CHICAGO PUBLIC SCHOOLSOffice of School Financial Services

For the fiscal year ended June 30, 2007

Richard M. DaleyMayorCity of Chicago, Illinois

ANNUAL FINANCIAL REPORT

BOARD OF EDUCATION OF THE CITY OF CHICAGORufus Williams, PresidentClare Muñana, Vice PresidentNorman R. BobinsTariq H. Butt, M.D.Alberto A. Carrero, Jr.Peggy A. DavisRoxanne Ward

CHICAGO PUBLIC SCHOOLSArne Duncan, Chief Executive OfficerBarbara Eason-Watkins, Ed.D.,

Chief Education OfficerM. Hill Hammock,

Chief Administrative Officer Pedro Martinez, Chief Financial OfficerDaryl J. Okrzesik, Controller

CHICAGO PUBLIC SCHOOLSDISTRICT MAP

The Chicago Public Schools’School Leadership Modelconsists of 23 Area Offices,structured by elementary andhigh school areas. CPSmanages and guides the 17elementary and 6 high schoolareas. In the following pages,CPS is proud to share a closerlook into each area highlighting alist of schools and the area’saccomplishments in the last year.

CPS AREASElementary School Instruction Areas:

1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18

High School Instruction Areas:19, 21, 23, 24, 25*, 26*

*Not shown. Please see pages 24 and 25.

INSTRUCTION AREA MAPSMaps on pages 3 to 25 show the locations of all of CPS’ 622 schools, usingthe following key:

● Elementary schools● AMP schools● High schools● Community schools (map 25)● Military schools (map 26)● JROTC programs in high schools (map 26)

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“We strive to provide

effective educational

approaches, giving

our students a solid

foundation for their

lives inside and

outside of the

classroom.”

OUR CHILDREN,OUR FUTURE

December 14, 2007

DEAR COLLEAGUES AND FRIENDS:Every school year is a challenging new chapter in the history of theChicago Public Schools (CPS). We continue to take bold steps in ourquest to improve every child’s academic performance. As theircurrent leaders and mentors, we have the opportunity and theresponsibility to help them fulfill their goals and become productivecitizens.

We continue to evaluate and foster outstanding educational programsthrough successful recruitment and retention of excellent teachers,enhanced teaching methods, effective professional development, andimproved business services. Two investments in these key areas ofinfrastructure are the CPS@Work Human Resources system and theIMPACT student information system. While the 2007 start-up of thesetwo major enterprise systems has presented significant challenges,we are starting to reap rewards.

We strive to provide effective educational approaches, giving ourstudents a solid foundation for their lives inside and outside of theclassroom. The Renaissance 2010 program is an example of how,with the assistance of outside partnerships, we researched andadopted a variety of cutting-edge educational programs that arealready succeeding. Student test scores are up and demonstrate thatChicago has significantly increased the percentage of studentsmeeting state standards.

Our new school year brought forth many encouraging advancements.CPS reached a historic five-year agreement with the Chicago TeachersUnion (CTU) and its other unions. In order to accomplish soundfinancial results, CPS had to make many hard decisions that affectedour daily operations. As a result of our good financial performance,Moody’s Investor Service and Standard and Poor’s upgraded the debtratings for CPS in the fall of 2007.

We are very proud of our accomplishments but we also recognize thatthere is still much work to be done. We cannot accomplish all of ourgoals with our existing funding resources. Our children are entitled toexcellent academic programs and the highest quality instruction. Yet,as the third largest school district, we are one of the least fundedschool districts in the nation. As a parent, teacher, student,community, city and state, we need to focus our time and monetaryinvestments on the most important assets in life: our children, ourfuture. With your help, we can bring those dreams into reality.

