This school year, as last, the School Reform Board plans to dip into its healthy reserves to cover a shortfall between spending and revenue.

In the fiscal year that began July 1, the board plans to spend nearly $3 billion on general operations. That total is some $163 million more than it anticipates taking in from federal, state and local sources, even with increases in property taxes ($34 million), general state aid ($40 million), state Chapter 1 ($7.5 million) and federal poverty money ($8 million). To bridge the gap, the board will tap a fund balance that, as of June 30, it estimated at some $404 million.

Maintaining a hefty fund balance is a must in long-term budgeting, says Paul Vallas. “The worse thing you can do is spend down the fund balance in a single year.” Without a fund balance, the board would lose its triple A bond rating, he adds.

The following budget highlights were drawn from public statements by the board and analyses by Diana Lauber of the Cross City Campaign for Urban School Reform and Todd Rosenkrantz of the Chicago Urban League.

PROPERTY TAXES Last year, the board raised property taxes $39.5 million. This year, the board is raising its levy to capture another $34 million, a 2.7 percent increase and the maximum permitted under the Legislature’s property tax cap.

STATE CHAPTER 1 According to Lauber’s report, Chicago’s total will rise to almost $318.5 million. After distributing the required $261 million to schools, the board will have $57.5 million to spend at its discretion.

FEDERAL TITLE I Despite the $8 million jump in federal Title I dollars, schools will receive only an additional $2.1 million, not enough to cover 3 percent raises or inflation, Lauber points out. Meanwhile, central office calls the shots on 24 percent of the $181.4 million total.

PRESCHOOL PROGRAMS The board plans to add only 25 classrooms, which will serve another 850 toddlers at a cost of $2.5 million. Last year, it added 177. The board could have added another 100 classrooms if state legislators had passed a finance package for schools, says Vallas. Meanwhile, the board plans to double the Parents as Teachers First program, which employs parents to visit the homes of preschoolers who can’t get into classes. Next year, 2,000 children are to be served at a cost of $1.8 million. Cradle-to-Classroom, a new program that targets teenage mothers at 20 high schools for parenting classes, will cost $2 million.

HIGH SCHOOL RESTRUCTURING The board has budgeted $15 million for a variety of high school initiatives.

SUMMER BRIDGE PROGRAM With the promotion policy kicking in for 3rd-, 6th- and 9th-graders this year, the cost of this program jumped from $4 million to $34 million. About 42,000 students who did not meet testing standards had to attend this summer program.

TEXTBOOKS, SUPPLIES Slight increases are allocated for textbooks ($2.5 million) and educational equipment ($10.3 million), while supplies take a minor dip ($1.4 million). However, Diana Lauber’s analysis found that less money is going to all three areas compared to 1995. She attributes the decline to the drop in state Chapter 1 and other government money going to schools.

CAPITAL IMPROVEMENTS Above $3 billion earmarked for operations, the board plans to spend $318.1 million on capital projects. Also kicking in next year: the first payment on last year’s $500 million bonds, boosting the board’s debt payments in fiscal 1998 by $33 million to $119.3 million.

SALARIES, BENEFITS Teacher salaries will rise by $118 million, due to 3 percent raises and natural salary growth as teachers move up in seniority, according to Rosenkrantz’s analysis. Career service salaries will rise $40 million. By increasing deductibles and reducing the number of health insurance providers to four, the board held the increase in medical and dental benefits to $16.2 million. Without these actions, spending would have risen another $10.3 million, according to a board press release. At central office, the board expects to cut another 200 positions in FY98.

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