FISCAL YEAR 2014 BUDGET PROPOSAL Chicago Public Schools (CPS) faces a historic $1 billion deficit driven primarily

by a $405 million increase in the Districts annual teacher pension contribution. Without legislation action in Springfield to provide relief from the pension cliff, there is no way to absorb this deficit without some pain. This draft budget cuts non-essential spending, including $112 million in central office-directed spending. Since 2011, CPS has reduced spending in this area by $700 million. The District will also rely on reserves to close the budget gap. But even with that, it is impossible to balance the budget without a cut to schools. Any cut to schools is painful and we have done what we can to minimize it, but there were no other options. At the same time, this budget plan continues to invest in programs and initiatives that reflects priorities outlined in CEO Barbara Byrd-Bennetts five-year strategic plan, such as support for IB and STEM programs, establishing Full Day Kindergarten for all students, and increasing supports to reduce truancy and dropout prevention. BUDGET FACTS Expenses FY14: $5.58 billion FY13: $5.13 billion Revenue FY14: $4.856 billion FY13: $4.949 billion Deficit FY14: $977 million (driven primarily by $405M pension payment increase) HOW WE CLOSED $1 BILLION GAP Use of one-time reserves ($697M) Reductions to central office, operations, administration ($112M) Increased property taxes to the cap ($89M) Overall reduction of 3.5% to core instruction ($68M) Better than expected budget performance in FY13 ($12M) NEW INVESTMENTS IN SCHOOLS Full Day Kindergarten for all students ($15M) Expansion of Safe Passage ($9M) IB/STEM ($7M) Five new Parent Resource Centers ($700K) Expansion of Early Childhood ($2M) TIF INVESTMENT FACTS Reduced pensions payments are not the primary cause of the underfunding of the CTPF. The systems funded status has decreased by $8 billion over 11 years due to the following (this is based on an independent analysis conducted by Aon of CTPF actuarial reports): 53%: Due to lower asset returns than expected (ie, investments made with pension system dollars) 34%: Due to the combination of employee and employer contributions less than the normal growth in the unfunded status (normal cost and interest cost offset by expected returns on assets) 12%: Due to net experience and assumption changes (changes like increases in life expectancy) 1%: Due to benefit increases

CENTRAL OFFICE, ADMINISTRATIVE AND OPERATIONS SAVINGS SINCE 2011 Fiscal Year 2011 -- $75 million Debt obligations: $44 million (Scale back planned FY12 bond issuances for capital projects, lowering debt service costs) Administration: $17.2 million (Close vacant central office positions and those that will become vacant due to retirements and resignations, limited layoffs, reduce central office contractual service and delay office equipment upgrades, $16 million; refrain from upgrading computers and software used by central office support staff, $1.2 million) Operations: $14.1 million (Reduce unutilized space in under-enrolled schools to decrease need for private custodial services, $7.3 million; partner with ComEd to turn off all non-emergency lights during certain summer periods when school is not in session, re-bid waste management contract, cut overtime for central office cleaning staff, $1.1 million; downsize and increase efficiency of school bus fleet while serving same number of students, $5 million; cease funding a 12-person engineering apprenticeship program for high school graduates, $500,000; reduce size of supplementary custodial staff used to augment school custodial staff, $200,000) Fiscal Year 2012 -- $321 million Reorganization of Central Office and Area Offices: $107 million (Rationalization of spending in Central Office administrative support areas, $10m; eliminate duplicate and unnecessary functions in central instructional departments, $50m; reduction in ARRA and board-funded discretionary resources at the network offices, $32m; elimination of centrally funded, school-based performance management programs, $15m) Operations efficiency: $27 million (Restructure bus routes, $5m; reduce privatized custodians in underutilized schools, $9m; reduce CPD expense, $13m) Program reductions: $86.7 million (Reduce various city-wide programs, funding for supplemental test development, supplemental turnaround positions, supplemental positions and non-personnel funds for non-Title I eligible schools, etc.) Forgo 4 percent COLA increase: $100 million Fiscal Year 2013 -- $177 million Operations: $116 million (Facilities $36m; procurement, $30m; IT streamlining, $11m; improve food service revenue and expenses, $11m; reduce non-personnel costs, $8.4m; transportation (bus route pairing, smaller buses), $12.3m; other operations savings such as streamlining in Talent, Finance and Security, $7.5m) Programs: $49 million (Eliminate outdated or less effective programs, $20.6m; central education office reductions, $10m; Culture of Calm efficiencies, $7.7m; restructure staffing for centrally budgeted programs, $6.3m; other $4.4m) Administration: $12 million (Delay or cancel filling vacant, non-teaching positions, trim other budget items)
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Fiscal Year 2014 -- $112 million Operations: $60 million (Food service, $21m; facilities management efficiencies, $32m; transportation efficiencies, $6.5m) Administration: $34 million (Finance/IT reductions, $5m; diverse learners central office, $7.5m; reduction in number of networks and support staff, $1.6m; central office streamlining/efficiencies, $19.4m) Programs: $18 million (Final year of two-year Supplemental Magnet Cluster position rationalization ($8.6M); reduction of central office funded magnet positions for schools with large Student Based Budget increases, $700K; shift cost of school-based athletic directors from central office to schools, $1.3M; other miscellaneous: $8.4M)