papers and again prepare for better lessons and better teaching for the students I urge the board to accept and support this budget amendment thank you thank you for your comments our next speaker is danis kosu Speaker number 10 who is joining us virtually please enter star 6 to unmute good afternoon or good morning is this working yes please proceed oh okay so my name is Dennis kosu I've been a nurse for almost 18 years and have spent the last nine years in CPS uh a student was just sent to my office on Tuesday as the teacher was
037concerned about what appeared to be a rash around his face and I'm sure the teacher was worried about measles because as we are all aware Robert Kennedy the current Secretary of Health and Human Services is responding to the deadly measles house outbreak with cod liver oil our profit driven healthcare system has long been broken and it's about to get much worse under this new Administration a nurse in every school every day can make a difference my first year in CPS I was called to the playground to assess a student and when recess staff thought he should just walk off a slight deformity of the leg indicated a fracture and we called 911 instead nurses can also prevent unnecessary trips to a hospital two times this semester student a school had to call 911 because there
038was not a nurse in the building to assist one for a nose bed and second for ladness because the student head and head breakfast having a nurse in every school every day isn't some pipe dream that only happens in Scandinavia is what they have in Suburban Lincolnwood donor students deserve the same here in Chicago our Union has long been an advocate for a nurse in every school every day and while we have yet to achieve that demand CPS has increased the number of nurse managers until 2019 the entire department was run by three people and now there are currently 12 nurse managers and four more who assist the schan Staffing in early February a nurse emailed me that she was resigning her position in CPS because she felt supported by her request for Staffing and
039help and we need resing if there are resources to see a budget increase in managers I think we can do better recruiting retaining as well as Staffing our schools we can definitely support with that I know many of the managers don't have support have don't have experience in schools and as School nurses we can help them to conclude billionaires are cutting the Department of Education Medicaid and acting against the health interest of our communities PTU has and will continue to stand against these cuts and the to do the same by passing a budget which protects our students and their families thank you thank you for your comments our next speaker is Joyce Jefferson speaker number 11 as and as the speaker is approaching the podium I do want to note for the record that member
040Lopez is joined the hearing at approximately 11:01 a.m. greetings I am Joyce Jefferson a proud product of Chicago Public Schools a recently retired educator with 34 years of service on the south side of Chicago I'm also a parent of two CPS graduates one Val Victorian of Ariel Elementary School I have seen firsthand the power of passionate Educators when given the respect and the resources they deserved today I must address a serious issue the inequities in the reach teacher evaluation system Illinois state board Education data from 2022 to 2023 shows that teachers of colors disproportionately rated needs Improvement while receiving fewer excellent ratings than their white colleagues this raises a um urgent concern about bias and fairness reach should foster growth but instead it restricts autonomy dictates rigid teaching methods and penalize those who don't conform
041a flawed evaluation system has real consequences inequity and education starts with fairness and evaluation fixing reach costs nothing it simply requires the will to do what's right that is why I urge you to help settle this contract not just for teachers 30 seconds remaining but for students and the future of public public education in Chicago let's fix this broken system let's stand on fairness let's settle our contract thank you thank you for your comments our next speaker is Eden Mosin speaker number 13 good morning my name is Eden mcauslin I'm a field representative with Chicago Teachers Union before that I was a high school history teacher starting my career with Washington DC C public schools for 10 years uh and then moving to Howard Taft High School here in Chicago I'm also a PhD student
042at the University of Illinois at Chicago studying mid-career teacher retention specifically focusing on Educators in years 8 through 15 and the alarming rate with which those educators are leaving the profession we stand at a crucial moment in education in Chicago today as we negotiate our contract one final issue must be addressed rest Fair pay for our veteran teachers these educators are the backbones of our schools they bring years of experience deep institutional knowledge and a commitment to mentorship that shapes the next generation of teachers and students alike unfortunately veteran pay has been stagnant while the cost of living has skyrocketed without competitive wages we risk losing our most dedicated Educators to burnout or better paying benefits in other districts leading to brain drain in hours we must ensure that our expertise is valued not just
043in words but in wages outside of targeted professional development wages can measure it with experience is listed at the top of reasons for leaving in exit interviews in the current educational research today investing and Veteran teachers isn't just about fairness it's about strengthening our schools improve improving student outcomes and ensuring that education remains a profession people commit to for the Long Haul when we pay our veteran teachers what they deserve we invest in a better future for everyone you Board of Education have the power to stem the flow of experienced teachers leaving CPS if we fail to continue to pay veteran teachers fairly we're not just losing individuals we are dismantling the foundation of our schools the time to act is now settle this contract vote Yes pay our veteran Educators what they deserve please
044conclude invest in our Stu our schools our students and Chicago's future thank you thank you for your comments and our last speaker uh from the speakers list is Nelson Guru speaker number 15 good morning I am Nelson jaru Chief public affairs officer at the Chicago public education for the last 10 years my team and I have provided data and policy analysis to CPS leaders board members and the public to support our work with school leaders Citywide I am also a parent of two CPS students in the last decade this district has experienced periods of financial unpredictability without a clear and comprehensive financial plan that does not rely on debt restructuring borrowing or assumed Revenue this budget amendment could begin a new phase of challenges and ultimately lead to school L for that reason I recommend
045that you reject this amendment I recognize the pressure this board feels to meet all of its obligations including implicit commitments to the city of Chicago which has budgeted a $175 million reimbursement for the meabf payment and also 169 million voluntary Advance payment that it is not required to make if CPS had the money to reimburse the city for that payment it would be wonderful to do so but it does not the amendment identifies 139 million in Revenue if that 139 million is not used to pay teachers and administrators for new labor contracts there are no other identified resources to do so CPS faces a budget deficit a gap of around 186 million as a you have 30 seconds remaining that is more than the cost of, 1500 teachers positions and that Gap is for this
046year even if borrowing or debt restructuring were used to close this Gap what happens next year what happens the year after that the district is carrying almost $200 million in interest payments each year because of past debt restructuring to free up emergency funds at a given point in time that would have closed this Gap right now and make a serious dent in cps's long-term structural Gap we should learn from past challenges and mistakes not repeat them thank you thank you for your comments I do want to note for the record that vice president Bautista has joined the hearing at 11:12 a.m. president Harden we also have several elected officials who will like to address the board we'll start with Alderman Byron sigo Lopez from the 25th Ward who is joining us virtually please enter star
0476 to unmute can you hear me now hello yes please proce can you hear me thank you very much um thank you very much to the um um Board of Education I am thankful for all the teachers all the parents and students and our community that continue to advocate for a quality public education and the transformation of educational system in a time of tyranny in a time where communities are being persecuted it is um I would say a disservice to the city of Chicago that we have a CEO that had continued to undermine a black Progressive mayor battling teachers battling those who are actually trying to make a difference and have forgotten that we have a w to be king that is destroying public education as we speak that's what I'm here as a member
048of the city Council a a a representative of an immigrant community that needs today more than ever champions from education and I looking at the board of education to be those voices of those who cannot voice their concerns and I want to speak today about the facts the fact of the matter is that CE Martinez came to city council not too long ago and committed to make the pension payment as long as the appropriate Thief dollarars are all at for CPS city council delivered on that and approp and appropriated the largest steep Surplus in the history of CPS so that we can get this done we have continued to advocate for Mr Martinez to meet directly I'm still waiting for a meeting with him as we continue to discuss the challenges that we have in
049our communities to no availability to I find not only insulting disrespectful and completely reprehensible given the climate that we have today we need and more than ever to come together as a city board members teachers Educators parents and all the community at large to make sure that people in all in our communities and our children specifically are properly served CPS has received the largest th Surplus in history over $300 million at the request of MIT Martinez with a commitment and we have sent a letter signed by many councils uh many members of the city council so that Mr Martinez actually deliver on something that he has done before and it was done for the last five years city council does not decide on how many people CPS hires or what positions we don't Budget on
050behalf of CPS but yet CPS is now saying that we have to pay for the workers pensions that is outrageous we want to work together and we must work together we want to be partners in making sure that all our young people have the schools that they need but we can't be partnered partners with someone who stabed Us in the back and that would be very direct this time we've been waiting time after time for M Mr Martinez to do the right thing but he knew that the federal dollars were running out and yet he did nothing to secure new revenue and now he wants us to bail us out to bail him out this is important because we need an independent board with independent finances and we are ready to give you that ability
051and work with you to make sure that go to Springfield to demand that desperately needed Revenue there's no City Loans or debt for CPS the CD cannot be pressur into making out loans or auring debt to cover the CPS obligations that Mr Martinez came to city council to tell us himself we need to think about all Chicagoans we need a city council that is responsible for all Chicago every dollar spent on this pension payment is coming out of money for Public Safety infrastructure Public Health and sanitation we need a we need urgently partnership in CPS I'm looking at you the Board of Education members I'm looking at you as a father as an elected official to do the right thing Mr Martinez has received a letter from city council urging him to fulfill his commitment
052and his word it is outrageous that we are in this predicament and we continue to wait for a contract to be signed with teachers that are fighting for the education of our children and to fight for Education that our children deserve I urge you to the Board of Education members I urge you please make sure that we fulfill this commitment that Mr Martinez and we ask you to partner with us to once and for all work together to what Mr Martinez has said but have failed to do let's work together to the man of the governor of Illinois fully funded schools that we work in Chicago or black and brown kids deserve the same education that that other kids in other municipalities and I urge us to work together to go to Springfield to fulfill
053this commitment that was already acquired by Mr Martinez to use the Steep dollars to get those pensions for our employees in CPS and once and for all work together to make sure that we protect our children in a time of tyranny thank you very much thank you for your comments the next elected official is Alderman Jason Irv from the 28th Ward who is here in person good morning members of the board uh president Harden um yes it's nice over here I see very nice over here so uh nonetheless uh again president Harden members of the board uh I live in District 5 I'm also the Alman of the 28th War also chair the committee on budget and government operations for the city of Chicago um the city ultimately is your partner um the city of
054Chicago currently supports CPS to the tune of approximately 1.25 billion uh billion with the B as the CEO likes to say and we we support you through services that we do to the tune of $3 million Grant programs to the tune of $7 million water and utility waivers to the tune of10 million debt payments that we make on your behalf to the tune over $150 million there $39 Million worth of CPS supported Capital Improvements that are ongoing right now in this year and the largest chunk of what we do is the support of the meabf payment uh which this year is approximately $452 million on top plus the $298 million surplus that um that came from our tip districts in the city of Chicago again uh nearly 1.25 billion with with with the B it's
055been stated and it is true that you all have no obligation to reimburse the city of Chicago of the $175 million for the pension payment that we have made on behalf of CPS uh employees but also in that same conversation the city of Chicago is not obligatory so the fee waivers the grants free water or the city support for your Capital Improvements if uh we were in a vacuum here and I would go back to my colleagues I'd be willing to bet cash money if we said that the only thing we needed to do for CPS is give them the $452 million and we would have no other further Financial dealings with the city I'm sure they would take that on however we know that um that would not be in the best interest of
056all of Chicago even though the city itself as our unit of government would come out nearly $800 million ahead in that calculation again according to the original intergovermental agreement we were to do $300 million from this body to help with weaning you all off of the meabf payment that was coming uh to through by us for you but understanding you all's financial situation that number was not $300 million even though we sent $300 million we're only asking for $175 million of that and unfortunately I understand that you all have just been brought and came into this situation um and we understand these are Legacy issues these are not issues of you're making however we understand your dilemma because I to sit in similar situations at the city of Chicago however I'm challenged because these are
057all known factors it was known that there was a pension payment that was supposed to be paid by this body to the city of Chicago it was a known fact that there were ongoing labor negotiations and that dollars should have been set aside for that conversation not today but back in March of last year or Beyond when we knew that these obligations were going to exist however not you individually however this board as a collective as a continuing operation chose not to deal with those items and we are forced here today to address those realities but again uh leaving your partner to the tune of $1.25 billion to support you all leaving us holding the bag I don't believe is the best solution in this situation there's there's an old African Pro proverb that says
058it says when the elephants fight the ground gets trampled and our power collectiv is greater together we share constituencies however if one loses at the expense of another we're both losers in that calculation and I'm going to close with this um I generally do not go against the advice of the people that we have set forth to run the day-to-day operations of government but in this case given the circumstances that have been laid out based on some of the conversations and I won't go into some of the answers that I received in that in those conversations I believe we have a group of folks that are not looking for Solutions they're looking to create conflict and we are here today unfortunately in conflict and what we do not know is how this is going to