Respectfully submitted,

Rufus Williams Arne DuncanPresident Chief Executive OfficerChicago Board of Education Chicago Public Schools

1

The Chicago Public Schools is a body politic and corporateas well as a school district of the State of Illinois. CPSboundaries are coterminous with the City of Chicago. TheChicago Board of Education is established under andgoverned by the Illinois School Code and is not a home ruleunit of government. The Chicago Board of Educationoperates a system of 622 schools primarily for gradeskindergarten through twelve. As the third largest schooldistrict in the nation, we serve approximately 414,000students; we employ over 44,000 dedicated individuals –24,700 of which are teachers.

The Chicago Public Schools is governed by a seven-memberBoard of Education that is appointed by the Mayor of theCity of Chicago. The Board elects one of the members toserve as President of the Board. Additionally, pursuant toamendments to the Illinois School Code initially enacted in1988, elected school councils composed of parents,teachers, principals and community representativesexercise certain powers relating to the operation of theindividual schools in the Chicago Public Schools system,including selection of principals and approval of schoolbudgets.

CHICAGO PUBLIC SCHOOLSPROFILE

at http://www.cps.k12.il.us/AboutCPS/Financial_Information/CAFR/cafr.html. If you wouldlike a copy of the CAFR, pleasecontact us through one of theoptions located on the backcover of this report and we willgladly fulfill your request.

The primary function of theOffice of School FinancialServices is to ensure thefinancial integrity of theorganization and to accuratelyreport on the Board’s financialcondition in accordance with allstate and federal legislation,governmental regulations andBoard policies. While theauditors focus primarily onverifying the accuracy of theinformation presented, they alsoassess the financial risks to theorganization and review theprocesses that CPS has in placeto reduce these risks. Ashighlighted throughout thisreport, CPS has focused onimproving its financialfoundation and funding thoseactivities that will improve theeducational achievement of ourstudents.

2

Chief Administrative Officer

Executive Officer Finance

Executive Officer Technical Services

Executive Officer School Support Services

Executive Officer Human Resources

Chief Education Officer

Chief Executive Officer

Chicago Board of Education Inspector General

Chief of Staff

Mayor, City of Chicago

Citizens

Executive Officer High Schools

Executive Officer New/Charter Schools

Officer AMPS

Officer External/Internal Affairs

General Counsel

CHICAGO PUBLIC SCHOOLS ORGANIZATIONAL CHART

INTRODUCTIONThis popular version of ourannual financial report isdesigned to give our readers asnapshot of Chicago PublicSchools’ (CPS) financialcondition and to highlightinformation that our parents,teachers, supporters, andcommunity and state leadersshould find helpful for improvingtheir understanding of ouroperations. This report does notprovide all the detailed financialinformation that is contained inour Comprehensive AnnualFinancial Report (CAFR). TheCAFR includes all of the auditedfinancial statements anddisclosures. For a detailedreport, please visit our website

AREA 1 Area 1 schools posted the highestpercentage of students meeting orexceeding state standards, leadingthe city in composite score. Basedon ISAT scores, Area 1 has threeof the top 20 elementary schoolsin Chicago: Edison, Edgebrook, andNorwood Park.

NOTEWORTHY EVENTS INCLUDE:● Fiscal year 2007 total budget was $5.3 billion with

operating fund totaling $4.4 billion. The capitalimprovement budget was $626 million and $264 millionwas appropriated for debt service.

● CPS increased resources by an additional $298 millionover FY06 from multiple sources including an additional$50 million from property taxes, an additional $99 millionin state aid due to an increase in the foundation level, $45 million in higher interest income due to higher interestrates and higher cash balances.

● During the fiscal year, CPS recorded net proceeds of$366.5 million in Unlimited Tax Obligation Bonds to fundthe Capital Improvement Program. With upgrades in ouroutstanding debt ratings, CPS’ trends show strong financialstability.

● Looking forward, CPS’ fiscal year 2008 budget of $5.78billion represents a 9.3% increase or $491.4 million overlast year of which the General Operating Fund accounted for$4.65 billion with a 5.5% increase.

3

HOW DID WE DO LAST YEAR?

