CHICAGO — With Chicago Public Schools (CPS) facing a staggering $529 million budget deficit and no clear funding path ahead, a new report from the Civic Federation is calling on state leaders to consider reinstating financial oversight of the district — a controversial but potentially stabilizing move.
In a June report, the nonpartisan watchdog group floated the idea of reviving the Chicago School Finance Authority, which last operated in the 1980s and early ’90s, when CPS was on the brink of collapse. The new proposal comes amid concerns that the district’s structural deficit and leadership transition are creating long-term instability.
“The fragility of the District’s fiscal situation is susceptible to tipping quickly into crisis,” the Civic Federation warned.
What’s Driving CPS Toward Crisis?
According to the Civic Federation, the budget hole is the result of several compounding factors:
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Increased staffing despite declining student enrollment
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Underfunded pensions and mounting debt
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Too many school buildings operating below capacity
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A $324.5 million cost spike from the recently finalized CTU contract, including $251 million in salary increases
Additionally, CPS has now exhausted its $2.8 billion in federal COVID-19 relief funds, which previously helped mask the district’s deeper financial problems.
How Would State Oversight Work?
The proposed return of the School Finance Authority would bring state involvement in CPS finances — including powers to:
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Issue bonds on behalf of the district
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Levy property taxes to cover debt
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Force cost-cutting measures in operations and staffing
This model, last used in 1980, allowed CPS to secure low-interest loans and restructure operations when vendors stopped accepting school contracts due to unpaid bills.
The Federation emphasized that state lawmakers might be more inclined to provide extra funding if CPS were under more trusted financial oversight.
Tension Grows Ahead of Full Board Transition
The report also cautions that CPS is entering a delicate governance period. While the school board is currently a mix of elected and mayoral appointees, it will become fully elected by 2027 — adding new political dynamics.
Mayor Brandon Johnson and many board members oppose cuts, but outgoing CEO Pedro Martinez said the district cannot balance its budget without either:
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$300 million in new city or state funding (not currently guaranteed), or
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Major cuts to programs and staffing
Borrowing remains on the table, and interim CEO Macquline King has not ruled it out.
A Difficult Political Choice
The idea of state oversight is already controversial. It would shift power away from the city’s progressive mayor and elected board — a tough political sell. A bill introduced in Springfield earlier this year to create the new finance authority stalled in committee.
Still, the Civic Federation argues doing nothing isn’t an option.
“Imposing state oversight might be an appropriate response to what has been an extended run of fiscal mismanagement,” the report said.
Should the State Take Over CPS Finances?
Would a state-appointed financial authority help restore CPS’s stability — or undermine local control? Should suburban taxpayers support bailing out the district? Share your thoughts today at ChicagoSuburbanFamily.com and join the local conversation.