059end but I would hope that you would not just throw your partner under the bus and meeting your specific obligation because again as I stated before we both lose in that calculation I understand the decisions are difference I will ma'am I understand your decisions are difficult quot and I do not envy the position that you all are in however we have a responsibility not only to the city of Chicago but we have a responsibility to the citizens to the children to the teachers to everyone to solve this and get this right without creating harm that's IR irreparable for for us moving forward so again I ask that you all honor the commitment that has been made uh make the reimbursement payment so that all of us can move forward and work productively together to go
060down and get the necessary resources that are needed to make this city whole and great thank you thank you for your comments president Harden this concludes public participation let's now proceed with the fy2 amended budget presentation beginning with Mike Sakowski chief of budget and grants management before we begin Mike are there any comments from the board yeah um so I see uh chief of talent in the audience over there Ben I'm wondering if you could come up and speak to us about teachers being pushed out I keep hearing about that and about veteran teachers can we get a quick overview from the district on that thanks board member um off the cuff here um so you know we continue to make really good and meaningful progress at the negotiating table our hope is to be
061able to bring to this board a contract uh as soon as humanly possible for all of the stakeholders in this city um in no small part me because I don't want to keep negotiating it um but uh um we've had some really good conversations about about reach and the impact that it has on um all of our stakeholders we've made concessions at the bargaining table around um moving excellent teachers to a three excellent 10-year teachers to a three-year evaluation plan um and our nationally board certified teachers to a three-year evaluation plan um and we've heard a lot about you know potential disperate impact um in um what the data repeatedly shows what the Consortium University of Chicago Consortium found is that school that teachers who teach in higher need schools tend to score lower on
062reach and we've had really good conversations with our partners at the CTU about about how to mitigate some of that um including what we've started to call evaluator um evaluator Equity proposals and and I don't off the top of my head remember what is specifically a TA I'm sorry I'm shrinking down here what is what is specifically a tentative agreement at this point but we have largely agreed with a lot of ctu's proposals around how to mitigate some of the issues that we see about teachers in high need schools uh scoring lower on the on on the evaluation um including additional mentorship potentially through cps's mentorship program which we've seen as extremely successful in retaining teachers um or the CTU week Care Program um we've also talked about joint legislative action in Springfield to address
063some of the issues when in um that's in the Illinois State uh teacher evaluation law which we have to abide by um I will say I think it's important to note that the number of teachers who were non-renewed based on performance on because of their teacher valuation was was really low and that was if you just give me one minute here I think we there's sorry I wasn't ready Ellen I think there's somewhere around 4900 black teachers in in CPS and last year we had 30 that were non-renewed which is 6% % um and of that 30 my understanding is that 26 of them were rehired into the district so you know I think there's a lot of important conversations to have about black teachers and and how to make sure the black teachers are
064celebrated um nobody has worked harder than our team to to diversify the teaching for us we went from a third of our new teachers being black or Latino in 2017 to half this past year because frankly we the supply that we were getting from local universities was insufficient for our needs in a number of ways including about the number of teachers of color so we have invested millions and millions of dollars into do Pathways alongside CTU with our Residency program our teach Chicago tomorrow program to recruit our own high school kids um but what we are we are not seeing that evidence that we saw 26 or I'm sorry we saw 30 teachers black teachers last year be non-renewed 26 of whom were re hired so we're talking about four teachers which is about one
065in every thousand black teachers um who were not here as a result of reach thanks thank you sorry about putting on the spot board member Thomas Mr President um we have had uh conversations in five by fives and updates with our lobbyists to talk about entanglements from the city of Chicago with this board um to kind of wean us off and give us independently and financially uh the opportunities to pay off our obligations we have also heard uh this morning Alman Irving eloquently clearly and cogently give us the um list of things that the city council does to support education and CPS we've also heard from our CEO that we have no responsibility to make this payment but what I'd like to ask C Martinez if he had gone to the city council and ever
066indicated that this payment would be made after the $300 million that uh was released uh to CPS yeah so thank you m Thomas so actually it will be covered as part of our presentation in fact let's just go jump to that slide real quick um Mike if you don't mind to that table because it's easier to to show it yes yep right there so um that First Column that you see board members is actually what we testified at city council what what our request was so we made it really clear that the mayor had already committed $159 million and what the what what that was for we had also already started conversation with the mayor's office for months and for months before the city council hearing requesting the additional funds to fulfill those next two
067commitments including the pension reimbursement for a total of 484 that is on the record it's actually multiple times in during the testimony and so the commitment we made was to in order to be a good partner to the city if we receive $484 million then we would be able to have the revenue to be able to provide the payment and the second column is what actually would happened and again mikae will repeat that when he does the presentation for remember boys um thank you I just wanted to say thank you to um Alderman Irvin my alderman for um Coming to the school board today and i' just like to point out this letter um and the folks who signed it typically um in the media and so forth we're often hearing about um the mayor
068and his allies and so forth if you see who signed this letter these are people from across the city so we've even got Ray Lopez the 11 um the 11th ward 12th Ward um Brian Hopkins this is a unanimous sort of city council that wants us to know that they want us to do what we said we would do so I just wanted to point that out and um make sure that we think that through as we're going through um the budget discussions today thanks are there any other comments from the board Mike you're up sir thank you I apologize board member po yeah just briefly I wanted to highlight something that someone said earlier and that is that a budget is a moral document and I just want us to keep that in mind
069as we are going through our considerations on this issue in terms of not what we are required to do deur all the time but what we are required to do to provide the best possible situation for the children of Chicago and their families and the education that they deserve so just that's just a reminder vice president Bautista uh just a point of order of for the meeting there is a message that I'm seeing in the Q&A so for the tech team there is an elected official who is waiting to be let in uh to make their statement we see her however public participation segment has ended president Harden do you want um the elected official to still speak yes please thank you um vice president Bautista was that the only comment that you had yes
070okay thank you I believe it's state representative Lillian Jimenez who's on the line please enter star 6 to unmute hello good morning please proceed good morning good morning my name is uh lilan Jimenez I'm the state representative for the fourth district thank you so much for giving me a moment of your time um I am um in the fourth district as state representative in Springfield however I'm also um a CPS Mom I have a six-year-old who's a first grader at Cameron Elementary School in the west side um and have been very involved with my school since he started in kindergarten so I thank you very much for the work you're doing I see the impact every day of the work that you're doing um and the challenges that you have before you um the fact
071that you have taken these positions the first of of their kind um is just very honorable um and I just wish you all the best in the work that you're doing because I know how difficult it is in the National context as well as the local context so um you have your work cut out for you definitely and my heart goes out to you all um in the work that you're doing because it's impacting um the children and especially the working class and poor children of of Chicago that really need need your assistance in this moment in time um so I am here to ask for a full payment of the mbea um we uh in our community really understand the need for this to move forward um we don't want to see any further
072undermining and Trust in the CPS leadership and the promise from the CPS leadership and the promises to the community and especially the children um as you know I see it every day the funding directly impacts the students schools and the broader Community um I am uh I my school is a sustainable community school so I see the deep impact of the work that you're doing and the the need for the funding to to go um into the communities that really have high needs and my my child school is a school where we have seen um deaths from um gun violence and kids have to go to school the very next day that trauma that that creates um as well as we have many young students who have um traveled here and crossed the Daran Gap
073just to get to Chicago to to have a better life and the trauma that the their their migration has caused um and so there's just multiple factors um and the teachers are doing their very best to deal with all these issues um and seeing how my son has flourished um from not knowing how to read and do math um and seeing him really in those First beginning steps has been so amazing and I thank um his teachers every day and so now that this is this decision is upon you and this situation is on your shoulders I feel that any failure to fulfill this obligation for the full payment would mean depriving children of essential resources that CPS has already pledged to provide um I know that fiscal accountability is extremely important and so CPS
074must be transparent in how it allocates funds and if there Financial concerns they must be addressed without breaking promises to vendors and organizations that have already provided Services under the assumption that they would be paid um um and finally I just want to share that there is uh efforts in the Illinois house to look at the streamlining of the process of evaluating of teacher evaluations to make sure our most effective tenured Educators and principles um are allowed to provide the support to newer Educators um and um you know we hope that this will these evaluations become fair and less burdensome um and we know that you also have the ability to look at that issue and make sure that the evaluations become more fair and less burdensome and also that there is equity um and
075that the negative valuations don't fall on People based on their race nationality um and um status so um we want to make sure that you're looking into that um before we need to continue forward in Springfield to to make sure that the state law comes into make sure that those evaluations are more fair so um thank you very much for your time and um again um I um am praying for you all and for the work that you do and making sure you make the right decisions um and make sure that you the board reaffirms his commitment to ensure that the payment is made in full without delay thank you for your comments we not proceed I have one more comment here over here I I just want to clarify what board member blae said
076the letter from Alderman irvan is not unanimous there are 28 people that signed on I know you can all see that but it is not unanimous just to be for a point of clarification we'll move forward with the fy2 amended budget presentation uh it'll first begin with m Sakowski chief of budget and grants management and then it'll be followed at the behalf of the board by Gio jarski Chief Financial Officer of the city Chicago who specializes in bond financing will also be presenting to the board thank you please Mike proceed thank you president Harden and good morning members of the board my presentation will be a presentation on the FY 2025 amended budget um that will be brought to the board meeting next week for a vote so to start I want to recap what
077was included in our FY 2025 initial budget that was approved by the board in July of 2024 this budget totaled $9.9 billion and it was broken into three parts 8.43 billion to fund the district's operating budget which covers our day-to-day expenses that's what we'll be discussing today with regard to the amended budget 611 million to fund the district's capital budget which includes investments in school buildings and infrastructure and is funded primarily by bonds issued by CPS finally 817 million to fund the district's Debt Service budget which pays for principal and interest on bonds issued to fund our Capital program as we discussed when the board passed the fy22 initial budget in July at that board meeting we plan to amend the budget once the district had a final commitment of total Tiff Surplus and other
078appropriate local revenues to support potential outstanding costs in this fiscal year this proposed amendment adds the remaining committed Revenue to the CPS budget to increase this year's operating budget from 8. 43 it's 8.57 billion so included in this amended budget is the remainder of our Tiff Surplus funding that was not included in the budget that was approved in July of 2024 as discussed previously the city of Chicago's 2025 budget that was finalized in December of this past year included 298 million of Tiff Surplus funding for CPS the budget that was passed by CPS in July for FY 2025 included 159 million of the 298 million therefore there's 139 million remaining that is being added to the proposed amended budget what this amended budget does is it allows the board to use the 139 million and
079any additional appropriate local resources to support three pending contracts contracts the first is a pending collective bargaining agreement with the Chicago Teachers Union second a pending collective bargaining agreement with the Chicago principles and administrators Association and third pending intergovernmental agreement with the city of Chicago for a reimbursement of a portion of the on behalf of cost for expenses related to the Municipal Employees annuity and benefit fund also known as mapf coming back to what we discussed a little bit earlier um some context around the remaining funding so this chart shows what was requested by CPS um over the past 12 months to support costs in this year's budget and the what's remaining in terms of the Tiff Surplus that's being appropriated within this budget the city budget that was approved in December included a tiff
080Surplus allocation of $298 million for CPS which is the largest Tiff Surplus allocation the district has received in recent history however this total was 18 $86 million short of the $484 million requested and provides the district with only 139 million above what was included in the balanced budget approved in July so this amendment provides the the board the flexibility to utilize the remaining $139 million in Tiff Surplus funding plus other potential appropriate local resources for the aforementioned pending contracts while we do expect that the $139 million will be sufficient to cover year one costs of pending labor agreements with CTU and cpaa other resources or budgetary reductions Beyond those needed to keep the initial approved fy20 25 budget in Balance will need to be identified to cover the reimbursement to the city for meabf pension
081costs and that concludes my presentation you have any question or comments from the board thank you mik thank you uh member Smith I do have a question uh my question is uh for CEO Martinez uh as I look at the budget proposals being put forth uh assuming that our forecast continue to show reductions and uh shortfalls in the budget what do you think are the benefits and draw drawbacks of a zerob based budgeting of zero based budgeting as a way to ensure that in the future we can prioritize strategic investments in learning and the contracts that we have so you know member Smith um there's always you know there's always benefits to be looking at any budget and so that is something that we we do um and they done with zero base in the
082past uh what's interesting is that um when I when I go back a little bit you know several months you know when this whole conversation started about pensions and and and really trying to balance the current budget that we had and and the union contracts um you know one of the things that we did actually uh is we had to go through our budget every single dollar we had to go through all the functions that we did uh just to balance this year's budget and at that time the conversation directly with the mayor was didn't want to see any reductions uh we had just finished the Springfield session there was no new revenues coming in and the board that you know that resigned was very clear that we weren't going to make reductions we needed
