The city and CPS' crises are inseparable and both threaten to worsen the city’s financial situation. The pathway to surviving runs through the CTU
The Chicago Public Schools’ (CPS) annual financial crisis played out again and will once again drag Chicago into providing financial assistance which will provide a temporary financial reprieve while making it significantly harder for the city to address its own financial crisis. Chicago is like the Titanic with flooding of the CTU’s compartments dragging the city down to the bottom. The tragedy is a self-inflicted crisis and solvable and in ways that doesn't inflict pain except on the CTU’s political agenda.
The crisis is entirely driven by the CORE Caucus leading the CTU. The caucus is determined to maintain and increase their dramatic increase in members added during the district’s COVID hiring spree that saw 8,250 full time employees actually added and consecutive, unaffordable $1.6 billion contracts. The record contracts made CPS members among the highest paid in the nation while requiring no additional instructional time.
Of course the crisis has been worsened by CORE leadership’s constant work disruptions, strikes, threats of work stoppages, and their strategy of swapping precious instructional time with constant political activities. This combined with the CTU determination to use its control over the school board to protect its members by abandoning standards and accountability and by degrading public school choices like public charter and magnet schools.
CTU leaders are oblivious to the financial impact of the decline in enrollment. The loss of 93,000 pupils since the CORE Caucus seized control over CTU may be costing the district over $1.2 billion in state and federal aid. In 1995, when Mayor Daley’s first leadership team embarked on policies to promote enrollment growth, the district went from a projected five-year $1 billion budget shortfall to six consecutive structurally balanced budgets, a $1 billion cash balance, and 12 bond upgrades.
Under the CPS budget approved by the CTU bloc in July, CPS relies on an “assumed” $150 million in financial assistance from the Illinois General Assembly (IGA). Days after declaring his intention to support additional revenue in a supplemental budget bill, House Speaker Chris Welch backpedaled, saying he never committed to a specified amount of state aid. With CPS facing uncertainty due to CTU chicanery and Welch’s fumbling, the likelihood of state aid is grim.
Here is what is likely to occur: It is doubtful Welch will come to the CTU’s rescue, even if he survives the sexual harassment scandal in which he is embroiled. The mayor will be pressed by his CTU enablers to come to the financial rescue by once again raiding the Tax Increment Financing (TIF) program for even more than the $283 million the district is banking on in its budget. Meanwhile, the school district will be forced to reduce its head count by imposing an early hiring freeze that will send CTU into a frenzy.
The CPS budget crisis comes as Chicago is facing a midyear budget shortfall of $89 million to $130 million for 2026, alongside a massive projected deficit that by some estimates could exceed $1 billion for FY 2027. The crisis has intensified friction between Mayor Brandon Johnson and the City Council, compounded by high-profile resignations of Budget Director Annette Guzman and acting Chief Financial Officer Steven Maher, both of whom have stepped down leaving a leadership vacuum. Canaries in the coal mine?
Let’s specify up front: The school district does not have a revenue problem. Keep in mind that according to the school district’s own operational data, this budget leaves the district with one full-time employee for every 6.9 students and more non-teaching staff (over 22,000) than teachers. This district has seen its total budget grow by $4.2 billion to over $10 billion since 2019, yielding a 44 percent increase in per-pupil funding. The district currently spends over $32,000 per student.
Last year, the City of Chicago provided CPS with $1.3 billion in subsidies, 56 percent of all property taxes Chicago residents and businesses pay, 25 percent of all K-12 state aid, and 40 percent of all federal aid. It’s worth mentioning CPS also received $2.8 billion in one-time federal COVID funding, all of which was squandered. Little was needed in supplemental revenue during the district’s growth years enabling the city to balance its own budgets while not shortchanging pensions or selling city assets.
