CHICAGO -- Chicago public schools officials late Monday unveiled a tentative fiscal 1995 budget that includes a $120 million surplus, but said the extra money will not solve the school system's long-term funding problems.
Dawne Y. Simmons, spokeswoman for the Chicago Board of Education, said that about $70 million of the money stems from funds targeted for poor students that will be carried over from fiscal 1994. The money can be used by local schools only to improve schooling for children in poverty.
The remaining $50 million results from the early retirement of teachers, teacher vacancies, and delays in adopting a fiscal 1994 budget last fall. The board, which is expected to vote on the budget by the end of the month, will decide how that money will be used, Simmons said.
Board members discussed the surplus after superintendent Argie K. Johnson presented them with a tentative balanced $2.9 billion budget for fiscal 1995, which begins Sept. 1, Simmons said.
Despite the surplus, the proposed budget is balanced with $203 million of proceeds from a February bond issue that was designed to bail out the school system through fiscal 1995. In fiscal 1996, no bond proceeds will be available to balance the budget, which is projected at that time to have a $325 million deficit.
In a press release, Johnson stressed the need for a long-term funding solution.
"We need long-term funding solutions to secure our children's future. The funding must be reliable, predictable, equitable, stable, secure, and permanent," Johnson said.
Board officials have said that only the state legislature has the power to provide an increase in funding to assist the school system.
Johnson said that the $50 million of surplus money under board control is based on revenue projections through the end of fiscal 1996. The board's chief financial officer recommends that the board may not want to recognize any surplus until all projected revenues for fiscal 1996 are determined, she said.
If additional funds are available "as the resource picture becomes clearer," the money should be spent on a variety of needs, including upgrading the system's computer system, providing teacher stipends for instructional materials, and math and science materials, Johnson said.
However, board members ultimately will decide if the $50 million of surplus funds will be spent or saved to help fill the projected $325 million deficit in fiscal 1996, Simmons said.
The board is expected to vote on the budget on July 27 after public hearings, Simmons said. The Chicago School Finance Authority, the board's financial oversight panel, is required to approve the board's budget by Aug. 15.
Rating agency officials said that the board's $120 million surplus and balanced fiscal 1995 budget are not signs that the school system has solved its financial problems.
The board still must balance its long-term operating expenses and revenues either through an influx of new funds or by cutting its budget, said Todd Whitestone, a managing director at Standard & Poor's Corp.
Paul Devine, vice president and assistant director of the Great Lakes regional ratings group at Moody's Investors Service, said he could not comment specifically on the proposed budget because the rating agency has not yet received a copy from the board.
However, Devine said, the bond issue that bailed out the school system through fiscal 1995 "doesn't eliminate the budget deficit, but just delayed the need for its resolution."
The board's outstanding debt is rated Ba by Moody's and BBB-minus by Standard & Poor's.
