Mayor Johnson's budget raises taxes, defers obligations, and ignores the city’s long term structural budget issues. It also neglects the need to bring the financial accountability to improve schools and to lessen the city’s costly subsidies that strain Chicago's finances
When Mayor Brandon Johnson rolled out his $17.3 billion budget for fiscal year 2025, he asked the City Council to approve a $700 million increase over last year’s budget. The highlight of the mayor’s fiscal plan is not only the $300 million property tax increase but a threat to eliminate another 2,473 police positions and cut 643 fire and paramedic positions if aldermen do not indulge him. Even with that $300 million increase, the budget is not structurally balanced and does nothing to address the city’s long term financial crisis.
The mayor has presented his 2025 budget as a choice between the second-largest property tax increase in city history or draconian cuts, but this paints an illusion. The size of the deficit guarantees that even if the City Council approves his property tax increase the deficit will guarantee a delay in filling city vacancies, mostly in police and fire personnel as his predecessors did with great regularity. It is important to note that Chicago recently deferred on two new police cadet classes.
Chicago’s 2025 proposed budget will continue the city’s lingering legacy of financial irresponsibility. In an act of fiscal insanity, rather than judiciously wielding pandemic relief to fix its desperate financial issues, Chicago squandered the whole of $1.3 billion in COVID-19 cash in its general funds between 2022 and 2024. Federal aid, however, is expiring and Johnson’s proposed budget now has Chicago returning to its old habits of overspending and adding debt. As Johnson engages in his budget gamesmanship, across all city funds expenditures will continue to grow in every major budget area in 2025.
Noticeably absent from Johnson’s proposed budget was any mention of addressing rising pension costs, consolidation of pension funds, or removing politics from pensions investments to secure higher returns. Furthermore, Johnson’s budget pitch ignores Chicago’s critically broken procurement system, which sees the city needlessly squandering hundreds of millions of dollars more each year. The mayor’s budget also ignores entirely the need to revitalize Chicago’s antiquated system for seeking reimbursements from the federal government and insurance companies. That Johnson has blinked at reforming reimbursements comes at a cost: Chicago forfeits hundreds of millions annually.
By far, the biggest oversight in Johnson’s budget is the mayor’s unwillingness to grapple with Chicago’s ever-increasing public-school subsidies, which next to pensions is the biggest contributor to the city’s financial crisis. Unfortunately, the mayor compares the viewpoint of critics who oppose the Chicago Teacher Union’s budget-busting contract demands to those of the Confederacy when it came to freeing slaves. “When our people wanted to be liberated and emancipated in this country, the argument was, ‘you can’t free black people because it would be too expensive.’”
Why the mayor’s support of seemingly unlimited school funding must not be ignored
Mayor Johnson’s apparent desire to throw money at Chicago public schools is deeply troublesome for several reasons. Aside from the fact CPS devours 56 percent of all property taxes, Chicago also provides over $1 billion in annual subsidies to CPS when annual Tax Increment Financing (TIF) windfalls are included. In 2023 alone, Chicago set aside $567 million for teacher pensions, $142.3 million in debt service for school capital improvements, and another $97.7 million in pension contributions for CPS employees’ municipal pension fund. Chicago also furnished $7.9 million in Modern Schools Bonds, $27 million in free or reduced CTA student fares, and another $11 million in fee waivers.
A budget proposal that’s long on far-left-wing rhetoric and short on economic sense, Johnson not only reneged his campaign promise not to raise property taxes, but he did so by bowing to his patrons at the CTU. Johnson sent a record $300 million windfall from the TIF surplus. It constitutes a windfall because the diverting of property taxes through TIF’s has no effect of taxing district revenues as their tax rate automatically rises to meet the levy request. The city could have reduced its subsidies to schools in an amount equal to the TIF award which would have allowed him to avoid a city property tax increase altogether.
Johnson’s tax increase plan and gift of $300 million in TIF money rewards a schooling system that currently spends $30,000 per student, has one full time employee for every 7.6 students and employs more non-teaching staff — over 22,000 — than teaching staff. Despite a 46 percent increase in per pupil funding since 2019, test scores are abysmal as only one in three students can meet state standards in reading and one in six in math. Yet the system which has been abandoning standards and accountability as it returns social promotion somehow manages a high school graduation rate of 83 percent.
Johnson’s payoff to CTU leadership comes as the union is in the midst of protracted contract negotiations with the city. In the last contract sealed with the union in 2019, teacher salaries surged between 24 and 50 percent and schools added 9,000 budgeted positions, despite losing 10 percent enrollment and CTU leadership forcing the district to keep school campuses shut for 78 straight weeks with devastating consequences. Despite the damage done by the CTU, the union wants even larger pay increases — 9 percent a year over five years — and even more unionized school staff.
