CHICAGO - The Chicago Board of Education approved late Saturday night a $2.67 billion fiscal 1993 budget, tenuously balanced with $120 million of union concessions and and early state aid payment that both face substantial opposition.

A shortfall of $155.9 million for the fiscal year that begins Sept. 1 had thrown plans for a balanced budget off course.

The budget has been submitted to the Chicago School Finance Authority, the schools' financial oversight panel, which must approve it by the fiscal year's start for the Chicago public schools to open on time Sept. 8.

If the authority does not approve the budget, the school system will go into receivership and the authority will take control, said Martin Koldyke, chairman of the school finance authority.

The board's plan is dependent partly on the receipt this month of a $43.7 million state aid payment due to the schools in September. Gov. Jim Edgar of Illinois has put the schools on notice, however, that he will not support accelerating the payment.

Though the governor has the option to accelerate state aid under current law, he vetoed a bill on Friday that would make the practice permanent.

"To put is bluntly, I refuse to promise more than the state can - or even should - deliver, especially when we are eliminating or curtailing services and laying off state employees by the hundreds," Gov. Edgar said in his veto message.

"A promise of accelerated state assistance at this time," he added, "certainly will not encourage the school system to become more fiscally responsible."

Promised Pay Raises Cut

The board also approved a reduction in teacher pay raises to 2.6% from 7% to save the school system $44.3 million, despite the board's agreeing to the wage increase just last year in return for wage concessions from teachers for fiscal 1992.

Jackie Gallagher, spokeswoman for the teachers' union that represents 30,000 Chicago teachers, said a contingency clause enabling the school system to renegotiate teachers' contracts was eliminated during last year's contract negotiations.

She also said the union may take legal action against the school system instead of calling for a strike to challenge the school board's call for contract renegotiations. Ms. Gallagher added that union officers were expected to discuss the issue late yesterday.

A strike by teachers was averted last November after Major Richard Daley of Chicago intervened. At that time, teachers agreed to accept a 3% raise in exchange for the school board guaranteeing their 7% raise this year.

The board's budget also calls for $32.7 million of other concessions from teachers, principals, and other unions in the budget. It further proposes to eliminate $15.8 million in special programs and $17 million in administrative costs.

Concerns Weigh Budget Down

The cutbacks in administrative costs are subject to contractual and legal obligations before the budget is approved because they include eliminating 280 office positions and moving 300 "categorically funded" positions to the schools from the central office, according to a school board press release.

In the press release, Board President Florence Cox cautioned, "After three years of continually reducing services at the central office and throughout the system, further budget-balancing initiatives only curtail the board's ability to meet every student's needs."

In June, Schools Superintendent Ted Kimbrough's call for an increase in property taxes to reduce the deficit was rejected by Major Daley and Gov. Edgar.

The school board has $48.4 million of outstanding general obligation debt, rated BBB with a negative outlook by Standard & Poor's Corp. and Baa by Moody's Investors Service.

The school board is also obligated to make lease payments on $427.5 million of outstanding revenue bonds issued on its behalf by the Chicago Public Building Commission, which began a five-year building program last year.

Paul Devine, vice president and manager of the Gresat Lakes region at Moody's Investors Service, said the "types of measures the board needs to attain short-term budget balance are worrisome from a long-term credit perspective.

Officials from Standard & Poor's Corp. did not return phone calls for comment.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.