083to continue to work with the city for additional Tiff Revenue to be able to to able to help the city and also you know cover our our upcoming collective bargaining agreements what was interesting and the reason I bring this up to your question um a lot of conversations um weekly meetings actually uh with City with City staff and eventually we even brought in the CTU uh staff very transparent about our books and we actually shared our every detail of our budget and what was found at the end was that there was no other real places to cut um and so because every any reduction would have either would have cost us more money in the long run right now we Outsource too many things and frankly I I hate that and I think it it
084cost us more in the long run to do that um so anything we cut in the district we wind up having to find the service somewhere else it's more expensive in the long run and the other is that you know the services that we have um really are essential for the schools whether it's services for children like after school programs uh services around summer school programming uh support for teachers and so even though we didn't do a zero based budget it was as close as what I've seen CPS do in a long time um and of course you know we're going to have to really look at our budgets again for next year thank you or remember boys hey just another question um for CEO Martinez so how did we get to the or Mike
085um to the projected CTU CPA labor contract the projection of 150 million yes so so that was our projection at the time that was based on cost of living adjustments of 4% for both CTU and cpaa beginning July 1st 2024 plus additional elements that were under discussion at the time around additional steps additional programming additional costs that would impact either contract but more likely the CTU contract now at the time you know this was in in the summer and the fall when we still expected there might be additional costs Beyond pure wage costs in this year's contract where we're at right now we're in March already the contract's not finalized and so we anticipate that the cost that we'll incur this year will be primarily wage based um and will fit within the $139 million
086so that cost has come down a little bit in terms of what our estimate is um by about by about 11 million yeah so so just to reinforce that um because again we were starting negotiations at the very beginning of the school year and so the main drivers were going to be the colas which we and we shared actually even before we made it a a permanent proposal to both the city as well as eventually even the CTU leadership about the 4% raises um that was the main driver and then we knew because it was the beginning of the school year we were looking at increasing sustainable Community Schools we knew that there could be some additional Staffing and so we just did a you know sort of a round number of what that additional
087cost could be as Mike said now we're in March uh many of these things even though we have agreements on them are going to be now effective next year not this year so you had a projected amount why didn't why wasn't that included in the budget that the previous board passed so you know I I always say this if the mayor would have came to the board or would have said to the board and myself go ahead and cut the 150 million go ahead and cut the 175 million for the pension pay I'm not sure the board would have agreed I'm not sure cuz you know but that was in fact we received the opposite message uh we we shouldn't be cutting and so that's what really then gave us back the path of okay
088then let's work together to maximize the Tiff revenue and then here's our our formal request and that started informally you know you know way before April of last year but then formally April of last year that eventually LED even to the city council hearing I'm just concerned at how this whole conversation is framed right so we've got base funding at 97 million we've got seciu at 62 million um projected CTU at 150 um reimbursement for meabf at 175 and and um the city payment is at 300 million um the way this conversation is being shaped is that it's either CTU um labor contract um amounts or the meabf it sort of puts those two against each other and the truth is there's a bucket of money there's a bunch of stuff coming out of it
089and we don't have enough money so this is why we have to really think about how we approach this because the information that we're getting in it looks like a setup to me it's 150 million you can either pay CTU or you can pay the pension fund where the truth is there's a number of things in this bucket that either get paid or not paid is that correct again I I would respectfully disagree board member um again the the conversations and again were had in depth in depth again for weeks and weeks um you know were about what is it that will be required to first of all you know uh make sure that we have funding for SEIU because um the board the previous board would not approve that contract unless we had a
090commitment of of Tiff revenue and that was provided that was the original plus our B funding of 159 then the conversation then really it was never about an or it was what is required for us to be good partners what is required for us to be able to cover the upcoming uh collective bargaining costs and those are very transparent like I said um weeks and weeks of meetings there's plenty of emails there's plenty of minutes I mean there's plenty of things to to look at that we have on record um and so again the the the unfortunate challenge is that we requested for $184 million we were very consistent on that request and the request and instead we received 298 million and that's why we have a dilemma today I'm looking forward to the conversation
091about new revenues and creating new opportunities to bring money in um so thank you thank you president Harden or member Brown I'm just curious uh um was there a an organized campaign from CPS to get the state of Illinois to pay the pension to pay the teachers pensions like other uh other teacher unions across the state yeah so that so that's always been a priority for the legislative agenda and that's been you know true uh member Brown for even before I got here um it's always and in fact frankly you know to give credit I mean CPS did get one of the biggest funding infusions um the year where we started on the path of more parity for the teachers pension fund um still more work to be done though we're still in frankly I
092think there there as you heard from our leg from our lobby is probably the probably the best opportunity for CPS to get more funding is still looking at pension parody um as we look at even this current session I asked that question uh sort of knowing the answer and and um I think I'm choosing my words carefully I think it's it's it feels um disingenuous to be in a situation where uh we're told it's either as board member blaze said the CTU payment or the nebf and you have the flexibility there is no flexibility we are our back is against the wall and every interest is coming at us feeding us the side of the story that they want us to understand and I think it's not about this thing being complicated it's about the
093fact that the story is not given to us in full context the is not given to us in full context and so uh I'm also interested uh in conversations about new revenue and um and also a real strategy to actually bring additional revenues into CPS that was it so if I can just um one followup to that board member Brown the amendment that we're providing today does provide flexibility for other options to be considered if those other options are identified and with where we're at today we're really facing the same decision that we had back in July of last year as as as far back as April of last year where the revenue the fact that we're underfunded is the problem and that creates that choice of what if if we don't have additional revenue
094and we're taking on additional expenses what do we have to cut to free up money to fund those unless there are other Solutions so can you quickly share the options Mike you said you said it does provide us options can you quickly share what those options are so I believe there's a number of things under discussion right now um that we anticipate hearing about and and and evaluating in the coming days right now what we have confirmed is the $139 million but there are folks that are looking at this we're still looking at various options and um you know expect to have more information on that in the coming days I have a question uh I'm going over the signatures of the alderman on this letter to pay the meab BF payment and uh my
095question is for president Harden uh president Harden do you know if these signatures were given to the board voluntarily or was there a campaign by members of this board to obtain these signatures yeah this is completely coming from city council itself no solicitation from the board for this no solicitation okay thank you board member Lopez thank you uh president for me it's being in this role is knowing every decision that I make keeping in mind um you know how it will have the impact especially when it comes to finances to make a priority for our students or schools and our workingclass families um and I'm also you know trying to understand what happened before many of us arrive in this board um and what is the best option moving forward uh one of those is
096uh just for more information um for CPS leadership have we received any legal opinions issues regarding uh the pension obligations so um I mean even um yeah so first of all it's in state code so so so again dispension has been around for 100 years there's no dispute legally about the obligation it is the city we're very careful wording the amendment it's a reimbursement so we ourselves do not have a legal relationship in terms of um being um being the primary payer of the pension I guess I want to be careful how I say because I'm not a lawyer um so it's always been for a 100 more than a 100 years legal obligation of the city again uh a levy was created I believe during the Emanuel era uh I believe in 2016 keep
097me honest mava um again it was it hasn't been raised to meet the increased uh obligation of the fund as a as a board um we do not have the power to create levies we don't have the power to increase levies only the city does and so levies for fire and police penion which are also very underfunded were were created those have been raised and so so for the problem for us is that our revenues are very limited and as a board you don't have the power to create new revenues um and I agree with all the board members that say we do have to have a collective plan with Springfield that's an ongoing battle and it has to be Collective with the city with our unions and ourselves as well as other partners thank
098you um particular you mentioned about in which is what I'm have come you know to learn more more clearly is in that we cannot generate mostly our own uh revenue and we keep hearing whether it be from the city or other individuals that also we are you know transitioning becoming a fully elected school board by 2027 um that being said is there seems the there's too many things tied up when we are as a board limited or how we can even generate Revenue um so maybe after the city presentation um I'm just wondering what other in it it's a longer conversation what other support systems will be in place to help uh CPS right because we even though it's a different uh independent board we still serve those families collectively in the buildings that are
099used in many of the wards or throughout the city uh my other question is if this board were to approve the budget amendment and you know move forward with making that pension reimbursement will this have any impact on the teacher negotiations right now and push back potentially you know causing for other um delays and impacts on students and teachers so M Lopez I can answer that because again our we're as always our team is negotiating as we speak um but it's been very clear that's been made to our negotiation team if the funds are not in place um by the way they don't care how they get there but if the funds are not in place for the current CBA um that they it will drive a strike vote that's been very clearly said to
100us uh they will not accept reductions they will not accept furlows they will not accept layoffs everything will drive a strike boat um and that's been like I said very clear the the other thing I just want to say when as you mentioned revenues the challenge we have and again I would go back to the origin of this so besides the underfunding of the state which is has been historical um you know I've been I was hearing CPS from 2003 to 2009 constantly you know going down in Springfield talking about how Springfield was 49 out of 50 states and funding got some increases in funding but always severely underfunded what also has created the underfunding is the fact that tiffs have grown so much now that there's $1 199 billion dollar of property values that
101we don't have access to and like I said a fully elected school board that would have never been a thing I've been in in four other districts wouldn't have been or three other districts not not have been a thing because the elected Schoo would have had to vote and any tip that was created on any Tiff that was extended um and I can tell you I've been in those other three districts where people came and asked for that same question and it was a absolute no because the districts again were underfunded and knew that they could not the only funding source they have is property taxes and they just said we cannot give that up and so now that tips have grown out to 19 billion in values that we don't have access to $1.2
102billion every year 600 million to the district so with all the back to Alderman Irving if I do the math for the last 10 years that's $6 billion that we should have had over the last 10 years that $6 billion dollar that a lot of them could have been in you know some of that money in the bank where we wouldn't have to be borrowing for payroll today that six billion dollars that didn't require a pandemic and and the government giving us this Aid and so again I know tips have benefit our city but the problem is they've been extended some some of them multiple times by by the way even with our even without our knowledge because we had in December tips extended and because of that we have a revenue shortfall so again
103you know it's just it's a very complicated issue and we've always said we have to be collaborative with our city partners and figure out a long-term solution I do appreciate and I call this out the new Administration has been more transparent than ever they are committing to tips being being uh you know expire letting them expire in the future which is a welcome change but these tips they're expiring in such a late time they're not going to benefit us for this year for next year thank you and last one and I think this more like a a comment just want to make sure um say that I agree that it's important that we continue those relationships and um and building trust at every level of government whether it be at the state of the city
104uh that being said I think as at least for myself I'm also mindful of what does this set a president for moving forward what in the future is the city going to be asking us to also help contribute to the many items that the elderman stated that the city is already contributing so and that concludes my comments and questions thank you board M Lopez I think it's important to recognize the fact that there were several CTU members here today in their public participation supporting the payment of the meabf so we just need to take that into consideration that I don't know that a impending strike is is something that we can point to given today's testimony from CTU representative supporting the payment so we would need to be mindful of that as we go forward
105I have a boys just again to reiterate what I said yesterday about having experts here um I had the Good Fortune of talking with um cook County's tax assessor Fritz kegi he did mention that um [Music] um we have that the school board has access [Music] um to be able to reject or accept any of the board of reviews recommendations on tax on lowering people's taxes um it's we haven't used it in 20 years and and you know C CPS has had nine CEOs in the last 15 years so surely maybe something got lost in the sauce but we there are other opportunities if we can bring experts from other departments to talk about their Specialties and not talk about um levies and uh uh uh Tiff funds with Educators I think it would be
106really helpful so I want to say thank you to you president Harden for um bringing in an expert today and I I look forward to hearing what Jill jarski has to say but we should also hear from other members um of the taxing body I've worked for Cook County for five years property taxes are extremely complicated there's five different um jurisdictions that it goes through and it it um there's you know this is Chicago there's a there's there's lots of there there could be potential loopholes and opportunities so I think we should continue the conversation to find revenue and I think we should continue to seek experts to come and talk to us about the things we're not experts in well I don't mean I don't mean to put you on the spot but I
