CHICAGO (AP) -- The Chicago Public Schools revealed a $5.6 billion budget on Wednesday, the same day a bond rating service downgraded the district's general obligation debt because of its huge pension obligation.
The school district's budget, up from $5.1 billion last year, includes an increase of $405 million in pension payments the district must make because pension reform failed in the Illinois Legislature. Moody noted the district tapped its reserves for $700 million to deal with a $1 billion budget deficit.
The school district is raising its property tax rate to the most allowed under law in an effort to balance the budget.
Moody's says the downgrade to A3 from A2 reflects significant debt and pension obligations of overlapping governmental entities on the district's tax base. The negative outlook applies to $6.3 billion of the school district's general obligation debt.
Last week, Moody's downgraded the city's debt rating, pointing to Chicago's $19 billion unfunded pension liability. Illinois has a $97 billion pension shortfall.
Earlier this month, the district dismissed about 2,100 teachers and support staff. That is in addition to the approximately 850 teachers and support staff laid off in June, which the district attributed to its planned closures of about 50 schools that it considered underutilized.
"We clearly don't have a sustainable budget," CPS Chief Administrative Officer Tim Cawley said. He noted the district is spending $1,000 per pupil just to cover the increased pension obligations. Officials say they expect 405,000 students to enroll in the coming school year.
"Imagine what schools could do with an extra $1,000 per pupil," Cawley said.
As the school district introduced its budget, protesters from the Chicago Teacher's Union were expressing outrage over budget cuts.
CTU staff coordinator Jackson Potter slammed the district for making cuts the union claims will devastate schools. The budget introduced Wednesday included an additional $68 million cut in what will be spent in the classroom.
"We're seeing the elimination of art, music, world language programs across the district; physical education being eliminated; ballooning class sizes are a very high likelihood in the fall," Potter said. "You don't have time to even plan a lesson; and you have 50 students in a classroom; and you don't have art, or music, and physical education."
Schools CEO Barbara Byrd-Bennett said Wednesday she has struggled with "the level of frustration, sometimes the level of anger that our principals and our parents and clearly our teachers are feeling over the difficult decisions that have to be made. She suggested that parents and teachers join her in lobbying Springfield for structural pension reform.
"There has to be a different look, a different structure for pensions," she said.