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The United States Olympic Committee(USOC) selected Chicago as the U.S. BidCity. With a team of experts spotlightingour city, Chicago is in full pursuit of hosting the 2016 Olympic and ParalympicGames. CPS fully supports the course forwinning the 2016 Olympic Bid because itwould act as a catalyst toward countlessopportunities for our students and cityorganizations. Hosting the Games wouldallow us to fast-track capital projects,witness urban revitalization, and exposeus to such education benefits as diversecultural events, athlete influences forhealthier living, and true appreciation ofthe city in which we reside and flourish.

In general, CPS ended the fiscalyear better than budgeted, primarily due to sustainable revenue increases in addition tostrategically reducedexpenditures. As in past years,CPS instituted strong fiscaldiscipline and budgetedprudently, reducing

administration costs by $49.6million, experiencing favorabletrends in healthcare costs, thuscoming in under budget in allcategorical expenses. At the endof fiscal year 2007, CPS againmaintained a strong cashposition.

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

4

WE BALANCED THEBUDGETThe 2007-2008 budget wasthe thirteenth consecutivebalanced budget presented tothe Chicago Board ofEducation. This balancedoperating budget reflectedtotal resources of $4.6 billionwhich includes the use of$109 million of unreservedfund balance.

WE FUNDED THECAPITAL IMPROVEMENTPROGRAMUsing new debt issues,refundings, and Tax IncrementFinancing (TIF) dollars, CPScontinues to fund itsnecessary capitalimprovement program (CIP). Infiscal year 2007, CPS receivedapproximately $366.5 millionin net proceeds from newbonds. The state has providedno funding in the past three

years for CIP needs. This year wehave been working with the Cityof Chicago to fund the ModernSchools Across Chicago program, a joint effort to renovate and build 27 schools.

WE IMPLEMENTED NEWACCOUNTING STANDARDSOnce again during fiscal year2007, CPS led the way with early adoption of the followingGovernment AccountingStandards Board Statements:

● GASBS 48, Sales andPledges of Receivables andFuture Revenues and Intra-Entity Transfers of Assets and Future Revenues

● GASBS 50, PensionDisclosures—an amendmentof GASBS Statements No. 25 and No. 27

FINANCE?WHAT’S GOING ON IN

WE PROVIDED ADEQUATE FUNDINGFOR TEACHERS’PENSIONSState statutes govern howCPS must fund the ChicagoTeachers Pension Fund. Nowthat the funded ratio for theChicago Teachers’ PensionFund is below 90%, CPS mustallocate additional employercontributions totalingapproximately $26 million inFY2006, $80 million in FY2007 and $132 million inFY2008.

FINANCIAL REPORTINGAWARDSThe Government FinanceOfficers Association (GFOA)awarded CPS with theCertificate of Achievement forExcellence in FinancialReporting since 1996 for itsCAFR and since 2000 for thepopular version. Since 1998CPS also has received theAssociation of SchoolBusiness Officials (ASBO)Certificate of Excellence inFinancial Reporting.

AREA 2 Named a National Blue Ribbon School ofExcellence by the U.S. Department ofEducation, Horace Greeley School wasone of 12 Illinois schools that receivedthis highly acclaimed recognition. Theaward recognizes schools that are modelsof excellence, demonstrate a strongcommitment to educational excellence forall students, and achieve high academicstandards. Also, a State Pre-K teacher atPeirce School was selected as oneChicago’s finest educators.

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ARMSTRONG, G

INTER-AMERICAN

NETTEL-HORST

The Government FinanceOfficers Association of theUnited States and Canada(GFOA) has given an Awardof Outstanding Achievementin Popular Annual FinancialReporting to Chicago PublicSchools for its PopularAnnual Financial Report forthe fiscal year ended June30, 2006. The Award forOutstanding Achievement inPopular Annual FinancialReporting is a prestigiousnational award recognizingconformance with the high-est standards for prepara-tion of state and local gov-ernment popular reports.

