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Public Speaks Out Against Process of Schools Budget

Finances & Budgets

As Chicago Public Schools officials scramble to complete the district’s 2012 budget, parents, teachers and taxpayers made one thing clear in a series of public hearings last week: they must have a voice in developing the budget and not be asked to comment only after it has been released.

Citing inaccuracies in enrollment figures and cost projections, they said the district repeatedly announced a looming budget deficit and threatened spending cuts and layoffs, only to produce a balanced budget that allowed for public involvement too late in the process.

For months, officials had warned that the district was facing a $712 million deficit in the 2012 fiscal year. They cited the number when denying teachers a 4 percent contractual raise, making unpopular cuts to programming and, just last week, announcing plans to increase property taxes to the maximum allowed by state law.

But when final budget details became public on Aug. 5, the district revealed that over the last year it had built up $470 million in its reserve fund with unanticipated state payments and other revenue sources. It plans to use $181 million from the fund to help plug the budget gap, leaving $289 million, or roughly one month’s payroll, in reserve. The cuts and tax increase will still be needed to erase the rest of the deficit.

At a public hearing Wednesday, Karen Lewis, president of the Chicago Teachers Union, objected to the limited role the community was given, of merely commenting on what she called a “done deal.”

“Our voices are really not heard,” Ms. Lewis said. “They are tolerated.”

The new district administrators said they inherited this year’s deficit and had to move quickly after taking office to complete the budget. They said they were working to make the process more transparent and to involve the community.

District officials also pointed to the fluid nature of the budget process, with numbers changing as revenue projections were updated and bills came in higher than expected.

Laurence Msall, president of the Civic Federation, a watchdog group, said a budget was merely a “hopeful projection” of what the district expected to take in and spend over a year. “It’s not an exact science,” he said.

But Kurt Hilgendorf, a history and economics teacher and a member of the Chicago Teachers Union budget and finance committee, said at the hearing on Wednesday that while budgeting was not an exact science, recent budget cycles suggested that the district, to some extent, used the budget as a political tool.

Early in last year’s budget planning, Ron Huberman, then the district’s chief executive, projected a deficit of nearly $1 billion, threatening layoffs and calling for teachers to give up their contractual raises voluntarily. The gap was narrowed over the following months by legislative action to reduce the district’s pension payments temporarily, combined with an influx of federal stimulus money.

At this time last year, Mr. Hilgendorf said, the district maintained that there was a $244 million deficit in the 2011 projections, but in the end there was a $288 million surplus. That half-billion-dollar variance suggests that the projection process “might be subject to some pressures of numbers that aren’t exactly accurate,” he said.

Over the last few years, the district has relied on its reserve fund to plug its deficit, further clouding its actual financial position during the budget process.

Last year, Mr. Huberman said the district would drain the reserves of the last $190 million. Though it was thought that the reserve coffers remained empty, district officials announced last week that C.P.S. would again use reserves that had been replenished over the past year.

“It covers unforeseen shortfalls,” said Tim Cawley, the district’s chief administrative officer, when the budget was released. “It’s not exactly a cash hoard.”

Yerik Kaslow, director of education and general policy analysis for the Center for Tax and Budget Accountability, agreed, saying, “There’s no telling what the next year’s going to bring.” But he said the omission of the reserves when talking about the deficit could be misleading.

“To say ‘I’m in debt, but I have four grand in savings,’ then I guess I’m not in debt,” Mr. Kaslow said. “You kind of begin to wonder, Is it a rainy-day fund or a bucket of change?”

Wendy Katten, a member of the parents’ group Raise Your Hand, said the use of reserves “raises questions about the way we talk about the deficit.”

“It leads to some lack of credibility,” she added.

Future budget cycles do not appear much brighter for the district. After receiving short-term pension relief from Springfield last year, the district is staring at significant increases in its pension obligations, and officials project that the deficit will rise to nearly $1 billion in two years.

Rod Estvan, an education policy analyst who examines the district’s budget every year, said the proposed 2012 budget, as it stands, included cuts that would be made after school started.

“This is terrible practice,” Mr. Estvan said. “This creates a situation where people do not know what funding their schools will get.”

All the budget tells them, he added, is that “tomorrow will bring more cuts.”

The New York Times, August 13, 2011


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