CPS sees another $45M hit to budget after agreeing to pay state back $87.5M over 8 years due to funding mistake

Chicago Public Schools has agreed to pay the state $10.9 million annually for the next eight years to return $87.5 million that had accidentally been funded to the district — and the district expects to lose another $45 million in funding this year because of the error.

The payment plan comes after months of discussions between CPS officials and the Illinois State Board of Education, which asked the district to repay the money in April when it discovered the mistake.

A contractor working with the state during former Gov. Bruce Rauner’s administration made a coding error that overstated the enrollment of students at state-authorized charter schools in districts with more than one such school, officials said in the spring. CPS is the only district with more than one state-authorized charter school, so it was the only system to get money it shouldn’t have.

The mistake led CPS to receive $87.5 million from the 2018-19 school year through this past year that should have gone to other districts. ISBE said the money represents 0.3% of the total state funding — more than $28 billion — that has been distributed in that time.

The money CPS repays will be distributed to a total of 762 of the state’s 922 school systems that are owed at least $10 — including 14 owed between $1 million and $5 million, 15 between $500,000 and $1 million and another 168 owed in the six-figures.

CPS spokeswoman Mary Fergus said the eight-year payment plan “would provide the least amount of impact to our students.” But “the larger concern to CPS is the reality” that the state’s correction to its funding formula also means CPS is set to lose an additional $45 million in state funding this year from its previous projections.

CPS didn’t say how the new projection will impact schools

The state introduced Evidence-Based Funding in August 2017, implementing a formula that calculates districts’ allocations based on their students’ needs, aiming to equitably distribute more resources to under-resourced school systems.

But based on the state’s own calculations, CPS is funded at only 68% adequacy. That means the district needs almost $1.8 billion more per year than it currently receives from the state to adequately serve its students at all schools.

Given that shortage, some Chicago Board of Education members have shown frustration with the requested repayment. CPS is asking the school board to approve the payment plan at its monthly meeting Wednesday.

ISBE spokeswoman Jackie Matthews said the “repayment amount each year represents one tenth of one percent of CPS’ total operating budget” and thus should have minimal impact on classrooms, while “the agreement ensures that the Evidence-Based Funding formula is implemented with fidelity.”