AREA 3 The dynamic team ofprincipals in Area 3 iscommitted to providingquality learningexperiences for ourstudents in order tocultivate critical thinking.As instruction leaders, Area3 Principals have a laser-like focus on improvingteaching and learning. Inalignment with our motto,“Planting Knowledge,Reaping Scholars,” ourefforts germinate intostudent success.

N E WPROCESSES

REVAMPEDCONSOLIDATEDCOLLABORATIVE

WE’VE REVAMPED OURHUMAN RESOURCES/PAYROLL PROCESSES CPS@Work, an integratedHuman Resources system,had its Phase I completed in 2007, dealing with corebusiness functions of HumanResources, Payroll andBenefits. Phase II began inNovember 2007, allowingemployees to update theirbenefits information on-lineduring annual open enrollmentvia the CPS@Work website. It will be completed in 2008giving full access to humanresources, benefits, andpayroll self-services foremployees and managers witha more paperless system andimproved work flow.

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CONSOLIDATEDBANKINGConsolidated banking is a district-wide school checkingaccount and banking servicessolution for all CPS schools.Previously, CPS schools usedmore than 70 different banks,95% of our schools receivedlittle or no interest on theirchecking account, fees andstatements were inconsistentand services varied. UnderConsolidated banking, all CPSschool checking accounts willbe consolidated at a singlebank with lower fees andhigher interest, standardizedservices and reporting withinternet access, and providedwith secured weekly armoredcar pickups. As of June 302007, 40% of our schoolswere enrolled in the programwith the expectation thatenrollment would becompleted by the end of2007.

IMPACTChicago Public Schools’Instructional ManagementProgram and AcademicCommunication Tool (IMPACT)is a comprehensive, district-wide initiative to build andimplement a centralizedstudent information solutionto replace the existingrepository of student records.CPS is the first large, urbanschool district to attempt acomprehensive technologysolution that makes studentinformation more accessible,reduces paperwork, andallows teachers moreinstructional time withstudents.

“P-CARD”CPS’ Procurement Card (“P-Card”) program providesadded flexibility in thepurchase of goods andservices for schools anddepartments throughout CPS.This charge card has asingle transaction creditlimit of $1,500 andefficiently tracksindividual school internalaccount expenditures.

FIRST CLASS EMAILOpen Text™ Corporation’sFirstClass messaging andcollaboration software enablesCPS to provide more than400,000 students and facultywith the benefits of advancedemail capabilities,comprehensive set of tools foronline collaboration, documentsharing and social networkingservices within a securelymanaged environment. CPSreceived funding support forthis initiative from the U.S.federal government’s Schoolsand Libraries Program of theUniversal Service Fund (commonly known as “E-Rate”).

5

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

HOW DOES THE BUDGETFOCUS ON EDUCATIONALPRIORITIES?The budget for fiscal year 2008increases total funding for thegeneral operating fund by 5.5%.Revenue enhancements include$74 million from increasedproperty taxes, $69 million in newstate aid funds, and $54 millionfrom higher personal propertyreplacement taxes compared toFY07 budget.

CPS executed several cost-savinginitiatives in fiscal year 2007,which resulted in a $63 millioncost reduction in the fiscal year2008 budget. Savings due toretirements combined withstrategic reallocations allowed thedistrict to invest an additional $60million in core educationstrategies.

IS THERE AN OVERRELIANCE ON LOCALREVENUES IN CHICAGO?Chicago taxpayers fund adisproportionate amount of thecosts of educating our students.Local property taxes have risenevery year. Local resourceshave paid for 90% of the over$5.1 billion capital program,with the state contributing nocapital funding during the lastthree years. Education fundingreform has had limited politicalsupport at the state and Federallevels and no significant changeis imminent.

Chicago taxpayers contribute tothe Chicago Teachers’ Pension

EDUCATIONFUNDING

AREA 4 Reaching beyond core academic subjects,students are immersed in fine arts and richcultural globalization. Students gained anunderstanding and appreciation of themselves,their community and world through participationin programs such as Roque De Duprey School’sexperience of live performances by the ChicagoSymphony Orchestra, Stowe School’sinvolvement in the Video Club resulting in theYoung Film Makers of the Year awardpresentation from the Chicago Cultural Center,and the participation of Darwin School’s teacherand student exchange program. 6

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CPS faces financial challenges in the year ahead as

revenue struggles to keep pace with increasing

costs and declining enrollments. In the next few

years, pension funding will become a substantial

expense for CPS, with expenditures expected to

increase significantly each year.