107you know again my recollection has always been that we've always fought you know you know tax appeals and and we we you know I mean it's always been a thing and I and I know that our collection rate is very reasonably High uh because of that although we don't win every case but um can you add maybe I'm missing something sure uh thank you everybody I'm Wally stock I'm the district Treasurer um I help craft the tax levy every year been um in the Public Finance field for 30 years and I've worked with the board for 11 so I've I've been involved in billions of dollars of the levies that we extend each year and we go through a a very thorough process when we determine how the levy is actually going to be extended
108um as we've heard about we have limited resources when it comes to the property taxes what that basically amounts to is we are underneath the property tax cap so there is a a property tax limitation law that went into effect back in 1994 um and so each year we only get to increase our property taxes by the lesser of uh the increase in the Consumer Price Index or the rate of inflation 5% so we've been doing that to the extent that we can do that there's also been other things that we have done um when taxes are protested recently there was a a law that was passed that said that refunds that were actually given out to taxpayers that we could actually recoup that money so um that's been about three years and I believe
109uh it's somewhere in the area of 40 to $50 million that we've been receiving from that um the other thing on the protests is um I believe when protests reach a certain amount we actually have hired external councel to go in and uh kind of dispute that I'm not sure if we've been successful in every time but I know that um you know we certainly can't we don't have the resources and and it's sort of difficult to go in in every homeowner that says that my taxes should be lower and it's going to result in a homeowner basically getting a $500 or $1,000 tax break but for large corporations that come in and say they want millions of dollars in tax breaks I believe we've hired external counsel to to defend that from time to
110time I would ask uh our general counsel Ruchi to kind of confirm that so I don't know if you have any other questions please confirm me that I have a question uh this question is for president Harden we had a good conversation where I told you I would go back and look at the history and examine the uh history of these payments uh as I consider uh my decision um I went back and looked at the history and I'm glad today you brought up the CTU membership uh coming to Advocate to make the payment uh one of the statements that I found in the history of these payments uh when Rah Emanuel was mayor uh Jesse shy from the CTU said if the money isn't fair let's say we cannot afford to give $170 million
111to the city that was uh Jesse shy from the CTU uh when Lori lefoot was mayor uh there was a statement made by then vice president Stacy Davis Gates workers and Working Families would be better served by the city council rejecting uh by the city council rejecting this budget and for forcing the mayor back to the drawing board as in regard to CPS paying the meab BF uh on CTU one.org the mayor is forcing CPS to shoulder pension costs that by law the city is required to pay what I'm wondering is what is the difference uh in those positions do you think Mr Hardin is the difference in those positions when r Emanuel and Lori Lightfoot was mayor versus now well the first comment I'll make is just relative to ottoman Irvin's uh presentation where
112he talked about the what the current support is from the city and the significance of it um also the record $298 million and TI surus was received so I think those are two important component that add to why this is even part of our consideration uh so I can't speak to previous years obviously I wasn't here you weren't here AR can speak to is what's before us today and what's in the best interest of this board I mean we're new there's a history of this payment being made and so you know I would just say to this board to consider whether or not you want to be the first board to set as a precedent not recognizing its full obligation and I think that what we have to you know continue to consider is are
113we doing everything in our power to address these obligations I mean that's essentially part of our fiduciary responsibility is to examine all of these things we recognize it's been stated over and over again that this is part of our obligation and so what we are doing and what the board we continue to do is examine every option that we can to make good on these obligations I think Alderman Irving stated it's over a billion dollars of current projects and support that comes from the city today uh so it's just prudent for us to try to maintain that relationship and do everything we can to ensure that we have that type of support going forward so you know again I can't speak to historical I wasn't here I wasn't you know a party to what went
114into those considerations but I know today we have before us you know a real obligation and it's you know coming upon us to demonstrate to City Council in the effort of being collaborative and supportive uh that we're doing everything we can to meet that obligation and I and I agree about being collabortive let me just say this M Smith real quick because I think it's important so first of all let me break down a little bit what Alderman Irving listed so we have about um $20 million in different fees that are weighed water fees Etc uh which garbage fees which we appreciate I mean definitely so first of I want to start with thank you for that um there's a levy that the city um uh issued for for for bond which I knowva has
115the details which is legally required to pay that Bond it's not uh that money can't be used for anything else um so that's 150 million doll that that was done I believe during the manual area I believe marava uh but but again it's specific bonds that uh were issued that um you know I'm pretty sure benefited CPS but they were issued and and had to you know now the the city you know put that Levy the 319 million in capital as much as I appreciate it we're literally competing with every other Agency for pennies on a dollar trying to get money for a boiler trying to get money for a roof I mean it's nothing you know you know it's nothing overly fancy um and then you have the $452 million which is the pension
116which is again is a legal obligation of the city that is not a legal obligation of the dist I'm not saying it's right but for a 100 years it's just always been a legal obligation and then what's left it's the Tiff release which again I'm not going to start on my broken record again of if tiffs didn't exist over the last 10 years we we would have seen $6 billion as as as he said I like to say with a b um coming into the district so I just want to make sure that we're always talking about the facts and about preceden and what this doesn't include is that CPS provides more than $40 million in Access of what required to provide Burly childhood funding to the city which is our also you know on
117the other side so which counters also some of these numbers yes and uh I just wanted to add we are looking at now uh however when I hear that there's a history of payments being made it's hard for me to cherry-pick history when there's also a history of people who are advocating for the payment today the history is that they were against it when it was being made so those are the things that I'm trying to put together and see how it makes sense sway yeah I I'll just say Bard board member Smith you know independent of what others may have said historically the board has a responsibility today and so as you evaluate your decision you know look at it at the macro level and the uh implications that it causes so you know
118people change positions for whatever reasons uh but you need to keep in front of you as all the board members what our responsibility is today and what's before us today um and again it's been stated over and over again that the these are real obligations that we have and we have a responsibility to try to meet them to the best we can uh I think the board has said pretty much unanimously that we're going to protect classrooms at all costs so that that's not coming off the table um but I do think we have a responsibility to continue to meet all these obligations that's presented to us particularly knowing what the potential implications of not doing so is uh as we look at the next year here we know that there are pretty significant financial
119issues that we'll face and we want to go into this headwind with the support of the city so with that board member Bo um you know I'm wondering about the the obligation to meabf uh and the timing we're hearing that the it has to be uh paid by March 30th is my understanding so would we have to in dividing up the the payments between the teachers union the administrator Union and and the meabf would we have to give them the whole 139 now to have it in there by March 30th and then uh you know we don't have the full 175 like I'm I'm just trying to figure out how they that works and then then after we pay that do we start looking for these additional appropriate local resources to satisfy the contract that's
120I'm I'm just trying to understand the timing of it all so so I think that's where the risks are at U member Bole so right now what we can recognize legally is 139 million in revenue and so I appreciate what president Harden just said I want to reiterate it cuts are off the table right so we're not looking at cuts and in terms of uh furlows and and and layouts because I think that's just important I think it's important for us to repeat that so thank you president Harden those are off the table uh but right now as we speak this minute those are the available revenues to you therefore if the money is used by the end of March there is no more funds um and so again then we're searching for revenues and
121again that creates the risk and like I said it was very clearly stated To Us by CTU leadership that if the money for whatever reason is not there for the contract it is going to require a strike let me just add board member Bole that a lot of this work is happening in parallel right so we'll continue to try to identify these other resources and part of what the presentation is from Jill will outline to potential options that we could look at and will continue to pursue all the way up until you know that timeline has expired I don't think it any any point we're prepared to make a decision without understanding what the full implications are and so that's why we're working so diligently every day you know even through the weekend to try
122to work through these options to make sure the board is fully informed and understands that you know when the pension pay if the pension payment is indeed made that there are other options for satisfying our other obligations um I mean all of this works in Tandem and so you know the concern of doing and triggering something else is not something that we're trying to set ourselves up for I mean that's just not the practical way to do this um but I think you know having the at least this this counter position or this other options presented to us will add a lot of more color to the discussion um and then we can continue with the the questioning so if the board will allow our next presenter to come up to add the this context
123to the discussion and then we continue to ask questions yeah I have one more comment and in all due respect president Harden it is not and I repeat it is not our obligation our fiduciary responsibility is to the families in Chicago Public Schools what is best for the students it ends there it's not our obligation if we had a lot of money it would be great I would love to be able to do that but we don't we're in a district that is in a financial cliff and we have to do the a fiscally responsible thing but it is not our obligation good afternoon good afternoon uh my name is chill jorski I'm the Chief Financial Officer for the city of Chicago um as uh president Harden mentioned um my career um has been working
124in Public Finance um which I have uh been in the field uh for 27 years um and have experienced working extensively um with the uh Chicago Board of Education on many of its Bond issues in the past um I'm also a CPS parent uh I have a 27 and 25y old who are both CPS grads and live in the city and uh my Caboose is a 16-year-old at uh Ogden International High School where he is stressing out about getting his final projects done not putting as much time in as he should have I've reached that stage in parenting where you know he's in high school he's got to handle it himself so I just hear the complaints now I don't run out and buy poster board anymore um we have a presentation here today uh
125that I want to walk through um you know I was actually watching this uh meeting yesterday and I uh heard the request for me uh to be here today so uh we had some of these slides ready already um uh We've tweaked a couple things um I don't have you know a long prepared remarks but I have jotted down a number of things that I I do want to hit on uh as we walk through and then I would welcome questions uh from anyone who is here uh today um so when we start off I think uh the introduction here is you know why are we here um what Solutions potentially are there and what is the history that brought us here today so you know we're here because not all of cps's costs were
126included in the fiscal 2025 budget um there's two particular items uh one increased labor costs were not included um you know we know that um those labor negotiations have been ongoing and um I certainly hope for everyone that is involved that there will be a resolution on those soon um and you will have a new uh CTU contract um as well as the principal contract and the SEIU contract that was settled last year um in addition the uh payment to the city for a portion of the allocable amount that is attributable to CPS employees who participate in the Municipal Employees annuity benefit fund uh was not included either um so the options that we are going to talk about today is um you know reducing The Debt Service expenses that CPS has uh in this
127fiscal year and increasing Revenue to CPS through the Tiff Surplus um the real reason we're here today is because when the state uh legislature passed legislation authorizing an elected the school board as part of that legislation they called for an entanglements report to detail the financial entanglements between the city and CPS so if you look back historically prior to that the city did not ask CPS to make the meabf payment um as we'll get into historically the meabf payment was also a lot smaller than it is today um because of State funding requirements were essentially insufficient um those requirements have changed which have driven the cost up a lot um which is important it is very important that we meet those obligations the fund is underfunded because of the past uh funding policy that was
128dictated by the state we are making the uh greatly increased payments as is Our obligation and has been mentioned I believe it was yesterday the state is also putting in a supplemental amount into meabf and into of our Pension funds to increase their funding ratio um that is not something that we are in any way asking CPS to participate in you know that is something that the city is doing on its own uh to more quickly uh improve the funding ratios and to save billions of dollars in the long term in uh future pension costs but why does this disentanglement really matter I mean I think you could look at it and say okay so there was a requirement for an entaglement report the report was made do we actually need to do anything I
129think it matters because CPS has consistently been held apart from all the other school districts in the state when it comes to state aid um legislation regarding the powers of certain school districts there is all school districts and there is Chicago public schools now as was mentioned earlier um you know previously CPS had the burden of paying the full cost of Chicago Teachers pension the teacher pension fund the contributions to ctpf the only School District in the state of Illinois that had to make that payment very significant amount of funding um after uh there were um reforms made after 26 2017 when CPS went through a couple of years of Highly unbalanced budget uh which led to uh the state passing legislation changing the funding formula um creating the current more the current version of
130ebf but also authorizing some tax levies uh to pay for pension funding and the the state agreed to pay the normal cost of the Pension funds that was the first time the state has paid anything the other part of what they did was they didn't pay more they just authorized tax levies tax levies on people who live in the city of Chicago to make those payments both of those are highly beneficial to CPS what would be fair is if all of the teacher Pension funds were paid for by the state that is what is done with every other single School District in the state of Illinois the state didn't authorize other school districts to have property tax l to pay their teacher Pension funds as they did here even though it helped cps's budget the
131state pays them and by the way everyone in this room today who lives in the city of Chicago pays those pensions too because the way the state collects money is primarily through income tax and sales tax which we all pay so we pay the pensions of the teachers all across the state of Illinois and then in Chicago we also pay property tax for the teacher pensions and we also have to pay sometimes more which I believe is the case of this year that CPS had to provide more funding out of its budget for its teacher Pension funds we pay for the non-teacher employees they're in meabf those are paid for in two ways there's a property tax levy that pays for a portion of it which is actually three ways the makes a corporate fund
