As the school year winds down, Chicago Public Schools (CPS) CEO Pedro Martinez has issued a crucial message to families, staff, and supporters regarding the upcoming budget for the 2025-26 school year. Facing the expiration of federal pandemic aid, rising costs, and growing student needs, the district is grappling with a significant deficit, but Martinez is pointing to a controversial city funding mechanism – Tax Increment Financing (TIF) – as the solution to protect school budgets, particularly those serving Black students on the South and West sides.
In his letter, Martinez stressed three main takeaways: a commitment to keeping cuts away from classrooms by targeting central office and administrative costs, the possibility of balancing the budget without raising taxes or increasing debt, and the necessity of uniting stakeholders around a plan to use existing revenue, specifically TIF funds, to finance schools.
This budget season presents new challenges compared to previous years. The loss of federal COVID-19 relief funds, coupled with inflation and increased labor costs from recent agreements, creates a difficult financial landscape. Furthermore, CPS is seeing a rise in enrollment and is serving more students with disabilities, English Learners, and those experiencing homelessness – populations that often include a significant number of Black students requiring targeted support. These growing needs underscore the importance of initiatives like the district’s Black Student Success Plan, which aims to address historical inequities and improve outcomes for Black students through targeted programs and resources. However, the plan is currently facing a federal civil rights complaint, alleging that it discriminates against non-Black students, adding another layer of complexity to the district’s efforts to support all learners equitably.
Despite these hurdles, the CEO reiterated the district’s commitment to prioritizing investments in core instruction, support for vulnerable students, student-facing programming, and staff, while cutting non-personnel and vendor spending.
A significant point highlighted in the letter, and one particularly relevant to equity in Black communities, is the continuation of the new budget model implemented last year. Martinez noted that the old per-pupil funding system disadvantaged smaller and under-enrolled schools, “mostly on Chicago’s South and West sides,” contributing to disparities in student experiences. The new model aims to provide a baseline standard of staff and resources for every school, regardless of size or location, along with additional funding based on student need – a move intended to bring more equitable resources to historically underserved areas.
While preliminary school budgets are being released to principals this week, Martinez made it clear that the total amount of direct funding to schools has not been reduced despite the overall district deficit. He emphasized that cutting direct school funding would have the most severe impact on students and is considered a last resort.
To avoid such cuts, CPS plans to find efficiencies internally. However, unlike last year, these internal savings will not be enough to close the budget gap entirely. Martinez argues that additional revenue must be brought into the system to fully protect individual school budgets.
This is where the focus on TIF funds becomes central. Martinez explained that every year, $600 million in Chicagoans’ property taxes is diverted from CPS and other agencies into TIF accounts for economic development projects. He pointed out that over $3 billion currently sits in TIF accounts, replenished annually by property taxes that he believes “should be going to public education in the first place.”
Martinez criticized the TIF system, stating it “prioritizes developers instead of students.” He argued that a fully-funded education system is the true cornerstone of economic development, nurturing local talent and attracting families. While the city sometimes declares TIF surpluses, returning some funds to CPS (like the $299 million received last year), these decisions are inconsistent and unpredictable.
The CEO is calling for the Mayor, City Council, Board of Education, labor partners, philanthropic groups, community organizations, families, and staff to unite around a plan to use this existing TIF revenue to close the budget gap and provide sustainable funding for the district. He warned that without bringing this existing revenue into the system, the alternatives are “deep and painful cuts to school budgets which will shortchange our students today, or irresponsible borrowing which will shortchange them tomorrow.”
Martinez, whose tenure concludes in mid-June, expressed his deep investment as a CPS alumnus, parent, and leader in ensuring the district’s future success. His final public message on the budget strongly advocates for utilizing TIF funds if state funding doesn’t fully materialize, believing it is the best path to allow schools, staff, and students – particularly those in Black communities who have historically faced resource disparities – to continue building upon academic gains and moving towards a more joyful, rigorous, and equitable experience for every student. The district has encouraged families and staff to advocate for state funding and engage with the budget process moving forward.