$0

$200

$400

$600

$800

$1000

$1200

$1400

Source: Chicago Public Schools

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07

State Funding of Teachers PensionSuburban/Downstate vs. CPS State of Ilinois Original Commitment to CPS

Suburban/Downstate FundingOriginal State CommitmentCPS Funding

Sta

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Fund (CTPF) through theirproperty tax dollars andcontribute to the downstateteachers’ pension fund throughtheir state income tax dollars.Prior to 2006, the state ofIllinois provided only $65 millionper year to CTPF. As of FY06,the state increased theircontribution to $75 million, andCPS estimates an equalcontribution in fiscal year 2008.In spite of the modest increasein state funding, it is stillsignificantly below the state’soriginal commitment to provideCTPF with between 20 and 30percent of its annualcontribution to the downstateteachers’ pension fund.

students showed up on thefirst day. CPS is working withseveral community partners,athletes, and celebrities tospread the word to familiesthat there is a clearconnection betweenattendance and academicperformance. CPS’ back-to-school kickoffs and outreachefforts, which lead up to thefirst day of school, were muchto credit for the attendanceincrease.

WHAT ABOUT NO CHILDLEFT BEHIND ACT(NCLB)?Enacted in 2002, the No ChildLeft Behind Act gives schoolseducational reform based onstronger accountability forresults, encouragement ofproven educational methods,and more choices for parents.Recent NCLB studies of stateachievement data show thatreading and mathematicsscores are up, andachievement gaps amongracial and ethnic groups havebegun to narrow.

INCREASINGATTENDANCEIMPROVES ACADEMICPERFORMANCE ANDINCREASES CPS’REVENUES The goal of CPS’ AttendanceImprovement Initiative is toincrease the district’s year-long attendance rate by atleast 1% annually until CPSreaches an overall attendancerate of 95%. This year, 91.9%of the 408,600 enrolled

AREA 6 Partnerships with National Lewis,DePaul, and Roosevelt Universitiesprovide professional developmentto our schools in literacy, mathand writing, respectively. TheChicago Area Writing Project isdedicated to improving theinstruction of writing and use ofreading as well as writing in thecontent areas for classroomteachers in the Area 6 schools.

HOW DOES THE STATEHELP FUNDEDUCATION?In Illinois, the state providesfunds to compensate fordifferences between the per-pupil foundation level andlocal property wealth, referredto as general state aid. Whilestatewide K-12 education hasreceived an increase in thefoundation levels of schoolfunding, rising from $4,560 inFY2003 to $5,734 in fiscalyear 2008, the state share offunding is very low comparedto other states. In Illinois, thestate provided 31.8% of totalK-12 funding while thenational average was 46.9%.For CPS, the increase in GSAand other categorical staterevenues resulted in anincrease of $95 million for theFY08 Budget.

The result in Illinois issignificant inequity in schoolfunding with some schooldistricts spending more than$20,000 per student whileothers spend less than$5,000. The gap betweenwell-funded schools and poorlyfunded schools continues towiden.

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CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

7

STRONGFOCUSEDDETERMINED

BENEFIT PROGRAMSEnrolling families in benefit programs improves children’shealth and increases CPS’ resources.

The Children and Family Benefits Unit (CFBU) promotesincreased access, enrollment, and renewal of CPS studentsand families in food stamps, All Kids (formerly called KidCare), Family Care, and TANF. In FY2007, liaisonscompleted over 4,000 applications for food stamps and/orAll Kids. Liaisons also presented at over 200 parentmeetings to educate CPS families about their potentialeligibility, rights and responsibilities with regard to publicbenefit programs. Liaisons support all CPS schools, with afocus on 100 schools whose students are predominatelyunder-enrolled in All Kids. By increasing enrollment of CPS’90,000 potentially eligible students in these health andwelfare programs, CPS receives increased state aid basedon the Poverty Grant.

