Ongoing tensions over Chicago Public Schools’ $9.9 billion budget spilled over into a new arena Thursday, with plans swirling within the City Council’s budget committee to question district leaders about a $175 million pension payment that’s missing from the district’s spending plan.
As the city faces a $223 million budget deficit through the end of the current year, CPS’s expected contribution to the city employee pension and benefit fund is in question, as is CEO Pedro Martinez’s leadership. The embattled school superintendent has faced growing criticism from the Chicago teachers union, as well as support from school leaders and, in an open letter Wednesday, 15 city councilors.
MEABF payments to cover pensions for CPS non-teacher retirees have been transferred in part from the city to the district over the past four years as part of an effort to untangle finances before CPS transitions to a fully elected school board. The fact that this year’s MEABF payment was not included in the CPS budget is among Mayor Brandon Johnson’s criticisms of the spending plan. Both the district and Johnson have signaled that a future budget amendment is likely.
Martinez could now be questioned in the City Council alongside School Board President Jianan Shi next month, said Jason Ervin, chairman of Johnson’s chosen Budget Committee. In response to the renewed scrutiny, CPS has pushed back against accusations that it has shirked its responsibilities.
The CPS’s decision not to include pension costs in its initial budget is a “major blow to our bottom line,” Ervin said. “It either means cuts in other areas or increases in revenue that are needed,” he said.
Next year, the city’s budget deficit is expected to reach $982 million, the Johnson administration announced last week.
“We need to understand why they have necessarily shirked their responsibility to make sure they cover the costs of their employees’ pensions,” Ervin said.
In the past, the school district has simply “pressured us” without even discussing it, Ervin added. In his criticism of Martinez, first reported by the Sun-Times, the 28th Ward councilman described the exclusion of pension payments from the CPS budget as borderline malfeasance.
That narrative is false, according to the district, which also sought to maintain the diplomatic tone adopted by CPS in response to criticism ahead of the Board of Education’s budget approval in July.
Discussions between CPS and city officials over pension payments have been ongoing for a year, and the parties worked together to develop and finalize the district’s $9.9 billion budget before the spending plan was approved, a CPS spokesperson said Thursday.
The district is required by law to have a balanced budget, with operating revenues matching expenses. In an emailed statement, CPS said the district has reduced spending by about $500 million over the past year to deliver a balanced budget “that is focused on best supporting our students and staff, building on the district’s academic progress.”
The district’s previous contributions to the fund, made possible by TIF surplus and federal relief funding, were developed in collaboration with the city, the CPS spokesperson added. Given property tax caps and a deficit of at least $500 million the district faces next year, CPS cannot cover the $175 million deficit, or any other shortfall, without outside support, the district said.
Several Budget Committee members support Martinez
In an open letter published Wednesday, 15 of the 50 members of the Chicago City Council expressed their support for Martinez. Nine of the councilmen who signed the letter are members of the Budget Committee, including Vice Chairwoman Nicole Lee, 11th.
“CEO Martinez has proven himself to be effective, innovative and committed to the best interests of our children,” the board members wrote. “It would be shameful and disheartening to see a man of such professional integrity become the victim of political pressure.”
Councilman Marty Quinn, 13th, said Thursday that principals in his district have asked him to support Martinez. School leaders fear disruption if the superintendent is fired, Quinn said.
“The job is pressure-filled, but Pedro has been very responsive in a short time,” he said.
Martinez has created a “stable foundation” for the district, as evidenced by the fact that the Johnson-appointed school board sided with him against the mayor on the issue of pension payments, Lee said.
“This is not the best time to create instability when we are facing such a large deficit,” Lee said. “It’s a real challenge for whoever is in this position. I’m really happy that he is in this position.”
Lee and Quinn both declined to say whether CPS or the city should cover the cost of the pensions, but welcomed efforts to summon Martinez to the City Council Budget Committee to discuss the payments.
But Councilman David Moore, 17th, said the school district should foot the bill.
“When you go to an elected school board, it’s up to you,” he said. “They have to adapt.”
Still, Moore credited Martinez for improvements in student achievement and stressed the need for stability when asked why he signed the letter.
“There’s no obvious reason for us to stop working at this point,” Moore said. “Stability is key. And as long as we’re progressing and moving in a positive direction with our kids, I think we should keep Pedro Martinez.”
In addition to pension payments, CPS will have to fund expected salary increases resulting from ongoing labor negotiations with the Chicago Teachers Union and the Chicago Principals and Administrators Association. The district did not respond to a request for solutions to cover the costs, saying only that CPS “will continue to work with all of our partners to find solutions … so that we can better support the continued success of our students.”
