Dive Brief:

• In a report obtained by the Chicago Sun Times, consultants told Chicago Public Schools that the district could run out of cash by this summer and needs to take drastic action, including the implementation of tax increases and budget cuts.
• The accounting firm Ernst and Young said that one of the recommended tax hikes would just go to paying off old projects and school construction. All together, the increases would cost the owner of a $250,000 home $450 a year.
• As a short term fix, the district is considering borrowing $200 million to get through the end of the month and nearly a billion dollars to get to next summer.

Dive Insight:

Chicago’s school budgeting has been a particular sore point for Mayor Rahm Emanuel's administration. Illinois Gov. Bruce Rauner has recommended filing for bankruptcy, while Emanuel has placed the blame at the feet of his predecessor. The city’s teacher union, meanwhile, has accused the district of “going broke on purpose.” The district’s teacher pension fund is in disarray and the controversy has launched at least one investigation. As one source told the Chicago Sun Times, “there are very few good options at this stage.”

Still, while Chicago’s situation may be extreme, it’s not alone in facing budget woes. Philadelphia has found itself in a similar situation, New York City Mayor Bill DiBlasio has drawn ire for some of his budgeting choices, and many other urban districts face contentious budget battles as constituents with divergent interests make themselves heard. District leaders in other cities would do well to keep an eye on Chicago in order to learn from the city’s turmoil and avoid similar upheavals on their own turf.