AREA 7 “Excellence is not the Goal. It’sthe Standard” of the Area 7school recipients of the ChicagoMath and Science Initiative Grant.Merit distinctions includeachievement of the highest ISATComposite Score in the city ofChicago, winner of the 2007 DriveAward, and various partnershipswith community organizations.

8

RUDOLPHRUDOLPH

SUDER MONTESSORISUDER MONTESSORI

NIA FOUNDATIONS

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MITCHELL (AMP)

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RYERSON

WARD, L

HEFFERNAN

BROWN, W

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SE

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MARCONI DODGE RUDOLPH

SUDER MONTESSORI

WHAT WOULD CPS DO WITH ADDITIONAL FUNDING?● Improve teacher quality – CPS wants to encourage more of

our teachers to become Nationally Board Certified, a provenindicator of teacher excellence. CPS is also exploring meritpay for improved student performance, another provenmethod of increasing student achievement.

● Smaller class sizes in the early grades – CPS would like toreduce primary grade school classes to less than 28students, which allows students to focus on learning thebasics and developing good study habits.

● Universal community schools – Community schools are thosethat stay open evenings and weekends to provide bothacademic and social enrichment activities for students as wellas classes for parents and neighborhood residents. By nextSeptember, CPS will have 150 active Community Schools; ourgoal is to make all of our schools Community Schools withinfive years.

● More early childhood classrooms – Last year, over 35,000children participated in early childhood programs, about two-thirds of the eligible population of 50,000. There is stillstrong demand for more program availability, which is limiteddue to lack of space and funding.

The Chicago Public Schools is the

third largest school district in the

nation. In school year 2006-2007,

it served approximately 414,000

students in 622 attendance centers

with a staff of over 44,000.

SAVINGS THROUGH CPS’TEACHER RETIREMENTPLAN REALLOCATED TOCORE EDUCATIONLast year, CPS hadapproximately 1,400 employeesretired due to our retirementincentive plan. The hiring ofentry-level teachers into vacantpositions resulted in net savingsof $28 million. Savings due toretirements combined withstrategic planning resulted in anadditional $32 million inreallocations. This allowed CPSto invest $60 million in coreeducation strategies.

EMERGENCYPREPAREDNESSThe Board of Education of theCity of Chicago was awarded$932,000 from the USDepartment of Education for itsReadiness and EmergencyManagement for Schools(REMS) Grant. The grant fundswill allow the Board to developcompliance and trainingprograms to ensure all schoolshave Emergency ManagementPlans that meet nationalstandards. Further, the grantaward will allow for thedevelopment of trainingprograms to ensure that schoolstaff members are prepared tomanage an emergency thatdevelops in a school.

AREA 8 Our unwavering commitment for improvingteaching and learning is the basis for thedevelopment of partnerships with PolkBrothers Foundation and Chicago NewTeachers Center (CNTC). The Foundation wascoordinated by DePaul Center for UrbanEducation to expand the progress ofCommunity Schools and build strong linkswith the community in extended learningopportunities. The CNTC leadership andcoaches serve to increase beginning teacherretention as well as bring a new generationof dedicated educators to Chicago PublicSchools.

9

SUMNER (A

CRANE HSLOCKE CHARTER

POPE

PENN

KING

MASON

HERZL

CROWN

MELODY JENSEN

HENSON

IRVINGBETHUNE

JOHNSONLATHROP

WEBSTER

HAMMOND

GREGORY KELLMAN

ERICSON

LAWNDALE

CHALMERS

PLAMONDONHUGHES, C

FRAZIER IB MAGNET SCHOOL

CERMAK RD

ROOSEVEL

LASK

DVORAK

CPS was awarded two federal grants of $22 millionto transform 10 of the district’s historically lowestperforming elementary schools into magnet schools.Proposed are 5 new technology magnet schools,and the other schools will be dedicated towards alanguage academy, a Montessori school, 2 new bac-calaureate programs, and the district’s first-everchildren’s engineering program.

