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CPS Claim Of Central Office Cuts Defies Earthbound Mathematics, Physics

"In every statement on the budget this year, CPS has stated that it 'has cut Central Office spending by nearly $600 million since 2011,' adding that the reductions helped keep budget problems away from schools," Sarah Karp reports for Catalyst. "It is a phenomenal claim."

Indeed. There was just $600 million worth of unnecessary spending laying around? Even for a City of Chicago agency, that seems implausible - especially given that every administration claims round after round of Central Office cuts to show that A) they are financially responsible stewards, unlike the previous administration, which also claimed cuts to set it apart from the previous reckless administration, which also claimed cuts to set it apart from the previous administration, and so on and so on until you tumble into a time/space vortex taking us back to the reckless Central Office of God; and B) to show that management is doing its part - unlike, oh, let's say teachers.

Or, as Karp writes: "For one, hundreds of millions in cuts have already been made, year after year, by one administration after another."

I hope someone who isn't me goes back and adds up all the claimed cuts, because I'm certain it won't take long until we're dealing with negative numbers. In other words, all the claims of Central Office cuts over the years probably trump the entire CPS budget pretty quickly.

But this is CPS make-believe land, which is a quasi-quantum place where the rules of earthbound mathematics do not apply.

"[T]he entire central office budget for the current 2012-2013 fiscal year is just $233 million, up from about $200 million in 2010," Karp reports.

How do you cut $600 million from $200 million? Just make the claim 400 million times!

But it turns out Central Office spending is actually up $33 million since 2010.

Now, CPS claims it has cut $600 million from the Central Office since 2011, so maybe in between 2010 and 2011 the budget went up by $633 million. That's the only way CPS's claim can be true.

But the story gets even more extraordinary.

"The biggest addition since that time was the Office of Portfolio, created in 2011 to authorize and manage new schools.

"The portfolio office went from an initial budget of $5 million to $88 million in 2013, and has now been incorporated into a new Office of Innovation."

How is an increase in Central Office spending a cut in Central Office spending? By redefining the terms!

"Asked about the $600 million in savings, CPS spokespeople said they referred to central office in the broadest sense and that it includes debt service, operations, citywide units of personnel who work in more than one school, and programs," Karp reports.

So when they said Central Office, they didn't mean Central Office. They meant "Central Office."

*

"In their most recent statement on the budget, CPS revised the wording to say 'central office directed spending.' They also say the total was rounded up and that actual savings were about $573 million."

The generally agreed-upon rules of rounding would dictate that 573 be rounded down up to 570 575 instead of up to 600, but here's the important part:

"Even so, the figure is hard to substantiate."

You mean CPS can't just give us a list with each cut?

No.

Well, they had to add up the numbers somehow!

Yes.

Well, let's see the list they used to add up the numbers to 573.

They don't have one.

*

"Direct spending in schools - including teacher and principal salaries, supplies and the like - accounts for nearly 70 percent of the CPS budget and has increased by about 4 percent since 2010. Meanwhile, CPS' overall budget has gone down by about 2 percent.

"To reduce non-school spending by $573 million would require cuts of 40 percent in non-school-related spending.

"A Catalyst Chicago analysis of the CPS budget shows that virtually every area that is not considered a direct school expense has posted an increase in spending."

So not only has there not been $573 million in cuts, but there has actually been an increase in spending by the (redefined) Central Office.

"It just makes me laugh," says Wendy Katten, who runs the parent advocacy group Raise Your Hand.

Through her tears, I'm sure.

*

By the way, I'll take Katten any day of the week and twice on Sunday in any dispute in which Becky Carroll unironically calls her a liar.

*

Back to Karp's report:

"CPS spokeswoman Becky Carroll admits it would be impossible to find evidence of the reductions in the official budget book. 'It is not the way it works,' she says."

Oh. Well, how does it work?

We just make the numbers up.

Oh.

I mean . . .

"Along with cuts, there has also been increased spending on other things, she says. Some of those things are contractual obligations, such as salaries, health care and pensions."

Okay. And?