132contribution that just means we use our general fund to pay the balance of it we are taking money that was reserved um from prior year surpluses to make the Surplus payment um the city had significant surpluses which it reserved specifically to fund pensions uh due to co era funding and we have asked CPS to pay for a portion of that mbf payment so the big picture is that we are double burdened here in the city of Chicago I pay a lot of taxes just like all of you do I pay for the teacher pensions for CPS and I pay for Teacher pensions in the rest of the state so when we talk about disentanglement it's not just about today it's about the future I want CPS to get to a place where the state stops
133treating CPS as a different and other type of school district the very first step was when the state authorized an elected School Board something we've never had when CPS was under mayor control things were very different as one would expect CPS did not control its own government governance the city did and we also provided a lot of financial support which we continue to do today as CPS moves to be a completely independent school board there is need for CPS to become financially independent so that the legislators in the state of Illinois feel the need to treat CPS the teachers the workers and all of the students in the same manner that they treat those teachers employees and students in every other school district in the state and that is why it matters so this board
134can choose to not make that payment and that message is to the state of Illinois that the state legislature doesn't need to address the issues because it will continue to be addressed inside the borders of the city of Chicago that it will continue to be something that the city has to Levy for as the CEO suggested or the city has to pay for in other ways but not something that the state has to solve and at the end of the day there's been inequitable funding to CPS for a long time and that needs to be solved it's not as bad as it used to be during the crisis of 2016 17 at that time the state paid 15% of Education funding went to Chicago Public Schools even though 20% of the state students are here
135it was so inequitable it was egregious much of that has been changed but it has not completely been solved and I for me what I hope is that the long-term goal of this board of CPS leadership today and in the future of the city council of the mayor and of all the citizens of Chicago is to ensure that CPS gets treated equitably that we get the funding that we deserve that the pensions get treated the same as every other school district these costs are high they're burdensome we need them to be spread out across the state in the same way the rest of the state's costs are spread out over us that is why disentanglement and this pension payment matters today can we move to the next slide I just want to briefly go through
136a summary of the MAF payment and the Tiff Surplus the payments began in 2020 uh with a $60 million payment that was scheduled ramp up to 250 million uh uh last year and 289 million this year uh that's cps's fiscal years uh instead of allowing that to ramp up when Mayor Johnson came on board he did meet with CEO Martinez uh many of the other members of the board at the time um as well as other leadership here at CPS who Express the concerns about what was happening to cps's budget as Federal funding wound down and the mayor agreed to keep that payment constant at 175 for now to address those budget concerns in the meanwhile on the funding side the funding has gone up in fiscal 21 it was 164 million in Tiff Surplus
137it's $298 million today we've heavily examined our Tiff funds and while we have many projects important projects that lead to economic development that improve the capital infrastructure of our city that are going towards affordable housing that are going to things that benefit all of our residents we have many projects being funded out of our tiffs we do feel that there are projects we can line item out that have not started and that if we do that aggressively we could have another tip Surplus in the same size 300 million for next year that requires city council approval you've heard from a couple members of city council here today you have a letter in front of you from others I look forward to reading the letter myself I've heard about the 28 signatures I haven't read it
138what I do know is that when I'm at City Hall I talk to a lot of aler men and one of the things they have said to me is that they have a great deal of concern that they feel the commitment was made to make this payment and if it is not made they are concerned about why we continue to support CPS in the manner that we do we have questions about the 319 million in projects that are outgoing can they be canceled we have questions about Li the Tiff Surplus next year and rather putting the money back into the critical projects that benefit the city including students and parents at CPS who all live inside the city of Chicago I don't expect our city council to continue with the level of subsidy that they
139do unless the commitment that they feel was made to them is honored if we go back to the history of this entanglements uh when the report was made um about CPS entanglements um CPS uh the mbab payments had started going up significantly cost we go back to 2014 10 years ago or so um the payment was $162 Million that was the entire payment so cps's portion was much smaller than that if we look at last year the payment was $940 million of that the city also added on additional $178 million in a advanced Surplus payment for a total of $ 1.19 billion the allocable portion for CPS was about $452 million CPS employees are 63% of the fund they're 47% of the covered payroll and 40% of the benefit cost you might be wondering why
140are you 63% of the fund but only 47% of the covered payroll one of the commenters who spoke publicly earlier today um made the comment about the participants in the meabf fund that the CPS employees are some of the lowest paid workers in CPS she also talked about how a pension is a promise to those workers it is true that they are some of the lower paid workers the mbf covers both Municipal Employees in Chicago as well as these employees who are not teachers at CPS I am a member of meabf um as is almost everybody that you will run into in City Hall absent the police officers who work there and protect everyone who works in that building every day the first IGA the interg government agreement between the city and CPS included some
141important language I don't know if you've seen copies of it um you will see copies of another IG which is relatively similar in form to the first one and all the other ones that were passed but the language in it in the very third item immediately after the where whereas Clauses says that the IGA would renew annually through 2059 CPS and its board had a clear line of sight that the intent was for the payments to continue it wasn't a year-by-year negotiation the payments that were made initially the first three the 60 the 100 the 175 million they track exactly what the Kon plan was for payment and only after Mayor Johnson came on board and reduced the payment from 250 million to 175 which was made a year ago and reduce the payment for
142this year from 289 million to 175 did it change from that ramp we don't think it's correct that this was a year-by-year negotiation that CPS did not continue intend to pay in the long term let's move to the next page you had a preview of this uh um when Alderman Irvin chairman of the budget committee for city council spoke to you earlier today for your convenience we've put together a table to show you the level of City support so the largest entanglement is the meabf fund of which as we calculated based on a percent of payroll cps's portion was $452 Million last year as I mentioned already we paid over1 billion dollar into that fund already we are asking for $175 million to be paid by CPS for their workers which leaves a $277 million
143subsidy that the city is contributing I think there was a question that was asked yesterday about how much the allocable portion was um and the budget director didn't have the numbers with him at the time but I took a look at uh CPS is AER its Financial reports that are on the website and in its most recent AER CPS agree CPS net noticed that it recognizes that the city made $11.4 million payment on behalf of CPS to nbbf additionally CPS paid $175 million that was a $356 million allocable portion that was calculated by CPS not sure if CPS uses the same methods for calculating the AL portion as we do but that was cps's calculation what it was and that would have been for 2023 we have $319 million of Tiff funded projects that are
144currently underway these are capital projects that amount I believe is significantly larger than cps's own capital budget was for this year and while maybe they're for things that are un unimportant like a boiler here or there nothing fancy it's a significant amount of money that is contributing to the buildings that support the students in their learning environment we provided 298 million in tips Surplus there's been a lot made of the ask of $484 million I don't think anybody in city council took the $484 million ask as a serious ask or that it implied in some way that CPS would not make the Tiff payment there are no other taxing bodies who come to CPS and ask for Tiff Surplus most of those bodies much like the city budget a reasonable amount based on what has
145typically been done over many years not over one year and then to the extent there is a larger Surplus they're able to spend that on projects we have not had somebody come in and ask for 5 million 10 20 100 and other than the CEO we've never had anybody ask for 484 million I do not believe when city council approved a $570 million tip Surplus which is a significant Surplus in of money that is not going into projects that benefit all Chicagoans that they ever expected that would mean that the CEO would say No Deal we're not paying it $142 million uh debt Services paid by the city that is by a levy uh for capital projects that were for all CPS buildings there's no question about whether they benefited CPS they did we're paying
146another $12 million of Tiff revenue for other Debt Service for capital projects that we have completed 7 million in Grants three million in other services and 10 million in water and sewer that's $ 1.07 billion doar assuming that CPS pays the 175 without it it's 1.24 three billion don't ask why I had an extra decimal on there on one number than the other poor editing it's really significant so when we disentangle from CPS what does that mean are we going to take away a billion dollars or are we going to disentangle the big things the biggest thing is mbf there's no other school district in the state that has a city that pays for their pensions it's a highly unusual situation and it's based on the highly unusual history that is something over time that
147needs to get disentangled is CPS not going to get TI Surplus that would be impossible Tiff Surplus is allocated based upon the percentage that each entity has as far as property taxes go which for CPS is generally around 53% are we going to undo the debt service we pay of course not those projects are already done are we going to unwind the grant programs at $7 million that seems unlikely if we continue to have a Cooperative agreement going forward and certainly to the extent that we successfully disentangle there's always a possibility that number goes up it really is about the meabf but there's a lot of money in here and city council controls Tiff projects and they control Tiff Surplus and they've made it clear they're not happy with the current situation let's move to
148the next slide I did a rough analysis of what I think the funding needs are I want to be perfectly clear these are numbers that I made up for analytical purposes only I'm not privy to the negotiations with any of the unions it is not part of my role and frankly I did not ask uh what the state of those are or what numbers ought to be I picked a round number based on things I've read in the Press so I assume 200 million increased Libor costs that number can be lower it could be higher I don't know but it lets us do the math 175 million for the CPS MB ABF payment that's 375 million costs you have an unbudgeted Revenue that you've talked about today 139 million of the 298 million was not
149budgeted the other 159 million was already budgeted so if we take out the additional revenues and the the additional cost we get to to 240 million so we took a look at what are the short-term borrowing scenarios that CPS could use to address address the remaining Gap I know you heard a lot yesterday um you heard that it would be illegal for CPS to balance its budget using debt proceeds I spent a lot of years working with CPS and I worked on a lot of debt financings of various kinds and I was working with CPS as their adviser in 2016 and 17 when a very large number of deficit financings were needed unfortunately um know as we talked about earlier the history in 2016 and 17 a lot of funding came to CPS after that
150it was an unpleasant way to get there but CPS has received significantly more funding from that time period those structures that we used at that time were not illegal um nobody lost their board membership or uh engaged in a misdemeanor and there were no CPS staff that lost their jobs they were structured as refundings um and restructuring of debt so what does that mean it means in Lay terms if you issue Buy funds that take existing debt coming due and you refinance it out over a longer term what you actually do is reduce your costs you lower your expenditures lowering your expenditures is a way that is allowed to balance your budget CPS makes Debt Service payments uh once a year um I believe they need to be done by February 1st could be February
15115 sometimes I get the dates confused on the mechanics so CPS has already deposited the money that it needs to pay the June 1 and December one Debt Service payments we can flip to the next page if CPS issues refunding bonds that refund 240 million of those costs that money The Debt Service will obligation will be reduced that's a lower expenditure and those funds will be released out of The Debt Service fund after the bond financing is completed and financially closed we looked at three different scenarios on how could we achieve this the three scenarios that we looked at have terms of 3 to 10 years maturing between 2028 and 2035 we we used current market conditions I believe it was based on March 3rd um yes March 3rd is what we have noted on
152the page we took into account cps's credit rating and the credit spread it would have to pay we confirmed with with investment bankers to ensure that the market level we were using was appropriate each of the borrowing scenarios is under 5% it's not a payday loan they each generate the 240 million that we've modeled you could do 250 you could do 200 but each of them generates the same amount of money it would refund payments due on June 1st and on December 1st it's a combination of tax exempt bonds for the amounts due June 1st and taxable for the amounts due on December 1 and they would result in releasing a like amount of money out of The Debt Service result fund if we flip to the next page this is the Hard One to
153pay attention to a lot of numbers my apologies um we illustrate what the repayment scenarios would look like in real money so each of the colored uh boxes shows a different repayment zero so we'll start with the one on the left the left hand column where it says cash flow savings that is uh the money coming out of the bond deal the 240 million that would get received this year and the repayment stream in that one it shows three years of repayment we' call that an accelerated repayment scenario 150 million 15 million in the first year 119 in the second in the last year $29 million in repayments the revenues in the middle column it says new revenues those are the property taxes that we expect CPS to receive those are the city projections that
154have been made property taxes that City PS will receive as tiffs expire in the city and on the right hand column is the balance so what is left over so if you look at that blue with the three-year repayment scenario you can see that it's essentially using all of those projected Tiff revenues the new property taxes these property taxes come to CPS on top of the levy and on top of the the CPI increase that CPS takes each year um and once they are added on they become part of the base Levy and can be increased at 3% a year like the rest 3% or whatever inflation is like the rest of cps's property tax the middle scenario is a fiveyear repayment and that has a $56 million annual Debt Service payment which you can
155see if you look to the right hand column in the yellow there's excess then every year from these new property tax revenues from 59 million in 26 the first year repayment um ramping up to uh 87 million you see a pretty big jump uh in 2031 that's because there are a lot of expirations in 2030 scenario three 10year repayment $31 million payment a larger amount of excess left over these are just idea on how you can think about repaying it not using 30-year bonds and thinking about the new property taxes that will be coming in so one of the questions that we get um that we've heard we've heard asked by um some folks directly to us and and we've heard speculated about is how would you know that CPS is actually going to get