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

WITH PENDING LOCALTAX INCREASES, WHYDOES CPS NEED MOREFUNDS?In spite of the assumed FY08$69.3 million increase in staterevenues, the State of Illinois’funding is still insufficient tocover the cost increases infiscal year 2008. Therefore, theburden of supporting publiceducation rests increasingly onlocal taxpayers. CPS will require$73 million from the fund-balance reserve and anincrease in property taxes to thetax-cap limit, which translates to$74 million - $19 million fromnew construction and $55million from raising tax rates by3.4%.

The ultimate goal for Chicago Public Schools is

to ensure that every child in every school is on

track at every stage in his or her career to

graduate prepared for success in postsecondary

education and employment. To reach that goal,

we’re continuing to focus our work on the three

core and two supporting strategies:

Instructional Excellence

Talent Attraction and Development

Expanded Options and Opportunities

Performance Management

Resource Alignment

STRATEGIESCORE

will continue to expand the corereading programs into at least150 more schools and introducea third core reading program(Open Court: Imagine It).

Meanwhile, all students ingrades K–2 will take theDynamic Indicators of BasicEarly Literacy Skills (DIBELS)assessment. More than 2,000teachers received DIBELStraining this summer. Literacycoaches and teachers are beingtrained this fall to use Reading3D, the latest version of theDIBELS assessment.Furthermore, our district-widewriting initiative provides trainingfor 3rd–8th grade teachers onthe ISAT writing rules.

AREA 9 Strong and innovative school-based partnershipssupport the needs of many of our schools —adoption of Medill School by the Union LeagueClub of Chicago centered on supporting thestrategic and financial needs of the businessgrounded process, Midwest Generation’s longstanding financial support of Walsh School’sefforts to improve mathematics and scienceinstruction through the Chicago Math andScience materials, and other significantpartnerships including UBS, ING, CBOT and WITS.

10

“By putting the education of our

children first, focusing on learn-

ing the basics in the classroom

and staying the course year by

year, we’re delivering on our

commitment to give every child

in every school the same oppor-

tunity for a good life.”

Mayor Richard M. Daley

MONTEFIOREMONTEFIORE

PICKARDPICKARD

PERSHINGPERSHING WEST WEST

ARMOURARMOUR

CHICAGOVIRTUALC

NIA

DETT RUDOLPHHERBERT

CRANE HS

BROWN, W

FOUNDATIOB

SUDER MONTESSORILITARY HSLITARY ACAD

KINGIRVINGUNO PAZ

WALSH

SMYTH

HEALY

DRAKE

PEREZ

OROZCOMEDILL

PILSEN

HOLDEN

HAINESCOOPER

ABBOTT

WARD, J

JUNGMAN

GALILEO

WHITTIER

SHERIDAN

MCCLELLAN

GLADSTONE

JACKSON, A

SOUTH LOOP

WILLIAMS ESWILLIAMS MIDD

WILLIAMS CAMPUS

NATIONAL TEACHERS

ZFINKL

THOMASEVERETT

AMP)

DE LA CR

PARK

ALLI

K (AMP)

ASHLAND AV

WESER

A

31ST ST

COTTAG

E GR

OVE

PERSHING

MONTEFIORE

PICKARD

PERSHING WEST

ARMOUR

Although many programs helpsupport instructional excellence,four initiatives are at the core ofthe district’s instructionalexcellence strategy.

The Chicago Reading Initiativeframework, established sixyears ago, offers increasedsupport in several areas: abalanced literacy framework andhigh-quality core readingmaterials, extensive school- andclassroom-level coaching,extended time, and additionalstudent support.