While the school district was dramatically increasing its budgeted positions with no improvement in the school system’s disgraceful academic performance, Chicago eliminated 1,700 police positions with destructive consequences as the number of “High Priority” 911 calls not responded to grew from 19 percent to 50 percent. In addition to emergency calls going unanswered, arrest rates have fallen by half. Meanwhile there are over 10,000 more “non-teaching” full time positions in the Chicago Public Schools than the Chicago Police Department has officers.
Rebuffed by Governor J.B. Pritzker in their demands for $1 billion more in state funding for CPS and always raising property taxes to the maximum levy cap, the school board and CTU will seek greater city support from TIF funds and other city subsidies. Unfortunately, the mayor compares the viewpoint of critics who oppose the CTU’s budget busting contract demands to those of the Confederacy when it came to freeing slaves. “When our people wanted to be liberated and emancipated in this country, the argument was, ‘you can’t free Black people because it would be too expensive.”
The fact remains that the CPS budget is becoming increasingly intertwined with the city budget and that the CTU considers the city a virtual ATM machine. It is imperative that City Council considers examining the school’s budget and their spending priorities. The City Council would do well to look at balancing its budget and addressing the city’s long term financial needs by bringing accountability to the school’s budget and moving to end the city’s massive school district subsidies.
While this may seem an impossibility, it is an achievable goal if the following steps are taken. First, a new CTU contract must be tied to available revenues. After a previous contract that saw the 24-50 percent increases in pay and 9,000 added staff, holding the line is reasonable. That must be accompanied by the districts embrace of real zero-based budgeting.
Second, the school district must be divided and decentralized. Under the current structure, the district allocates only 54 percent of revenues to local schools while providing elected Local School Councils and school principals autonomy over school finances, personnel and staffing models, including the authority to select their preferred school model.
Third, Chicago must return CPS to pre-COVID staffing levels with priority given to reducing non-school based positions. This would still leave the district one employee for every 8 students while minimizing the impact on local school staffing levels. The value of positions added since 2018 exceed $600 million.
Fourth, Chicago must close or consolidate near empty schools and lease closed or under-enrolled schools to public charter schools. This would not only save the district over $100 million in operating costs but generate tens of millions more in rental fees.
Fifth, it is vital Chicago expand public school choice. Taking this step will increase state and federal aid. That means expanding less expensive but superior high performing public charter and magnet schools. Charters in Illinois on average receive $8,600 less per pupil. Chicago’s magnet and selective enrollment schools also receive less.
Sixth, Chicago should take advantage of the future TIF windfall now. Using the school district’s portion of property taxes from TIF districts being retired to fund the mayor's infrastructure initiative can raise up to $3 billion to help address districts capital needs without diverting school operating funds or raising taxes.
Last, Chicago’s legislative delegation in Springfield must make state pension funding equity for Chicago Teachers a top priority. This would allow Chicago to shift the special Chicago Teacher Pension Fund (CTPF) property levy totaled at $557 million last year to fund the city’s pension systems and provide an additional $170 million to the district. Governor Pritzker can incentivize city and school district leaders to embrace fiscal responsibility by bringing long overdue equity to Chicago teachers' pension funding without having to provide more funding for downstate districts.
The state is projected to pay $322.7 million or 32 percent of employer contributions in fiscal year 2024 for CTPF teacher pension costs. By contrast, Illinois is projecting to contribute $6.04 billion or 98 percent of employer contributions to Teacher Retirement System in fiscal year 2024. State funding equity for Chicago teachers is long overdue.
In taking these actions, Chicago’s school district can balance its budget without taking resources away from local schools themselves while empowering the schools to make needed corrections to improve neighborhood schools and provide parents with quality educational choices. At the same time the city will be able to reduce its (non-TIF windfall) school district subsidies by upwards of $850 million. These actions can address the current twin city-schools budget crisis but must be accompanied by long overdue financial reforms.
This requires serious pension reform including the consolidation and professionalizing of pension fund investments, revamping the outdated procurement and billing systems, and instituting a real zero-based budgeting at both the city and schools. In addition, the budget process itself must be reformed by Chicago through the adoption of a “Truth in Budgeting” Ordinance that governs the budgeting process and ensures complete transparency and ample City Council and public input on major spending decisions. It also requires an independent and properly resourced budget office with complete access to information, full auditing authority and staffing resources to provide independent analysis and oversight.
