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CHICAGO, Feb 22 (Reuters) - The Chicago Board of Education on Wednesday approved a revised budget that incorporates unpaid furlough days and other cost-cutting measures to save $104 million to help address a $215 million pension funding shortfall.
The $5.41 billion budget still has a $111 million hole to fill before the fiscal year ends on June 30. The Chicago Public Schools (CPS) will continue to pursue money from the state of Illinois to fill the gap, including through its recently filed lawsuit against the state, according to a school spokeswoman.
The nation's third-largest public school system sued Illinois last week, claiming the state's method of education funding discriminates against the district's largely black and Hispanic student body.
CPS is struggling with pension payments that will jump to $733 million this fiscal year from $676 million in fiscal 2016, as well as drained reserves and debt dependency. The fiscal woes have pushed its general obligation credit ratings deep into the junk category and led investors to demand fat yields for its debt.
As part of a deal to enact state-wide pension changes, Illinois lawmakers passed a bill last year to send CPS $215 million in one-time funding earmarked for its teachers' retirement system. In December, Governor Bruce Rauner vetoed the measure after comprehensive pension legislation failed to materialize.
Frustration over the veto led CPS to file its lawsuit invoking Illinois' Civil Rights Act. The Illinois State Board of Education said on Wednesday it finalized a settlement in the only other pending lawsuit over state funding, which was filed by civil rights group the Chicago Urban League in 2008.
Under the settlement, procedures will be put in place for when legislative appropriations fail to cover all general state aid claims submitted by school districts, the state board said in a statement.
The state Senate has proposed a package of bills aimed at ending Illinois' record-breaking budget impasse. The measures, which must all be passed in order for the package to be enacted, include state funding for Chicago teacher pensions as well as a major tax hike, casino expansion and a school funding revamp. A bipartisan deal on the bills stumbled earlier this month when the Senate rejected a key measure to cut pension costs.
A spokesman for Democratic Senate President John Cullerton said on Wednesday negotiations over the bills continue.
CPS's fiscal 2017 budget, which was originally approved by the school board in August, was also revised in December to accommodate a new teachers' contract. (Editing by Matthew Lewis)