156these property tax uh payments how do you know that we're going to let the the tiffs expire so the city itself has authorized borrowing for the city's purposes against these same Tiff revenues we have a a large uh we have a web page inside of our website dedicated to our plans we authorize 2 point excuse me$ 1.25 billion dollar in housing and economic development bonds we are going to use these Monies to continue to invest in projects that will benefit City residents half of that will go to affordable housing projects and half of that will go to Economic Development projects growing opportunities for wealth creation in the city of Chicago for creating jobs for enhancing the quality of life for people who live in the city so we're pretty committed to letting these tiffs expire
157because we're going to issue a lot of debt and we need to repay it city council already authorized that we did that last year there were Tiff expirations last year they were modeled into our scenario we had modeled in eight um excuse me there were Tiff extensions we had modeled in our scenario that eight tiffs would be extended and that is what happened eight tiffs were extended if you'd like to learn more about our program just Google City Chicago General obligation housing and economic development bonds we have tremendous amount of information available about our program about our plans we are already starting to spend money um we're extremely excited for the city at what the benefits of the program will be but that is Our obligation but it is also our commitment that these tips
158will expire so with that I'm gonna wrap up I've probably talked far too long should have Ed myself before I did this my apologies for the length if you have any questions I would be happy to answer them thank you Bard M branon CFO DKI thank you so much for coming in today and offering your expertise um I I wanted to clarify just for fellow board members first um uh right now we're facing an either or situation either take the 139 and Pay Teachers and principes or pay this pension I don't think there and there are a number of us who are pushing to make this a both and um I think there's been some confusion and I want to clarify if we only have the 139 the money needs to go to the teachers
159and principes that's I think that's I don't want to say obvious because I'm explaining it right now but um I don't want anyone on the board to think that those of us who are pushing for other Solutions or having a both and are trying to Short change the schools um on our students so I just wanted to clarify that uh um but I think this both hand solution has promises this this refunding has is promising to because there's downsides if we don't pay the 175 there's repercussions we you know we can yes we don't have a legal obligation to pay that money but that doesn't mean there won't be repercussions there are downsides not paying the 175 um this letter olivan irvan um attested to that today so um um the way I understand how
160this would work uh CFO draws can make sure I'm understanding it um there's some bonds coming due we we we refinance those bonds it reduces our interest payments in fiscal year 2025 and that frees up Revenue to borrow uh up to this whatever number is is is um financeable or we decide to to borrow and then that money then again we then we have enough money to pay for the pensions and to pay teachers teachers and the principles are a priority but uh we're we're smoothing a path to be good partners um by going through by doing this refinancing um and and uh paying making the pension payment as well um can you talk C DKI about what the uh interest cost will be uh you you noted the rate which was a reasonable rate
161but in dollar terms uh for our budgeting purposes what will the interest cost be sure um the interest cost um and let me just um I'm taking a quick look at this one let me just um quickly note that doesn't free up revenues it frees up resources that CTA has deposited I should I apologize you're right yeah that's um so you know I didn't uh you know as I'm looking at on page six what I did not do was include the totals and so I'm going to go off of memory here um but they can be added up if you add up the numbers in the cash flow savings um you know those will uh the negative outflows from the repayments minus the 200 40 million proceeds will be the amount of Interest I think
162it is about 27 million for the three-year and about 70 million for the tenure uh I know we did a pro we did a present value calculation and it ranged from around 7 to 10 million in today's dollars is the present value of those interest payments over time so just taking the five-year repayment scenario for example I'm what would you what did you say the total interest on that would be um it was in between the two it was probably around 50 million but I would have to add it up so we'd be paying 50 million against that would be the downside of this borrowing scenario versus the the the the millions in Partnerships that we have with the city um any future surpluses any Tiff projects that um we as a board uh CFO
163Martinez would request from future city councils um you know none of us want to pay interest on operating expenses I I agree you I think we all agree that's bad budgeting but we don't have a lot of great choices right now and um I think based on what CFO joski is is saying oh and let me ask one more question oh you you already identified the bonds that were available to refinance um I think that's uh all I wanted to ask at the moment I and again so there's some interest payments we need to pay I think the um the repercussions of not making this payment as people have attested today the not making the pension payment as people have attested day is way more expensive than uh the interest on this refinancing I I
164I agree with uh uh CEO Martinez that we need to have a better longterm discussion about sustainable financing um given where we are in the year um this I believe is our best option thank you I have a question I Bo member kuster sorry um sorry board member Smith um a couple of different times you referenced and disentanglement report which I'm assuming is the 2002 disentanglement report that was issued a couple of years ago um we actually received that report it's about 50 pages I read the whole thing um it's it's pretty bleak in terms of what CPS can handle um it pretty much outlines in the entire first half um cps's inability to pay for some of these things moving forward because of our inability to produce Revenue um so I'm curious you know
165as we talk about these disentanglements and this particular report that you've mentioned um you know what the thoughts are on that because the report pretty clearly states that this is going to be an incredible lift for CPS because of their inability to do revenues and that it's almost not entirely possible for us to truly disentangle all of these different elements um including you know the re curring and I guess compounding payment of the meabf are you referring to the ISB um go back to ISB did a report CPS did a report this is from on it it says Chicago Board of Education Chicago Public Schools City of Chicago um it's okay I'm not sure it doesn't say I understand your point it's our report that was produced of the board yep yeah so I by
166state law yeah absolutely so I I understand your point I mean I think that that is sort of the Crux of the issue right that CPS has relied upon the city because CPS was unique in being under City governance and in moving to a fully elected School Board how do you disentangle without changing anything right things are going to have to change and this is the opportunity to start a new dialogue with the state about the state funding CPS in a manner akin to other school districts so first off if we talk about the teacher pensions if the state paid for all of cps's teacher Pension funds that would be a significant reduction in cost now right now CPS has levies that pay for those tax levies talked about that earlier the double burden on
167Chicago residents if those tax levies were allowed to be used if legislation changed their allowable use for CPS operations that would solve a very large portion of cps's budget deficit and that is why the path to disentanglement I think has to be done together I have has to be a Cooperative process with the city to ramp up to disentanglement and in ordination with the state and with state legislators to say you see what we are doing here and what we need for you is to also come along the city is not interested in just say say hey CPS you're going to be high and dry sorry about everything that's not where we're coming from but we do want CPS to get to the place where it is financially independent like all other independent government entities
168and is looking to the same sources of revenues State revenues and local revenues as other school districts are I I think the CEO said before and we actually met with our legislator who talked a little bit about the continual work we've been doing down in Springfield to advocate for that but after years of that advocating we haven't seen the needle really move on that and this is an immediate need so for me I like the advocating is important going down there is important creating those relationships is important but I'm seeing an immediate need today and tomorrow that we don't have an answer to being addressed so for me it's trying to figure out how we get these revenues in in order to answer these questions tomorrow um and that I'm having a hard time seeing
169where that's coming from in some of this information yeah I mean this information that we provided to you is essentially a bridge scenario that's what it is it's not you know bringing in state money today um though the state budget is not done and certainly we know that conversations is ongoing and lobbying is ongoing and we hope that that has fruitful results results for uh CPS but you know what we presented is an option for a bridge financing in essence you know but I would say to you I think that one of the reasons CPS has not had success is that it continues to be held apart from other school districts and that while legislation was passed on a practical level the financial changes have not been fully implemented or agreed upon and there hasn't
170been a coordination of how do we present a plan to get to financial Independence and how do we ask for the state to bring us to that path I don't think there's been that type of coordinated um approach you know one of the things I've had state legislators tell me is that one of the reasons that legislators outside of the city tend not to want to support CPS is they feel that CPS doesn't do the things that other school districts do for instance go to the voters and ask for a levy and so we have legislators all over the state who have school districts inside of their their areas that they represent who regularly you know do referendums and go to the voters for property tax levies and they see the work that goes into
171that and that those local areas you know provide that um now we've authorized levies uh that support CPS so it's not to say that there aren't individual levies that haven't been put on to support CPS um city council has done there with their power and um you know levies were put in place after 16 and 17 for the pensions so there are additional levies that have been placed on Chicago taxpayers but I bring it up as just you know the way that you know people think about CPS as being different and it's how do you bridge that and bring legislators along to say we understand we were different but we're we are in the process of changing to be a board that has the powers of other school boards and would like to get treated
172in the same way so yes there's a messaging that has to go along with that I I am not a lobing expert may not be the person to give you your strategy for that but I do talk to enough lawmakers to know that they have lots of reasons why they think CPS is different and and that that path has to be has to be um figured out how to how does CPS become more like other school districts so that he gets treated more like other school districts board members of the core um yes thank you I'm looking at page seven which you didn't show us actually and it says additional saving opportunities so are you saying that um this these would be another way to generate the money I decided not to uh we can't
173hear you I'm sorry did did you hear me yes probably people who are online may have not heard you okay I was just asking about uh page seven which I don't know that they can see either um which has these three other opportunities um for savings is that something different than what you have been sharing with us then yes I put that page in and then I had decided not to speak to it because I really feel like that is uh Wally's land not mine um Wally probably feels like what I talked about is also is not mine but um I just had wanted to to when I was we were putting this together was thinking about the fact that you know we're talking about a transaction a kind of borrowing that brings a cost
174to CPS right of taking current obligations and uh refunding them and paying that back over time that has an interest cost as was asked about um by the um in the first series of questions you also have a lot of uh bonds um CPS has a lot of bonds that have higher coupons that are uh what we call callable or they're available to be redeemed on December 1 and that those can be redeemed for savings um you currently have um some pretty significant number of bonds that could be called right now that the savings are reasonable but not amazing um but there's a lot of bonds um the 2016a bonds in particular um and the 2016b and 17 a that will be um callable or could be purchased through a tender process that would achieve
175a lot of savings and so I brought I only had that in there to say this is a transaction that has some costs associated with it but CPS going into next FAL year also has some good opportunities for transactions that will bring us true you know true Debt Service savings into CPS because that comes to um 26.6 million I I added it up and um maybe that's about the amount of money we need is is one better than the other I guess that's what I'm not understanding what the what you presented those transactions the additional savings opportunities I think that uh CPS probably would want to focus on those in the 2026 budget year uh because um if you were to execute a transaction for them now to refund them you're too far away from
176the Redemption day and would probably have to do that on a taxable basis and likely you would prefer to do that on a tax exempt basis War Bo yeah my question is you know we already have so much debt and our debt payment every year is so much of our budget and and what kind of a message does this send to the state you know uh that bill that was filed last week saying they want to reinstate the school Finance Authority does it look like we can not handle our our budget ourselves and we're just borrowing borrowing and are they going to you know is that bill get traction is there a concern to present this borrowing plan I'm wondering um you know it's hard for me to speak to um you know what the
177reaction of state legislator would be um you know I I think that the filing of that bill I have not um had a chance to talk to you know our lobbyist about it um but from what I've heard though again not you know directly from our person who has their ear to the ground but from what I've heard from others is it doesn't seem like something that has traction um and one of the main reasons why is it would be very counter to what the state did in authorizing legislation to create an elected school board that would be fully independent and have its own powers and then turn around and before that board was fully elected and seated to then take Powers away from the board so it would be I think a difficult vote
178for most lawmakers to take it's completely contrarian to the actions that they did take already so I I don't suspect that if you did a borrowing to meet your obligations this year that it would have that impact um CPS has lobbyists who can probably answer that better than me or remember de I think she may have um accidentally disconnected okay we'll we'll come back board member Smith yes thank you uh for the presentation uh the reason I asked earlier about zerob based budgeting is exactly because of some of the things I see in this presentation which is balancing budgets by extending debt when we really need to be reducing debt and paying all of our bills so I have a few questions for you uh number one uh how does CPS making this payment create
179a condition for the state to pick up future payments and treat CPS like other districts how does how does paying this create those conditions you know as I said earlier I think that you know one of the challenges that CPS has always had when it comes to State funding is that c you please speak up I'm sorry sure sorry about that um see if I can move this closer to me need to hire lecturn over here um I think one of the reasons that CPS has been treated differently uh historically by the state is because it has not had full governance control it has been uh an entity that the governance was controlled by the city and that its finances were entangled with the city um I don't think that that is going to change
