A $734 million budget deficit has divided the Chicago Board of Education, with a majority aligned with Mayor Brandon Johnson pressing for a high-interest short-term loan and a $175 million municipal pension payment, despite warnings from the district’s own budget director that such borrowing could trigger another financial “downward spiral.”
Let us get this straight… @ChiPubSchool displaced 1,200 custodians to "save $40 million," and NOW, some CPS board members are proposing more than $90 million in interest payments to wealthy bond investors? pic.twitter.com/44gaX4YGD3
— SEIU Local 1 (@SEIULocal1) August 14, 2025
Interim CEO Macquline King unveiled her proposed 2025–26 budget on August 12, closing the shortfall without new borrowing and making the pension payment contingent on extra aid from the city or state.
But the following day, 11 of the board’s 21 members — nine appointed by Johnson and two elected with Chicago Teachers Union (CTU) endorsements — sent her a letter demanding both the pension payment and loan authority be written into the spending plan before it is finalized.
“Leaving [the loan] out at this stage would unnecessarily limit our flexibility,” the signees wrote, calling the provisions “critical” and warning it would be “difficult” to support the budget without them.
Budget Director Warns of “Downward Spiral”
CPS’s budget director told the board that short-term borrowing for operating expenses would risk another collapse in the district’s credit rating.
“Borrowing for operating expenses would send the district into a downward spiral of credit downgrades, higher interest rates and steeper cuts to staff, programs, and services in the future,” the director said.
“When the district engaged in this type of borrowing from 2016 to 2018, CPS received 34 credit downgrades, going from a double-A rated bond to junk. Today we are paying nearly $200 million per year for this crisis debt.
If we had access to this funding for our classrooms, we could hire at least 2,000 additional teachers.
A $200 million loan this year would cost $107 million to pay back — adding $307 million in debt service to future budgets.”
Meeting Disagreements
King’s proposal relies on $379 million in Tax Increment Financing (TIF) surplus funds from the City Council — a politically controlled process that board member Emma Lozano questioned openly.
“We are telling the city up front that we’re not going to pay this year, but we expect you to give us the money,” Lozano said during the August 13 meeting. “I think that we’re dreaming here.”
CTU-endorsed board member Ebony DeBerry said she did not want CPS to take on the loan, but signed the letter anyway “to make sure the district has options,” adding, “Signing a letter and voting are two different things.”
Union Feud Over Borrowing
The debate has fueled a growing rift between public-sector unions. SEIU Local 1, representing 1,200 custodians displaced earlier this year to “save $40 million,” criticized the loan push on social media, writing:
“Let us get this straight
@ChiPubSchool
displaced 1,200 custodians to ‘save $40 million,’ and NOW, some CPS board members are proposing more than $90 million in interest payments to wealthy bond investors?”
One CPS parent replied that the union should sue the board “for not performing their fiduciary duty… and their demand to borrow to make a payment that legally is the city’s burden.”
Activist Jimm Dispensa said the board members were “not proposing” the loan, but “demanding” it.
“CPS recklessly manages their finances and then cuts the lowest paid workers: janitors who keep the schools clean. Wild to hear some board members want to double down and guarantee future cuts.”
WTTW political reporter Paris Schutz described the dispute as “the feud between two public employee unions,” while another commenter, writing under the handle Creator’s Creation Care, questioned whether SEIU’s stance was about protecting jobs or “pushing congressional election messaging in CPS meetings.”
Junk Bond Status and Political Leverage
CPS is already the second-largest issuer of junk bonds in the United States, behind Puerto Rico, according to commentator Austin Berg, who noted that “a majority of elected school board members did not sign the letter” and praised King’s no-borrowing plan.
From the mayor’s office, senior adviser Jason Lee said the TIF number in King’s budget was “significant” and could be questioned, adding, “I just don’t think the math is gonna math out.” Still, Lee supported keeping a borrowing backstop, saying the board should “make sure that the budget has flexibility so that, if there are some issues with different revenue streams, there’s still a way the district can get money if they need it.”
Problems Identified
The board’s loan push raises several concerns. First is the high-interest debt trap: short-term borrowing would add hundreds of millions in debt service, repeating the 2016–2018 cycle of credit downgrades.
There’s also the issue of contradictory fiscal priorities, with $40 million in cuts to custodial jobs alongside the prospect of $90 million or more in interest payments to bondholders.
Another concern is political leverage over fiscal stability. The loan demand is tied to $379 million in TIF surplus — money controlled through a political process and far from guaranteed.
The fight has also exposed union infighting, as SEIU and CTU clash publicly over CPS budget direction.
Finally, junk bond exposure remains a pressing risk, with CPS’s already precarious credit rating leaving it vulnerable to further downgrades and higher borrowing costs.
The CTU and its crony board don’t care about the children when it comes to financial responsibility — they are thinking about themselves.
Teachers are expected to model prudence, guiding students in both education and financial responsibility.
Yet the ongoing tension between CTU-appointed board members and those focused on fiduciary oversight underscores a deeper struggle between fiscal stability and political influence — one that risks undermining educational quality for Black and Brown students.
These are not only current students, but future taxpayers who will inherit the consequences of today’s financial decisions.
In a district already burdened by debt, this conflict challenges the very ideal of prudent teaching.
Choices like the proposed high-interest loan threaten to deepen financial strain rather than strengthen classrooms.
Are CTU teachers preparing students for opportunity — or a lifetime in credit slavery?
References
SEIU Local 1 – “Let us get this straight @ChiPubSchool
displaced 1,200 custodians to save $40 million, and NOW, some CPS board members are proposing more than $90 million in interest payments to wealthy bond investors? (14 Aug 2025)
@SEIULocal1
CPS Parent – Reply to SEIU Local 1 Sue the board for not performing their fiduciary duty… and their demand to borrow to make a payment that legally is the city’s burden. Do it. Please (14 Aug 2025)
@ParentCps
Jimm Dispensa Not proposing. Demanding. (14 Aug 2025)
@JimmDispensa
Paris Schutz (WTTW) The feud between two public employee unions goes on
@SEIULocal1
slams CPS board members aligned with Mayor and CTU (14 Aug 2025)
@paschutz
@CTULocal1
Creator’s Creation Care – “If they took out those loans they could hire custodians back? Is SEIU trying to help their workers keep their jobs or pushing congressional election messaging in CPS meetings?” (14 Aug 2025)
https://x.com/Chicanoan606/status/1956165051112435742
Austin Berg – “The schools’ CEO presented a budget Wednesday that avoided any new borrowing. A majority of elected school board members did not sign the letter.” (14 Aug 2025)
@Austin__Berg
Let us get this straight…
@ChiPubSchool
displaced 1,200 custodians to save $40 million, and NOW, some CPS board members are proposing more than $90 million in interest payments to wealthy bond investors? 6:18 PM · Aug 14, 2025
@NotTheFakeDC
https://x.com/NotTheFakeDC/status/1956133369563242562
Sarah Karp (WBEZ) & Fran Spielman (Chicago Sun-Times) CPS board rebuffs budget plan from school district leaders (14 Aug 2025)
@SSKedreporter
@fspielman
CPS Budget Director – “Downward spiral” warning, Chicago Board of Education meeting transcript (14 Aug 2025)
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