"In other cases, the district saved money in one area, but paid more for something else - and therefore, Carroll says, the reduction is not reflected in a line item."

Okay. And?

"For example, Carroll says CPS saved $5 million when district officials renegotiated the milk contract. But because other food expenses went up, it doesn't look like a net savings."

Um, okay.

"Still, she insists that if the milk contract weren't renegotiated, the district would be in the hole for $5 million more."

First, you can renegotiate a milk contract but not a parking meter lease?

Second, all you did was squeeze a vendor who already has a sweetheart deal. That's not cutting $5 million from the Central Office, no matter how you define it.

"'It is $600 million less than would have shown up on our balance sheet had we not done what we did,' Carroll says."

I don't know how $5 million in milk contract savings turned into $600 million, but I thought the "cuts" wouldn't show up on a balance sheet because that wasn't how it worked. Except, apparently, when it is.

*

Finally, Karp notes:

"CPS officials have said they believe they will be able to balance the budget by draining one-time reserves, which were created by Cook County doling out property tax revenue earlier than expected (though it seems like this move would help with cash-flow rather than create reserves)."

Right. This just means they got the money sooner - not that they got more money. In other words, they didn't drain one-time reserves, they just sped up the billing the cycle.

*

Every administration tries to find "cuts" and efficiencies. It's part of the job. Nonetheless, the facts seem to show that Central Office spending has actually increased during Rahm's tenure as mayor/police chief/schools superintendent (he's saving us money by doing all three jobs for the salary of just one.) By Carroll's logic, you could say the budget would have increased even more if the administration hadn't done things like renegotiate the milk contract, but that still doesn't make CPS's claims add up - unless you not only redefine "Central Office" but "savings," "cuts" and "expenditures."

-

Comments welcome.

-

1. From Eric Skalinder:

Thanks for your wonderful article. It was both amusing and disgusting. You said this, "I hope someone who isn't me goes back and adds up all the claimed cuts, because I'm certain it won't take long until we're dealing with negative numbers."

So, I did a little digging.

Since 2008, CPS has claimed $1.3 BILLION in central office budget cuts. That's based on an annual budget of somewhere between $5 billion and $6 billion.

To think of it another way, CPS has lowered total budget expenses at least 22% by making cuts to central office. Central office accounts for only about 5% of the overall CPS budget.

Or, think of it like this: in the last six years CPS has completely eliminated central office 5 times over.

Still, according to CPS, "The General Operating Fund ended FY2012 with a surplus of $328 million, which compared favorably with the budgeted deficit of $241 million." Amazing!

The rough numbers I came up with are based on a quick and dirty review of CPS budgets, press releases, and mainstream news media reports.

FY2013: $600M
FY2012: $107M
FY2011: $161M
FY2010: $100M
FY2009: $90M
FY2008: $114M

It was only six years ago the Board of Education said this in the FY2007 final budget report: "CPS ended last fiscal year in strong financial condition, with revenues moderately higher and expenditures less than budgeted."

Oh, wait. That's not old news. CPS finished the most recent school year with a surplus of $344 million. And then closed 50 schools and laid off thousands of teachers because they couldn't afford them.

Here are the supporting links, except for 2013 which is all over the current news media.

2012-2013
2011-2012
2010-2011
2009-2010
2008-2009
2007-2008

Thanks again for the great article.

In a subsequent e-mail thread, Eric added:

Obviously, the $600M this year is an outlier and a result of redefining what they mean by "central office" like you mention in your article.

Even if you eliminate current projections and view CPS claims of budget cuts over the last 5 years in the most generous and forgiving light, the Board still claims to have reduced the full CPS budget by 10% since 2008 by making cuts in the 5% portion of that budget that is set aside for central office. Eliminating the entirety of the central office twice in the last five years is quite a claim. And yet the major media outlets still parrot fictional CPS press releases as if they are meaningful. I'm not sure which bothers me more.

2. From Carmin Ballou:

I don't suppose Rahm would allow the IG to see if these claims are substantiated either?



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Posted on July 11, 2013


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