Chicago's tax-increment financing (TIF) surplus reached a record $1 billion in 2025, and that money is central to Chicago Public Schools' 2026-27 budget negotiations. [S1] TIF districts are special taxing zones that pool increases in property tax revenue within a designated area; when city leaders declare a surplus, that pooled money is returned proportionally to taxing districts, with roughly half going to CPS and a quarter to the city. [S1] The district received $552 million from the city's $1 billion surplus last year. [S1]
For the current budget cycle, CPS initially projected receiving $200 million from TIF surplus funds. [S1] After pushback from board members and staff unions, CPS leaders raised that assumption to $285 million on July 28, 2026, replacing savings that would have come from cutting five paid professional development days. [S2] The change prevented furloughs that would have saved $17 million per day but cut staff salaries by roughly 2 percent. [S2]
CPS CEO Macquline King called the new figure "a conservative estimate." [S2] The district's budget still includes layoffs of 760 teachers and more than 800 school-based support staff, along with a midyear spending freeze. [S2] The school board is slated to vote on the $9.96 billion budget on July 30, 2026. [S2]
How TIF surplus works
TIF districts freeze the property tax base at the time a district is created. As property values rise, the additional tax revenue goes into a special fund for redevelopment projects within that district. [S1] When city officials determine that a TIF district has more money than needed for planned projects, they declare a surplus and distribute the excess to all local taxing bodies, including CPS, the city, the Chicago Park District, and the City Colleges of Chicago. [S1]
CPS receives the largest share, roughly half of any declared surplus. [S1] The city receives about a quarter. [S1] Aldermen are sometimes reluctant to declare larger surpluses because the money may be assigned to projects in their wards. [S2]
CPS budget pressures
CPS faces a $732 million deficit for the 2026-27 fiscal year. [S1] The district carries more than $9 billion in outstanding debt and spends more than $900 million, about 9 percent of its budget, on debt repayment. [S1] CPS is funded at just 73 percent of what Illinois deems "adequate" under the state's Evidence-Based Funding formula. [S1]
The district's cash flow fluctuates depending on the timing of revenue, and repeated delays in Cook County property taxes have worsened the problem. [S1] CPS will hit its borrowing limit for its previous fiscal year in August 2026, so banks will not approve new tax anticipation notes until the next budget is passed. [S1] District leaders are asking the school board to pass the budget by July 30, a month before the state-mandated deadline, to secure short-term loans to cover September payroll. [S2]
Uncertainty and political dynamics
Mayor Brandon Johnson did not directly commit to providing CPS the $285 million in TIF surplus funds. [S2] He highlighted last year's record surplus and called on the state to increase the district's funding. [S2] "As much as I've done my part to fulfill the promise of public education, the state of Illinois has to do its part as well," Johnson said. [S2]
SEIU Local 73 President Dian Palmer called the district's original $200 million projection a "deliberately conservative lowball figure." [S2] Chicago Teachers Union President Stacy Davis Gates said the budget "would cause permanent harm to Chicago's students" and called on CPS to make further changes. [S2] The CTU represents teachers; SEIU Local 73 represents 16,000 support staff in CPS. [S2]
City officials have not revealed how much TIF surplus they think is available for 2026, but have said they do not think they can provide as much as last year. [S3] It is unclear whether the TIF districts are depleted after two years of record surplus declarations. [S3] The city prepares its budget in the fall and assesses TIF surplus at that time. [S3]
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