180without a path to this entanglement mhm and and I'm glad you mentioned that CPS hasn't had full governmental control cuz that leads into my next question which is how much of the current Tiff Surplus uh available is attributable dollars reallocated from CPS uh tax property tax shares the amount uh that CPS gets in in Surplus 53% okay or so is the same percent as it it's allocable for property taxes in the county so 53% so with making us a separate entity include the release of all Tiff dollars attributable to CPS property tax no it's not how tiffs work but is that what uh that 53% isn't that what belongs to CPS tiffs are created as a tool is created in the state of Illinois for cities to use now City of Chicago use them far
181more than any other city that allowed for the creation of a district in which the property taxes to all the bodies who tax was frozen and the amount of growth related to property tax went into a tiff fund and that those funds could be used for several purposes Economic Development Capital purposes uh housing those type of Investments and the city has been making those Investments um for years with Tiff funds so many of you live in a neighborhood that has had investments from Tiff funds they benefit all of us uh who live in the city they benefit our children who are students at CPS they benefit people who work at CPS they are benefits to the city the Tiff program is not designed to say that Cook County because they're a separately elected entity that
182has no connection to the city that they can just call their share out and not have it or that the park district even though the park much like the CPS has governance that the city controls or mewat which is a separately elected body and is not under city government there's nothing that says that any of those entities can go and take their allocable share out of the Tiff because it was designed to aggregate the growth to allow for reinvestment that is how the tool Works what a portion of that Frozen growth uh from those property tax dollars is uh School dollars CPS dollars a portion of that growth correct yes okay so is the city willing to end tiffs uh is the city willing to end more tiffs early particular particularly in areas where there
183are few schools and large Tiff collections that's a question you'd have to ask city council what what is your perspective being I mean you talk about talking to a lot of people in government what is your perspective I have not had any Alderman come to me and suggest uh closing tips early would you uh would you perceive that districts that have few schools and large Tiff collections that's uh money that CPS is not receiving would that be a correct statement CPS is receives money from the tiffs for capital projects uhhuh the other monies go into other projects in the city so they acrew benefits to people who live in the city because there's a tiff project for instance that has an economic development benefit that doesn't mean that folks who work at CPS and go
184to school at CPS don't benefit from it people who live in the city benefit from Tiff projects so let me let me help a little bit because I think I I think I know where you're going so I've talked to legislators as well you know not only this year but in the past and one of the things they do ask is if there's going to be a full disentanglement where is the disentanglement plan for tiffs um they are fully controlled by the city you have no as a board have any power over them and again it's one thing if this was true in every city of the state or every District in the state even in the country this is a CPS issue this is a Chicago issue again not saying that tiffs haven't had
185benefits for our city it's not that's not really the debate not saying that um you know we're not getting Pennies on the dollar so by the way the the capital dollars we get um you know it's about $200 million that we have right now we have to match 100 million but again if tips didn't exist even in the last and that's been projects over the last five years if tiffs didn't exist you'd be getting 600 million every single year for the last five years just $3 billion and so again it's it's you can't this you can't separate the things they're together um and again I'll just remind everybody in terms of the municipal pension fund where the only uh you know this is a Chicago only issue every other District every other City joined together
186and they they they created funds years ago I don't know why it didn't happen in Chicago and they're overfunded so the state has no sympathy when it comes to this particular pension fund I do agree with jillo that the opportunity it's just a matter of timing and I think the great one of the biggest inequities we have is the fact that our taxpayers do pay for the teachers pension fund and the state's teachers pension fund that is a double taxation I completely agree the challenge is you're not going to get that resolved next week and you know again you know I think it's a longer term issue but I think it's a it's a good one to fight for I think uh that's my point Mr CEO is that there are some monies that CPS
187is not receiving because of how this Tiff is currently working and uh it's being presented to us like it's the perview of the city for CP yes to beg for its own dollars uh and and I just think that's unfair to our children it's unfair to our teachers and it's unfair to our principles thank you board member bigs uh thank you for your presentation um I have a couple questions about something that chalkbeat reported this week um they reported that um the city made an advanced payment over and above what was required to meabf to the tune of about 168 or [Music] 168.75 some world that right that that overpayment could be cancelled and then we're looking at a difference of maybe six OR7 million um the reason that the C that the city made
188the advanced payment uh is because the the making additional payments above and beyond what the state requires is the single best way that we can reduce future costs related to those Pension funds so meabf is a very large fund um last year the Surplus attributable to it was 178 million for 24 26 it is 168 million that number is correct um in total um last year the city paid 300 million in Surplus advaned payments to all of the various funds that the city has for for our police for our fire for our labors and for our municipal employees and for CPS employees um when we look out out over the horizon the Surplus payments started about three years ago and um we expect them to continue to pay to have to make these payments through
1892030 um the savings that we will acrw from this is about $3 billion by putting in more money today today the funds invest at around 6 and 3/4% that is their target rate um I sit on a couple pension fund boards so I'm pretty familiar with their investment strategy um I have confidence in the way that their funds are managed that they are going to be able to hit that Target rate so investing those funds today in the funds allowing them to invest at their target rate and importantly for some of the lowest funded funds not have to sell assets to meet benefits but rather keep funds invested because prior to us putting this payment in they were actually having to sell assets to pay benefits and so if you think about if you're putting
190money away in an investment fund say for your children's college fund you have a horizon you know it starts out as a 18-year horizon you know comes down as time goes on um you start that off you probably are putting most of that in the stock market you're trying to achieve earnings on that um so that those earnings grow and can be used to pay that future cost when you get down to being like two three years away from your kids going to college you might say ah you sell some of these stocks in here I don't want it to drop the their freshman year and I'll put in bonds a little safer um more liquidity I know the money will be there I've made my earnings and I know I'll be able to sell
191those bonds or redeem them and uh pay for the education so the Pension funds have a very long-term Horizon right it's not 18 years um it's essentially forever except they have to pay out so much money in benefits that they were having to keep a lot of their Investments short they're having to keep it in things like treasuries this is during a time when treasuries were you know paying you know short-term treasuries less than 1% so you can imagine how hard it is to achieve your investment goals of 6 and 3/4% when then you have a lot of your money invested in short-term liquid assets because you need to have the money there because you've got to pay benefits so when the city started making the supplemental payment it allowed all of our Pension funds
192to be able to keep their money invested and not have to keep selling assets so you know one of the funds that I sit on right now we are looking at changing our allocation um and allocating down uh making our our allocation strategy our Target amount of treasuries down to zero because we are going to be able to keep everything in longer term investments those are the kind of things that are going to contribute to the health of our Pension funds they're going to grow their funded ratio and they're going to save us all lots of money in the long run as far as how much we have to put in there by the way we all pay for that right because that comes from all the taxes we pay in the city is what
193goes into paying for those funds and so putting that supplemental payment in is incredibly important to redering that burden on City taxpayers it's we could accelerate our debt not nearly as useful as putting money in the pension fund that is something that is a priority that we have made because of the cost it will save to all of us um we actually defer a lot of our debt we pay a lot of our debt longer but we are accelerate our pension payment it's an issue that's separate from the CPS you know portion it's really about trying to solve the Decades of underinvestment that were made um you know if you go back 10 years the city paid about 500 million into our Pension funds and this year we'll pay almost three billion and that's because
194we followed the state law on contributions and it wasn't enough now the state law has gone way up saying you got to put in 2.7 billion and we're adding more to get to that 3 billion number um you know we're trying to make up for what was one of the most costly and devastating uh funding plans uh in the nation remember de sorry I wasn't totally done so I understand that right it is a separate issue than the 175 million uh that CPS right would reimburse um but I'm I'm just wondering again in this climate right where we don't have a readily available means in order to make right to support the contrib tion why you would move forward and make a contribution over and above and is that something that could be changed for
195the past or the past budget is it something that could be a different decision could be made in a future budget is there a thought about raising the levy in order to cover that um I'm just wondering how the city is thinking about those pieces and the tools that you have available as well uh no we cannot undo the deposits that we've made um so we cannot undo the deposits we made for last year's budget or this year's budget um uh you know city council could address that in the 2026 budget um you know as I've said the city reserved money during covid for these payments so they didn't come out of a levy they came out of monies that were assigned by two Mayors both mayor life foot and Mayor Johnson uh has assigned
196executive orders that those that fund balance would be used for these purposes uh so did not come out of current taxes moving forward actually our plan is that a lot of that will come out of revenues we expect to receive when uh the B casino is built and those monies are already dedicated to go into our pensions we also cannot divert those monies um but that can be taken up in future uh future budgets but again this is a plan that was started several years ago to work to disentangle the schools and we've lowered the requests that we're asking we haven't increased it we've lowered it significantly and CPS had clear eyesight on this plan board member DeBerry I think the mute button is probably next to the leaf button she's having a hard time
197board member kuster um yeah I I just uh I don't want to put her on the spot either but I'm curious um maybe what CFO krug's thoughts are on you know some of the information that was presented I I think it's great that we have someone here from the outside to come in and talk to us but um you know to Chief Sakowski and CFO crew they live this every day this is the work they do every day so I'm also curious to hear their feedback on you know what has been proposed um in in some of this information uh thank you board member um Coster I I I really I haven't seen the information this is the first time that I seen the information from uh CFO uh G so I I would like
198to read and see what are the assumptions really to speak about the financings they have been financing in the past they hav't been financing to balance the budget they have been financing for liquidity issues so I think I think I would would like to go over what the presentation is about and not speaking out just of what I'm hearing and I'm online so I I I really would like to see the presentation before making any judgments I think the same is give them an opportunity to evaluated before we put them on the spot today I think it's really wor where CFO is board member Deber are you with us are you able to come through no okay Rosenfield um thank you thank you for your expertise I appreciate you coming today um I have a
199couple questions one so the city did in fact make the advanced payment that is correct so how much specifically was that payment uh the payment for 24 was 178 million is allcable for meabf and for uh 25 it's 168 million and those payments have been made so was that was the city required to make that payment or it was a volunteer payment uh no the city chose to make that payment so it was a volunteer payment okay thank you um I think it's important to note that the state and going to the state is a separate issue it's important we have a newly elected board will definitely do that but that's not going to help us today um and then my final comment would be to something that board member Bannon said about the uh
200$50 million or something like that in interest just to keep in mind because again I do believe Our obligation is to the families in Chicago public schools that is 500 teacher positions that's all thank you the only other Lopez the only thing I want to add also remember Rosen um is that also um and again there's complexities that we that you know to be fair you know we had we hadn't seen this information before so we want to make sure we analyze it in in multiple ways but also the the deficit will just grow for the future because um I like I said I really appreciate Jill the fact that to again give you and the team credit you have been more transparent about tiffs than than anybody this since I've been here so I
201want to First Call that out uh and you've been more transparent about plans for Explorations than I've ever seen so again I I want to first thank you for that um but board members we are counting these specific revenues already in our outline um budgets and so every one of these tip Explorations because the city has been so transparent which is a new thing for us every as you think about a $500 million deficit for next year which is the minimum that's the floor uh It could only grow from there you know these revenues were already accounted for uh in that budget and then in the projection for the for the future Years thank you uh question is regarding on page five um it shows some of the interest rates depending on the scenario just
202want to confirm are will these rates um are they going to be stable or are they going to be dependent on the market uh you know for example scenario two calls for 5 years would the 4.78% increase or potentially increase depending on the market in two or three years from now uh that's just the current market yeah the you know interest rates move up they move down you know there's so potenti no there's no uh there's nothing that you know in this presentation that can control or guarantee what future interest rates will be thank you um the second question and this is probably more for CPS leadership is uh will taking an additional borrowing have an any impact on the current borrowing that we do for any uh infrastructure or Capital funding M Slava do
203you want to address the question about the about the impact on borrowing well we we have to borrow about 00 million a year for Capital we know that we're going to be doing refinancings next year and so and we will analyze the different options that the different groups are bringing to the table our budget for 2026 really include some assumptions of of of of balancing of of refinancing that we're going to do for 2026 what I'm hoping is that everything that we're doing it will keep our rating stable so we're not going to receive any downgrade with all of the things that you know we're doing or we're not doing and you know that doesn't impact our our ability to go to the market so that's why for us it's important to make sure that
204we understand because we are things that we're going to do in 2026 and and our rating stay stay in table so if the rating stay stay stable you know then we have better access to the market but at the end of the day it all will depend on what will be our access to the market right CPS doesn't have an endless amount of money that you can go to the market and say this is what I want so so we we we just need to wait and see I couldn't say no I couldn't say yes because it depends what the market conditions will be at the time thank you um and the last comment is I think it's important at least for me thinking into we already know we have challenges finial challenges coming up
