CPS faces $734 million FY2026 shortfall; staff to host public learning and community feedback sessions

Chicago Public Schools staff told the Board of Education's Agenda Review Committee on July 9 that the district faces a $734 million budget gap for fiscal year 2026 under a conservative scenario that counts known revenues and potential expenses. Interim CEO Dr. King Macklin King and Chief Budget Officer Mike Syskowski said the projection includes a possible $175 million reimbursement to the city for municipal employee pension obligations (MEBF) and does not assume any unconfirmed new revenue.

The board was given a breakdown of the major cost drivers: substantial growth in required services for students with disabilities (staffing increases since 2019 that the district estimates have raised annual costs by roughly $450 million), rising maintenance and repair costs for aging buildings (an 85-year average building age and an estimated $14 billion backlog that has increased annual operating costs by more than $100 million), and historic pension obligations for support staff and teachers that have added further pressure to operating budgets. Staff said CPS carries over $9 billion in long-term debt requiring about $800 million in annual debt service and uses short-term tax anticipation notes to manage cash flow; the district ended FY2025 with negative 18 days of cash on hand.

Staff reported $165 million in deficit-reducing actions already identified (departmental reductions, vendor savings, programmatic cuts and grant reallocations) but said an additional $569 million in strategies must be identified before August budget approval. Staff emphasized that permanent structural solutions (new recurring revenues or ongoing expense reductions) would improve future-year forecasts, while one-time measures would not resolve persistent deficits in FY2027 and beyond.

To engage the public, CPS will host two public learning sessions (expert panels to explain how CPS arrived at its fiscal condition and to discuss potential paths forward) and five community feedback sessions July 14'21 (four in-person at schools across the city and one virtual session). Staff said the sessions will include a brief presentation followed by facilitated small-group discussions; CPS will synthesize feedback and present results to the board. Slides and materials will be posted on the CPS budget webpage and the sessions will be broadcast and recorded.

Board members asked for clarity on assumptions (including the pension reimbursement), the timeline for potential state and federal funding changes, outreach strategies to ensure broad participation, and options that minimize harm to students and staff. Mike Syskowski and budget staff said they were exploring all revenue and expense levers, working with the city and philanthropic partners, and would return to the July 24 meeting with updates; the proposed FY2026 budget will be published by August 13 for board consideration at the August 28 meeting.

Public speakers during the meeting'including Chicago Teachers Union Vice President Jackson Potter and community advocates from Kids First Chicago and others'warned the board against taking on high-interest loans to cover city pension demands and urged prioritizing classroom programs and staff. Several speakers framed the shortfall as a statewide and municipal policy problem that requires coordinated revenue solutions, not short-term borrowing that would add interest costs.

What happens next: CPS will collect and analyze community feedback from the July sessions and present updated budget options at the July 24 meeting and meet statutory deadlines to publish a proposed budget in August.