A Wirepoints analysis suggests that only half of CPS’ $10 billion budget finds its way into schools. Despite the fiscal dislocation at CPS, there is an opportunity to balance the district’s budget while beginning to wean schools off the over $1 billion in annual subsidies the city provides, which could then be redirected to meet the its own financial needs. This requires the following actions:
● The first and most important step would be to tie school district teacher contracts to available revenues. The last contract raised Chicago Teachers Union member salaries and added thousands of staff members, so a pause in future contracts is justified to align spending with revenue.
● Break up CPS’ central and regional offices and decentralize the district so money follows students. Currently, only 54 percent of school funding is received by the schools. There are over 7,800 school staff positions not assigned to individual schools.
● Return to pre-COVID non-teaching staffing levels and give principals and elected Local School Councils full autonomy over their school budgets. These positions are valued at over $600 million and would still leave the district with a ratio of one staff person for every 8.5 students.
● Consolidate and repurpose near-empty schools, which could save $100 million. Schools could be leased to any of the district’s over 100 public charters — over 90 percent of which are not in public school buildings — generating comparable revenue.
● Expand public charters, magnet schools, and school-based magnet programs to attract more students and generate more state and federal aid. The district can grow itself out of the crisis over the long term.
● Empower communities and parents through elected Local School Councils and their principals to control their budgets and staffing models and to select more effective proven school models. This would make the schools more attractive, helping to attract and retain students.
Aside from fixing the CPS budget, the current budget crisis presents us with an opportunity to explore areas in which CPS can better serve students. This is the moment in which CPS should expand school-district resources by taking full advantage of the AI breakthroughs and opting into the new federal scholarship program. Two initiatives that could considerably expand school district resources but will face stiff CTU resistance.
Properly deployed, AI can bring significant cost-savings to school district operations by making real “zero-based budgeting” a reality and improving all aspects of school operations. Most importantly AI can expand instructional supports, increasing instructional time and providing one-on-one support at affordable costs for each of its 316,000 students. AI can provide every one of CPS’ 24,000 teachers teaching assistance capable of supporting students across subjects and languages.
Meanwhile, Illinois participation in the federal Education Freedom Tax Credit could generate hundreds of millions of dollars for families — not only for private-school tuition but also for tutoring, early childhood education, paid high school work study, and other education-related expenses. Some estimates suggest such a program could eventually direct close to $1 billion in resources to families statewide, depending on program design and participation rates.
At the state level, priority must be given to securing pension funding equity. The state covers 98 percent of downstate teachers’ contributions, but only 32 percent for Chicago. Pension equity could free up almost $600 million. While a state bailout through the EBF is unlikely, the state can help the district in a way that is fair and does not require a corresponding investment in other school districts, by addressing the Chicago Teachers' Pension Fund (CTPF) funding-equity issue.
The state currently covers only about 32 percent of CTPF employer pension costs, while it covers roughly 98 percent of employer pension costs for all other Illinois districts (through the Teachers' Retirement System, or TRS), leaving those districts responsible for only about two percent. The state should bring its funding of CTPF into parity with what it provides to TRS-covered districts. This can best be done by consolidating the CTRS with the state’s TRS.
Doing so would provide the city with significant relief making it easier to balance their own budget. The special property-tax levy dedicated to Chicago teacher pensions — roughly $560–600 million annually — could be redirected to the city to help employee retirement systems, pay the school districts annual $175 million municipal employee pension fund payment, and free up the school districts remaining annual $100 annual teacher pension contribution.
Real financial accountability is unlikely while CPS leadership and the CTU continue engaging in business as usual. CPS bureaucrats maintain central control and the CTU relies on that centralized structure to enforce its contracts. The district needs a school board independent from CTU control and insulated from political pressure. It could be supported by Governor JB Pritzker reestablishing the Chicago School Finance Authority to provide political muscle and technical support.
Eliminating CTU control over the board is critical and possible. As of early 2026, the Chicago Teachers Union's popularity had fallen to a record low, with just 27.5 percent of Chicago voters holding a favorable opinion and a majority viewing the union unfavorably. This shift may prompt Governor Pritzker to opt into the federal scholarship program and seriously consider restoring the Chicago School Finance Authority.