205in the next at least fiscal year but there are other challenges that we're not aware of looking at the federal government that potentially we might you know get reduced funding for title one for English a second language and what does it mean taking on now more pay Deb payments thank you yes so with regard to with regard to next year obviously we're keeping an eye on those challenges with regard to the federal government and those are are concerning obviously um CEO did mention the deficit of of $500 million next year that's under the best case scenario so that wouldn't include a payment for mbf so we're really looking at if we're planning to pay this next year a deficit between 7 and $ 800 million that could potentially be added to with if there's additional
206borrowing costs that we have to take this year so we need to figure out this year so that we can really focus on some of these big challenges that we have ahead of us heading into next fiscal year which is coming up in about three and a half former Brown um thank you president Harden just wanted to uh for Jill just wanted to get a sense um based on your past experience um is taking out a loan illegal or let me say uh financing to reduce our debt and our cost is it illegal no it's not okay so I want to share with the board that we've been told repeatedly that it is um I think that the the way the question is framed is what makes the answer so if you were to issue
207bonds and just take that money as working what call working cash uh and put it into your operating fund uh and say I have proceeds their revenues that that's not that's not uh considered something you can balance the budget with okay but you can borrow to refinance and lower your costs it achieves the same impact yeah there's no it's a it's a it's a distinction between the two but not a a difference when it comes to actual Financial impact but it is a distinction whether you're refunding to lower your costs and free up funds for liquidity uh or you are issuing bonds to generate cash flow and that's why you've gotten two different answers yes ma'am so I the the second part I guess this is more of a just a statement today or yesterday
208was a great day in the state of Illinois like what is he talking about uh turned on channel 26 and Diet high school was playing in the state semifinals basketball tournament 10 years ago diet high school was closed and in places like this people like me were ridiculed because they didn't believe that this neighborhood high school that was closed would be reopened and yesterday they're in the state championship so win or lose they should be here at the board and they should get celebrated what's the point I think that the state strategy is directly connected to what we're talking about because there's a popery of things that have led us to this moment it's not just um the lack of resources I will share with everyone here that I've been a part of a coalition
209of community groups for over 20 years and never once were we invited sat down at the table and said this is our dilemma partner with us let's go down and let's not just Advocate but organize there's a difference there's a difference between advocating and building the power to transform reality diet high school is an example of building the power to transform reality this situation cannot just be looked at as the ability to make the pension payment or not we also have to include what is our strategy to go down to the state and B reality that is just it playing you know in in a nutshell so I'm just concerned because we were informed that one it was illegal that that two uh the only way we could borrow was against Capital was was for
210uh U for Capital uh projects plain and simple we were told that and so I think I appreciate your presentation because it gives us um a different perspective to look at and and just really try to understand what the way is forward but I think what what I'm clear on is that there are options and we have to kind of deal with all of that thank you board member Rivas uh thank you uh Mr President um so some some questions here uh that I have um so uh and just some making sure that we have the facts straight um so first off uh member Brown uh thank you for bringing that up um although we have received information that we're not allowed to uh borrow uh that is that distinction that we're not allowed to
211borrow and consider that borrowing as Revenue this is uh talking about refinancing uh of this debt and um had all the members of the board received this information prior to yesterday uh we maybe could really wrap our minds around it but we weren't privy to these conversations uh prior to this um first uh factchecking can CPS can our board can we Levy uh can we talk to voters ask voters directly to Levy taxes or is that something that someone else has to do on our behalf I'm not super familiar with the law on this but it is my understanding and I say this without this is just my understanding I would need to check it maybe people are better I think city council would have to authorize you to do a referendum I don't think
212you can do I don't think you have the powers to just do the referendum I think but I think and again somebody will have to check this I think someone here can city council can authorize the referendum and then you can go to the voters by by state law board members we're not allowed to do referendums um and you know or very very in such very limited circumstances um but in that sense but you know I think like there's a small referendum you can do for Capital maybe for 50 Mill million but that's you know something like that but but in terms of referendums to raise operating revenues or even to do what other districts do to Joe's point we don't have those Powers um which is one of the disentanglement issues with the state
213as well as you become a fully elected board I've been you know sharing this since I I came to Chicago the way every other District in the country handles or Capital needs is um is through referendums you know I did them in Nevada I did them in Texas I mean that's just that's just how it's done Chicago is the only District in the state that is not allowed to do that and then and then the reason that's important is because every borrowing that we take out is from operating dollars so in naville they're not having to make a choice about fixing their high school or renovating their high school and taking money out of the classroom you're doing that every single year so that's why every time we borrow we're just taking more dollars out
214of the classroom yeah and and I'm going to say that I suspect this is all part of the legacy of how CPS has been treated differently because it was under City governance uh the next question I I looked this up uh based on the uh this last page of the or uh all the different types of entanglements so we have $10 million that the city graciously provides in water and sewer to our schools um I believe so I had to Google this and so a New York Times article from 1981 uh that showed that uh the city the Board of Education of the city of Chicago sold the land under Midway Airport to the city of Chicago uh for dollar then and also to uh and in exchange we were not charged uh sewer and
215water uh for our schools uh the article didn't specify how many years that was for but I'd be curious to find out what was that deal back then made by this board back in 1981 to ensure that we weren't charged uh sewer and water as that's one of your $10 million entanglements uh you probably don't have that answer now but I'd love to find that out definitely not great um and then uh the other thing I wanted to bring up and and just because I'm really concerned about uh taking out dollars now that are going to take money out of the classroom in future years and so I know that we pay hundreds of millions of dollars every year in Debt Service as a board those are dollars that could be in our classrooms now
216that actually would solve the problem we have now and I think it was like $800 million a year that we paid in debth service um so I do know that uh during um during your tenure as an advisor uh to the chicag public schools between 2014 and 2017 the Chicago Public Schools refinanced uh $2.1 billion in debt which led to us now part of that annual money that we give to uh this Debt Service $194 million annually now is paid in interest um and that at the end of that term of refinancing those dollars between 2014 and 2017 we end up paying about $3.7 billion in interest and principle um and so I just don't want to add to that debt service and to think about what future boards are going to have to deal
217with uh when we're already thinking about a $500 million deficit as our floor for next year thank you for M banon uh actually I'm good I'm sorry Bo yeah you know I'm I'm thinking about this plan because it's new and it wrapping my head around it and I'm thinking about the the board that stepped down the the first appointed board that stepped down in the fall was this option explained to them I mean or is it a new idea because I know that that they did not want to take a loan they did not want to borrow to pay APF and but maybe they didn't have this option presented is this something new um you know we hadn't run these kind of cash flows like we did for this um but the option to borrow
218was something that was definitely explained to them on a conceptual basis War remember Blaze I just wanted to thank Joe for coming out and it was really it's really nice to see miroslava and Jill have a conversation I mean I know it's crazy talk but it would be really great if the city and CPS and folks just got together had a conversation and sort of figured this out it's way political um I guess because of history for lots of reasons but um I I really do believe that from the folks that I've met at CPS that you know everybody here car cares deeply about children um and schools and um it's it's just great that we're having I just want to say we I'm I'm really glad we're having this conversation and that you came
219over and I hope you come again and I hope we continue um sort of figuring out what the be best path is maybe we can get someone from the state to pop by and just blow all of our minds so thank you that's thank you for saying that and and that gives me the opportunity even though you did not ask a question um to say that I really uh do enjoy working with CPS staff um I've known Wally longer than anybody but I've known Mike a long time and miraslava a long time and got to know Pedro over the years and you know I have a lot of respect for the team here um and you know I hope you do know that we do talk separately too um you know uh we definitely stay
220in communication um and you know while certainly this is a you know I think a very complicated scenario to be at you know two government entities where we have this friction going on right now but I do have utmost respect for you know all the CPS staff that I've worked at it is an incredibly dedicated team here um and let me just say while I I'm also um you taking your time that I'm so excited about this board um I will actually I'm going to give credit to M Slava the first we talked right I think it was the first day when everybody came for training and I know there's a couple people that are newer since then but she said oh my gosh this board is great and they're really wonderful to work with
221and I'm really excited and um you know the limited interaction that I've been able to have has really just confirmed what she said to me that this is a really wonderful a group of people I I love the debates that you're having you're asking all the right questions um you know all the hard questions and um I'm excited for CPS um to have this kind of leadership bber boy we are scheduled to meet next week so we'll continue to have these Collective um discussions board M zore um so this is really board member DeBerry who um texted me since she was not able to make the thing work um she says I feel like we have a false Choice here between teachers and principals versus the appearance that we don't care about our workers retirement
222I want to thank you Jill for your transparency and for being clear about us providing a bridge I just want to say the city and the schools have been working with Bridge budget budgets for decades and thank you for clarifying that the percentage rate is fair I would like to know so this is a question for you Joel I would like to know how long it would take for this package to come together if we were to vote for it and for the CEO she wants to know or I'll speak for her I want to know uh when will the contract for teachers be completed um and so doing an actual financing uh would be the work of CPS staff and so they would be you know better suited to talk about a timeline uh
223to be able to complete a bond transaction we'll be providing another update for you board members next week but I will tell you it's Dynamic and it's moving fast on a daily basis and so as you heard earlier even CTU has said we're closer than ever and just one final comment and J you may want to oine on this as we just talk about tiffs and the amount of money that's due to CPS and and so forth I think it's important to note how tiffs actually work and that the investment that goes into a diff Tiff district is designed to attract it's addressing blight it's designed to attract business into that area so that it can generate the actual taxes and so you know it has to start somewhere and that's the rationale for a
224tiff in the first place is to create an environment that does produce tax increment that can then be used to support infrastructure City and other such uh taxing entities so I think it's important to understand how the whole thing works and so if you don't have first the investment then you don't have the entities that are paying the taxes then generating the ability for us to collect so just from a sequencing perspective it's it's important to know that if you are projecting certain dollars that are to come to us it first has to be predicated on the entities themselves being there to produce the actual taxes so I just wanted to wanted to make that point I don't know Jill if you want to add anything to that and if I'm capturing that accurately yeah
225I mean you're capturing it accurately you know I you know my personal opinion about tips is that you know way too many were recreated me go back you know 20 some years ago um you know mayor da uh there wasn't uh anything I think that he was more fond of than creating Tiff districts and um you know like uh you know board member Brown said earlier he you know would say that it was his only Economic Development tool um and he used it um extensively and uh a lot of great things have happened in Chicago as a results of those tiffs we have transformed a lot of swas of the city but it's also was too many in my opinion is just me speaking and it has taken a lot of taxing dollars out of
226CPS the park district the county the city is operating dollars um and so as they're expiring you know we're extremely committed to them expiring um we have the tension that you know we do have a city council that's been used to being able to control the spending of the money that's in those Tiff accounts and um you know I know you had asked questions uh earlier about them expiring earlier and I said I not really hearing a lot about that but that's out in The Ether right I mean other people talk about that and I think there's a desire by many people to see that uh because of wanting to sort of cor correct some of this history faster um but the tension does exist that we do have projects that are slated to happen
227and we do have a lot of good things that are coming out of it and whether you end those early or stop doing that um you know is is a you know that's a hard thing to do um but you know this mayor is more committed to putting the Tiff dollars back into the hands of other governments more so than anybody's ever been it's why the the years in which the mayor has been in charge of budgets that the Tiff Surplus have both been record years it's why this plan to issue bonds for us to fund Economic Development projects out of the money coming back to us was implemented under this mayor um because he is looking for tools that let the tiffs go away and have us continue to make investments so it's important
228for the city that we move away um from the Reliance on tiffs and we are uh we are putting um that strategy to work thank you very much T Jill board member Smith uh yes uh I just wanted to say uh I'm deeply concerned about anything mayor da was fonded of uh however uh would you Jill say that uh schools good schools great schools are one of the biggest attractors of uh people to areas yeah I think schools are obviously important I mean is it the only reason that people move to Chicago uh I don't think so I think that the corporate environment that we have is very important but good schools are important yeah so so as we talk about uh what Tiff dollars are invested into in terms of businesses I think sometimes
229we put business over education when education is one of the biggest attractors of great people to our city and that also needs to be one of our number one Investments thank you again Jo thank you very much for your presentation and the time you spent uh it's very helpful and we'll continue to work with you as we work through this thank you for having me here today this concludes very much our second fy2 budget hearing thank you