CHICAGO (Reuters) - The Chicago Public Schools would rely mainly on one-time measures to cover the $103 million, first-year cost of a new teachers' contract, under a plan the school system released on Friday.
The plan calls for saving $42 million through a restructuring of about $100 million of outstanding debt later this year or early next year and tapping $13 million in the current budget set aside for interest payments for bonds the district sold in August, according to a spokeswoman for the district. The school system would also raise $15 million through property sales.
"At times of financial challenges, it makes sense to use strategies like capitalizing interest or restructuring debt, particularly when interest rates are low, to bridge short-term budget pressures," said spokeswoman Robyn Ziegler.
Recurring measures in the plan include $12 million in administrative savings such as delaying or not filling vacant non-teaching positions and $21 million in reduced operational costs.
The $5.16 billion fiscal 2013 budget approved by the Chicago Board of Education in August did not include raises for teachers, who went on strike last month for the first time in 25 years. A three-year deal that will give teachers an average pay raise of 17.6 percent over four years if the contract is extended an extra year was overwhelmingly ratified by Chicago Teachers Union members this week.
The board of education, which has yet to approve the contract, is scheduled to take up budget revisions at its October 24 meeting.
"The budget is an ongoing process, and we will continue to work throughout the year to identify ways we can capture additional savings and increase revenue to address the long-standing financial challenges facing the district," said school CEO Jean-Claude Brizard in a statement.
Concern over the ability of the school system, the third largest in the nation, to cope with teacher raises and escalating pension costs within its already shaky budget has led credit rating agencies to downgrade the school system.
The current school budget drained reserves and levied property taxes at a maximum rate to tackle a $665 million deficit. Meanwhile, the district, which was already projecting a $1 billion deficit in fiscal 2014, has pegged the cost of the teachers contract at $295 million over four years.
(Reporting By Karen Pierog. Editing by Andre Grenon)