Chicago Public Schools on Aug. 13 presented a proposed FY26 operating budget that protects school budgets, funds recent labor agreements and avoids furlough days, while asking the city and state for additional revenue to close a remaining deficit.

The district’s chief budget officer, Mike Zadkowski, told the board the FY26 proposal balances a $10.25 billion spending plan while protecting school-level allocations and negotiated wage and staffing commitments. “This budget fully protects school budgets. It avoids the risk of beginning-of-year or midyear cuts to schools,” Zadkowski said during the Agenda Review Committee meeting.

Why it matters: CPS faces a structural shortfall and expects continued advocacy at the city and state levels. The budget presentation framed several tradeoffs and one-time moves intended to avoid midyear disruption to classrooms, but also left significant fiscal risk should contingency revenues not materialize.

What the proposal includes
• A $10.25 billion FY26 budget that the district says protects school allocations and labor deals while avoiding furlough days and risky operating borrowing. Zadkowski said the budget assumes $4.0 billion in property tax revenue and other funds, and relies on a mix of one-time savings and new/accelerated revenue sources to close a roughly $734 million deficit identified earlier in the process.
• Steps the district plans to use to close the gap include $126 million in additional centrally managed reductions (away from schools), $149 million in additional available revenues (including $45 million of evidence‑based funding above earlier projections and an increased TIF assumption), $29 million in accelerated refunding savings, $90 million in one‑time funds (including $65 million from a debt‑service stabilization fund and $25 million in philanthropic dollars), and a proposed $175 million contingent reimbursement arrangement tied to the MEABF contribution.

Pension reimbursement debate
The budget document states that CPS’s reimbursement to the City of Chicago for the Municipal Employees’ Annuity and Benefit Fund (MEABF) will be contingent on “additional state revenue, additional TIF surplus revenue, or other local resources above budget assumptions.” District Treasurer Wally Sock and budget staff explained the contingency and told the board the FY26 proposal leaves open the possibility of making that payment if new revenue arrives.

Board members and public speakers pressed the administration on the political and practical risks of tying the MEABF reimbursement to future revenues, pointing to a letter from aldermen last year asking CPS to make a comparable payment. Board member Barbara Blaze warned the arrangement risks fraying relationships with the city: “If the city is willing to give us money, and they ask for something in return, and we say no … why should they care about ours?” she said.

Short-term borrowing and cash flow: TANs
Treasurer Wally Sock told the board CPS will need short-term tax‑anticipation notes (TANs) to manage cash flow into FY26 and asked the board to authorize issuance up to a $1.25 billion not-to-exceed amount as part of the regular budget and tax-levy cycle. Sock explained that delays in Cook County tax processing have reduced the district’s year‑end cash cushion and that the district used TANs frequently in recent years: “We ended with a negative net cash position,” he said, explaining the district’s liquidity position at fiscal-year end.

Sock and budget staff estimated the district’s short-term borrowing cost at roughly 4 percent on current market terms and noted an FY26 TAN program of this size would be used only as necessary to avoid payment interruptions for payroll and vendor obligations. The administration said it has budgeted about $23 million for TAN interest in FY26 but cautioned that delayed property tax receipts could raise that cost if the full amount is drawn for an extended period.

Process and next steps
Zadkowski said the proposed budget will be posted for public review and the district will hold two public budget hearings on Aug. 19; the full Board of Education is scheduled to consider the final FY26 budget on Aug. 28. The proposed property tax levy that accompanies the budget will likewise be filed with Cook and DuPage counties as required by law.

Discussion highlights and stakeholder pressure
Public testimony and union speakers were unified in urging the board to secure more revenue rather than cut school services. CTU vice president Jackson Potter praised recent investments negotiated with the district, but urged a broader fight over past debt and funding shortfalls: “We can’t balance the budget on their backs because there’s always been two sides, the privatizers and those who want to invest in our young people,” Potter said.

Multiple board members urged continued advocacy in Springfield during veto session and asked administration to keep pursuing every revenue option while minimizing school-level impact.

What was not decided
The board did not vote on the budget or on TANs during the agenda review meeting. The administration presented the draft FY26 budget and requested authorization to pursue TANs as part of the formal resolutions forthcoming at the Aug. 28 board meeting.

Ending note
CPS’s FY26 budget process will continue through two public hearings and a board vote later this month. The district’s stated priority is avoiding midyear cuts to schools; whether state or local contingency revenue arrives in time to keep that outcome unchanged remains the central question for the coming weeks.