Chicago Public Schools’ ‘creative accounting’ symptom of a larger problem
In a creative-accounting maneuver that would make Wall Street proud, Chicago Public Schools’ leadership fashioned a 14-month year for fiscal year 2015. CPS is adding 60 days to its 2015 calendar, allowing it to “generate” one-time revenues of nearly $650 million – just enough to cover its skyrocketing pension costs and help balance its budget....
In a creative-accounting maneuver that would make Wall Street proud, Chicago Public Schools’ leadership fashioned a 14-month year for fiscal year 2015.
CPS is adding 60 days to its 2015 calendar, allowing it to “generate” one-time revenues of nearly $650 million – just enough to cover its skyrocketing pension costs and help balance its budget.
If that was confusing, it should be. All good budget gimmicks are. Here’s how CPS explained the scheme in its fiscal year 2015 budget:
“We are projecting that by changing the revenue recognition period to 60 days for the FY15 budget we will see an increase of approximately $654 million in reserves, based on August collections.
“We recognize that this helps us balance the FY15 budget but does not generate any additional revenue. It is simply a timing change that will help us provide a bridge for the FY15 budget until the time when we achieve financial stability through pension reform.”
CPS’s budget is under major stress now that the district’s pension “holiday” – a law that allowed CPS to underfund its teacher pension fund for three years – is over. CPS’s pension contributions have more than tripled from just two years ago, and without creative financing, the district’s budget deficit next year would exceed $800 million.
The crisis now has everyone looking for something or someone to blame: spending on charter schools; the collapsing state budget; lower federal subsidies; no pension reform out of Springfield.
But what’s fascinating is both CPS and the Chicago Teachers Union have known for years the district’s budget deficit would soon approach $1 billion. Sadly, the district has done nothing to avoid the fiscal problems that are now hurting classrooms and the very children that CPS is meant to serve.
In fact, the power play between CPS and CTU two years ago, and the strike that ensued, made things dramatically worse. CTU President Karen Lewis succeeded in raising teacher salaries – despite CPS already having the nation’s highest salaries when compared to the nation’s largest cities, and the pensions that go with them.
No one should be surprised that CPS is reduced to gimmicks such as pension holidays and extended calendar years to make its numbers work. That’s what the two monopolies that run Chicago’s education – CPS with its schools and CTU with its teachers – have to do to stay in power and keep control over billions of dollars.
Sadly, Chicago families have no real way to hold these two bureaucracies accountable. They don’t control the money. Most can’t vote with their feet. They are simply trapped, and that’s not fair.
It’s time to break the monopoly power that CPS and CTU have over our children and their future.