The year-long debate over who will pay for the pensions of non-teaching Chicago Public Schools employees ended after a tense, hours-long meeting where the Chicago Board of Education voted to agree to finance $175 million toward the payments.
In a unanimous vote, the board approved an intergovernmental agreement with the city in which it promises to pay an amount not to exceed $175 million for fiscal year 2026, effective Thursday until Dec. 31, 2026.
The decision comes after months of pressure on CPS to assume the payment from Mayor Brandon Johnson and some city council members. In August, the school board said it would only make the payment if it received additional funding from a tax increment financing surplus, beyond the $379 million it was already banking on in its $10.2 billion budget.
The board also voted to punt the decision of whether to close South Shore charter school EPIC Academy to its next special meeting on Nov. 4. EPIC’s board voted in September to shut down the school at the end of the academic year. The vote prompted a heated interchange between members as they debated the logistics of winding down the school’s operations and the students’ futures.
Pension payment
The additional funds from TIF districts – taxing areas around the city – and are intended for local development projects. When the TIFs expire or are declared to have surplus, meaning there are excess funds that are not obligated to specific projects, the money is disbursed across local government bodies. CPS receives a roughly 52% cut, while the city receives 23%.
The district’s approved budget stipulated that it would pay for the pensions, “contingent on additional revenue,” which must exceed the $379 million CPS counted on a TIF surplus.
However, those funds will not be secured until the city budget is passed, and the payment is expected to be made by CPS in two installments once the funding is received.
Multiple board members expressed concerns with the agreement but acknowledged that signing it indicates the district’s commitment to follow through on its August promise to pay the pensions if it received more funding.
Despite this year’s surplus, the question remains how the district and City Hall come to terms with a sustainable plan to fund Chicago Public Schools. “We need to have a longer conversation…among all of us on the board and also with the city to see what the long-term plan is regarding the reimbursement moving forward after this year,” board member Yesenia Lopez, District 7B said during the meeting.
Mayor Brandon Johnson’s budget proposal recommended a record TIF surplus of over $1 billion this year in its proposed city budget, with an estimated $552 million of that going to CPS, plus another $20.6 million set aside for its building improvement fund. Johnson’s budget must be approved by City Council by Dec. 31.
The CPS’s cut of the TIF surplus is expected to cover that $379 million gap in the district’s budget, $8 million in recently cut federal funding and at least part of the $175 million pension payment. Yet the expected $552 million TIF windfall leaves CPS $10 million short of covering its obligations.
It’s unclear who is left holding the bag because the pension payment is contingent upon the district using additional TIF dollars beyond the $379 million to cover the budget shortfall.
“If CPS doesn’t make the payment, or it doesn’t make the full payment, the city is left with whatever portion is remaining as gap for this fiscal year … and it will have to find some other way to fill that,” Civic Federation Policy & Research Associate Danny Vesecky told the Tribune.
The pension payment has been a point of contention for over a year, and played a part in the firing without cause of former district CEO Pedro Martinez. The city is legally responsible for the pensions, but in recent years has pushed for CPS to take over the payments.
In August, the majority of aldermen signed a letter committing to a substantial surplus to help CPS. But after the record-breaking sweep was proposed last week, both allies and opponents of Johnson have pushed back.
The money is intended to spur redevelopment across the city, and would affect 68 of the city’s 108 TIF districts, according to estimates from aldermen. Some expressed concerns that it will delay much-needed improvements in those neighborhoods, particularly on the South and West sides.
“Generally, TIF as a revenue source isn’t intended to be used for general operating purposes,” said Annie McGowan, a research and policy director at the Civic Federation.
Elected officials have increasingly relied on TIF money to solve Chicago’s budget woes — but it’s considered a temporary solution to structural deficits because it relies on one-time funds. In 2014, the city declared a TIF surplus of just $65 million. By 2025, the total surplus amount topped $570 million. CPS received $379 million, which accounted for 4% of its budget.
Uncertainty around EPIC lingers
Tension was also heightened around the future of EPIC Academy, which the board was slated to vote on Thursday but later tabled the decision. EPIC stakeholders have expressed concerns with their own future, including where staff and students will end up after the school closes in 2026.
The vote initially was to enact the closure of the school and provide it $1.4 million to help it wind down operations, but concerns grew after board member Aaron “Jitu” Brown, district 5A, motioned to amend the agenda item’s language. The amendment included plans to keep the school community together and create a wind-down plan alongside that community, among other points.
Multiple board members expressed frustration with being “surprised” by the amendment, which ultimately failed to be adopted.
“This feels like a gotcha. It feels like another us versus them. We’re not unifying as a whole board,” said Ellen Rosenfeld, District 4B. “…Why not share it early? I don’t understand.”
While acknowledging that to some board members the move felt last minute, member Michilla Blaise. District 5B added the nature of the situation speaks to the rapid uncertainty plaguing charter schools.
“As these charter schools seem to be closing, we just have to be ready, and we have to make sure that we’re doing our due diligence, that we’re keeping community informed, that we are talking with our labor partners…and we might have to do it a little more quickly than we have in the past,” Blaise said.
Chicago Tribune’s A.D. Quig contributed.