Chicago Teachers Union contract will create nearly $1B fiscal cliff for schools
Chicago Public Schools was already projecting annual budget deficits in excess of $500 million in coming years. The new Chicago Teachers Union contract costs will grow the deficit to nearly $1 billion
The new Chicago Teachers Union contract is expected to create a nearly $1 billion fiscal cliff in upcoming Chicago Public Schools budgets.
The contract – expected to add $1.5 billion in new costs – will create a new deficit in the current budget with only months to go in the 2025 fiscal year. It will leave future deficits ranging from an estimated $834 million to $983 million during the course of the contract.
The Chicago Public Schools board voted 19-0, with a former union leader abstaining, on April 24 to approve a new Chicago Teachers Union contract, estimated to add $1.5 billion to district expenses over four years. The previous CTU contract added $1.5 billion in expenses over five years from the 2019-2020 to 2023-2024 school years.
Chicago Public Schools passed its 2025 budget last fall, while CTU contract negotiations were ongoing. During that process, CPS was left to grapple with closing a $505-million budget deficit, which it did through a variety of cuts to department budgets, use of federal grant money, a central office hiring freeze and other cost-saving measures. Despite the temporary closure of the 2025 budget deficit, CPS projected the deficit to reappear in future years, even before factoring in a new CTU contract.
The addition of another $1.5 billion in expenses related to the approved CTU contract will exacerbate these deficits, including for the current fiscal year. This year will now have a new budget deficit to grapple with, as some items such as teacher pay raises will be retroactive to the start of the 2024-2025 school year.
While detailed estimates of the exact costs of the various provisions within the CTU contract have not been made available by the union or Chicago Public Schools, details from earlier stages of the negotiating process and additional details from the new agreement provide insights on exactly how the $1.5 billion in expenses may be distributed.
Most of the costs will come from pay raises awarded in the new contract, including a minimum 4% annual cost-of-living adjustment – which could be as high as 5% – and new “step increases,” or annual pay bumps based on seniority that are awarded in addition to annual increases in base salary because of experience. The new contract will bump the average teacher’s pay from $86,000 a year to over $114,000 by the end of the contract’s term.
In total, pay raises for current teachers are expected to cost the district an additional $1.17 billion, though this figure could range from $1.1 to $1.25 billion during the next four years, depending on inflation.
The next-largest item in the contract are provisions to limit or reduce class sizes. The agreement reduces size caps for kindergarten and middle school and automatically adds teaching assistants to classrooms with students in excess of the cap. CTU estimates an additional 400 teaching assistants will be hired under the contract. These measures are estimated to cost the district an additional $248 million by 2028.
New staffing requirements in the contract will also add new costs. The agreement adds 24 centralized fine arts positions, 68 technology coordinators, 124 case managers, 90 new librarians, plus guarantees social workers and nurses are present in every school. Previous CPS estimates suggested additional staffing demands from their contract proposal would add $24 million in additional costs by 2028.
An additional 50 “sustainable community schools” will be created, costing the district an estimated $24 million. CPS already has 20 of these schools, and student performance at these schools lags on virtually every measure. Students at sustainable community schools on average have the lowest reading and math proficiency, highest absenteeism, highest high school dropout rate, lowest graduation rate and lowest postsecondary enrollment rate compared to the average of students at selective enrollment schools and other traditional public schools. And 90% of sustainable community schools are currently under-enrolled. Yet the district is paying more per student at these failing schools.
Lastly, the contract will expand extracurricular spending on sports and clubs across the district. The contract will commit additional funds for uniforms, transportation to events, supplies and stipends for coaches. These costs are expected to add an additional $30 million in expenses through 2028.
The massive costs incurred from the new contract raise questions about how the district will be able to pay these new expenses. Unlike CTU’s last contract, CPS finances will not be buoyed by large influxes of federal aid. The previous CTU contract ran from fiscal year 2020-2024 and cost the district an additional $1.5 billion. Fortunately for the district, CPS received $2.6 billion in federal aid through the Elementary and Secondary School Emergency Relief Fund that it was able to use to pay for many of these costs.
The originally passed 2025 district budget spent the final $233 million in federal aid related to the COVID-19 pandemic, exhausting the last the extra federal funds. That leaves Chicago taxpayers fully on the hook for the new costs of the latest CTU contract.
What this really means is higher property taxes for Chicagoans. Property taxes represent the single-largest source of revenue for CPS, and the revenue source over which the district has the most control. CPS’s 2025 property tax collections are estimated to top $4 billion for the first time in history, up more than $1 billion – or 34% – from the amount collected in 2019, before the last CTU contract.
Without the flexibility to use pandemic-related funds to cover district expenses and facing large upcoming budget deficits, it is likely CPS may raise its property tax levy to cover the $1.5 billion in new costs associated with the CTU contract.