Last week, the Chicago Public Schools approved a $5.6 billion budget for the 2013-2014 school year – a budget that involves painful cuts at a challenging time. From a teachers’ strike at the beginning of the last school year to the difficult decision to close 50 schools, this year has been tumultuous for Chicago Public Schools and the students and communities it serves.

In the months leading up to budget passage, parties in the school reform wars have sniped across the battlefield about many topics:  closings, the size of the deficit, charter expansion, teacher layoffs, and what to do with vacant school buildings.  With so many specific issues at stake, it is easy to forget a simple reality—we are all in the same financial boat.  If the district suffers financially, we are all harmed.  We must take the entire context into consideration when developing solutions.  To move forward, leaders at the state, city, and district levels must make the tough decisions needed to level the district playing field, address the pension issue, and spend wisely, with students in mind.

Level the district playing field

In Illinois, we have come to take for granted that “rich” districts spend more on students than “poor” districts.  This need not be true.  Illinois is a national laggard when it comes to equalizing resources among districts, and was recently named the single most inequitable state in the country when it comes to school funding. While states like New Jersey equalize revenues so that low-income students receive more educational revenue than their peers, the reality here is just the opposite. Due to our heavy reliance on local property taxes to fund schools, Illinois has dramatic inequities among our more than 870 school districts. In some cases, students in one district are funded at four times the rate of another district.  To do right by the students in Chicago Public Schools, this must change.

Address the pension issue

Given recent headlines, it is easy to overlook the fact that the revenue picture for the Chicago Public Schools is actually brighter than last year. CPS projects $150 million more revenue than the amended 2013 figures. In most organizations, a revenue increase of that magnitude would be cause for celebration.

Not so for CPS. The problem is that this increase in revenue is eclipsed by rapidly rising costs. Most of these costs are pension related. The pension payment for the upcoming year will be $613 million. This represents an increase of $405 million over 2013, when CPS benefitted from the pension holiday granted by Springfield in 2010. Coupled with additional personnel costs bargained for in the new union contract, these rapidly rising costs create extreme financial pressure on Chicago schools.

And the picture does not brighten anytime soon. Absent some combination of restructuring or legislative reform, pension payments will continue to gobble up larger and larger amounts of the budget for the foreseeable future, squeezing operational funds elsewhere.

These challenges make the need to address the looming fiscal crisis even more urgent. But we are not seeing attention commensurate with the seriousness of the problem. Even in Springfield, where legislative leaders have established a ten-person conference committee to tackle the pension problem, the discussions thus far have focused solely on the state pension problem, not the CPS problem.  To do right by the students in Chicago Public Schools, this must change.

Spend wisely with students in mind

Even if state-level reforms are accomplished, we must acknowledge that the era of rapidly rising revenues is over and that we collectively avoided difficult decisions for too long. In past budget cycles, one-time fixes including federal stimulus funding, unexpected replacement tax revenues, and debt restructuring helped mask the depth of the deficit CPS faced. Who can forget the Edujobs windfall of more than $100 million in 2010 that allowed the district to avoid threatened class size increases? All of these options have been exhausted this year, resulting in painful cuts that directly impact classroom spending for the first time.

The good news is that, while not easy, there is much we can do to change our system to better serve students.  While it is tempting to think that more money would solve our problems, we shouldn’t forget that there is almost no evidence that total money spent correlates with academic achievement. To illustrate, Newark, NJ spent $24,123 per student last year and tallied a graduation rate of 38%. Chicago will spend $13,896 per pupil this year and has a graduation rate in the 65% range. Both districts have similar demographics. The lesson: While money certainly matters, ensuring that the money is spent well is the real driver.

This year, CPS took an important step in this direction by implementing a student-based budgeting process for all schools. This is a common-sense way to allocate funding based on student populations, similar to how charter schools have always been funded in our city. Instead of funding “positions” and giving principals limited control over school-based resources, the district has moved toward a system designed to maximize school autonomy. The move toward per pupil funding is a step in the right direction to ensure schools are funded based on student needs. Principals now have the power to make essential budget decisions at the school level, instead of having key decisions handed down from the central office.

District-wide, money must be spent on rational incentives and programs tied to student outcomes.  During strike negotiations, the district attempted to eliminate the use of automatic step and lane increases for teachers and replace them with a system built on performance. While that did not happen, we should still move towards a system that rewards exceptional performance. Otherwise we mistakenly assume that more experience and higher-level degrees automatically mean higher teacher quality. Such a system also creates counterproductive incentives with weak programs churning out low-quality masters’ degrees and individual teacher incentives entirely back-loaded, thus creating barriers to retaining terrific, early-career teachers. 

While there was a time when using proxies for teacher quality was more rational, research has now firmly established that high-quality teaching has a direct impact on student learning gains. In a 2010 study, Stanford economist Rick Hanushek found that the effects of a high-quality teacher on student learning gains are significant. Hanushek’s research revealed that teachers in the bottom quality decile produced one-third the student learning gains as teachers in the top decile, whose students advanced the equivalent of 1.5 academic years per year. Compounded over several years, this sort of high-quality teaching would be sufficient to close the stubborn achievement gaps that have plagued our city for years.

The core question for CPS is whether a $5.6 billion budget is sufficient to educate the district’s 403,000 students.  The short answer remains yes, but not within the current cost structure, which is hopelessly outdated and unable to adapt to current fiscal pressures. Consider this: if we were able to isolate the increase in pension obligations in the budget, that additional revenue would amount to $1,000 more per pupil this year. This means that a school with 800 students would receive $800,000 in additional revenue just this year. Of course, this assumes a district with flexibility to direct funding toward student needs, a reality that is a long way off. Just as we have moved to a student-based funding model where student enrollment drives funding allocations, we should ensure that funding is focused where it is needed so that all available funds arrive at the school as real dollars—not as teaching positions, ratios, or staffing norms—that can be spent flexibly on producing high academic outcomes for all students.

Andrew Broy is the president of the Illinois Network of Charter Schools.

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