This year in grades 3–8, 145schools have implemented oneof two supported core readingprograms (Harcourt: Storytownor Pearson Scott Foresman:Reading Street). Next year, we

30%

40%

50%

60%

70%

80%

Source: Chicago Public Schools, Research, Evaluation and Accountability

2003 2004 2005 2006 2007

ISAT Reading Scores2007 — Percent Meeting or Exceeding Standards

30%

40%

50%

60%

70%

80%

ISAT Math Scores2007 — Percent Meeting or Exceeding Standards

Grade 3Grade 5Grade 8

Grade 3Grade 5Grade 8

2003 2004 2005 2006 2007

INSTRUCTIONALEXCELLENCE

creating a more rigorous middleschool curriculum focusingspecifically in the areas of mathand writing. This year, 57schools have agreed to offer8th grade Algebra and thedistrict promotion policy hasbeen expanded to includewriting proficiency at the 8thgrade level.

The High School Transformationeffort is a comprehensiveapproach to strengthen our high

schools and raise expectationsfor students. A criticalcomponent of this effort is theInstructional DevelopmentSystems (IDS) strategy thatworks to align English, math andscience curricula with focusedteacher professionaldevelopment and strongerassessments. This year, thereare 25 IDS schools and 20more schools are expected tobe added in fall 2008.

AREA 10 Located in the predominantly low-income, Spanish-speaking “Little Village Community,” Area 10 schoolsplaced on the top of improving achievement city wide.In particular, Finkl School was featured in the ChicagoTribune newspaper as achieving the highest gains onthe ISAT. Drawing on a wide variety of supplementalmaterials and resources, the collaborative effortbetween parents, students, teachers, and thecommunity diligently designed an academic, social, andphysical development program that reflects a nurturingenvironment and is the vision of parents and thecommunity.

11

The Chicago Math and ScienceInitiative (CMSI), now in its fifthyear, offers supported curriculaand materials, aligned teacherprofessional development, andschool-based coaches. After fouryears of rapid expansion, morethan half of all elementaryschools use the math programand more than one-quarter usethe science. Participatingschools have improved morethan nonparticipating schoolson the ISAT. Recently, CMSIexpanded efforts to helpprincipals observe andsupervise mathematics teachersand started a lending programto make high-quality scienceinstructional materials moreaffordable and available toschools.

The 8th–9th grade transition iscritical to ensuring continuousacademic achievement,especially given the declines instudent attendance andconnectedness between 8th and9th grade. Accordingly, CPS ishelping middle grade studentsbolster their study skills —exposing them earlier to thehigh school curriculum — andoffering after-school andSaturday programs. CPS is

RUIZRUIZ

FINKLFINKL

ZAPATAZAPATA

KANOONKANOONSAUCEDOSAUCEDO

CORKERYCORKERY

GUNSAULUSGUNSAULUS

DE LA CRUZDE LA CRUZ

BRIGHTON PARKBRIGHTON PARK

12

SPRY RUIZ

GARY

FINKL

THOMAS

MADEROZAPATA

KANOON

WHITNEY

SAUCEDO

EVERETT

CORKERY

DAVIS, N

MCCORMICK

GUNSAULUS

BURROUGHS

DE LA CRUZPADEREWSKI

CASTELLANOS

DE DOMINGUEZ

MCKINLEY PARK

LITTLE VILLAGE ES

COLUMBIAEXPLORERS

TELPOCHCALLI

BRIGHTON PARK

CARDENAS

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

78%

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

Grade Level

Attendance Rate2007

Source: Chicago Public Schools, Research, Evaluation and Accountability

K 1 2 3 4 5 6 7 8 9 10 11 12

2007

Att

enda

nce

Rat

e

Curriculum

Academic Support

9th Grade Success

Leadership Leadership Support

Instruction

Extended School Day

Personalization

9th Grade On-Track

High School Transformation

Teacher Project supports ourwork with several organizationsto recruit and train newteachers. These certifiedteachers, who will make upnearly one in five new hires nextyear, also receive ongoingmentoring and support.

AND DEVELOPMENTTALENT ATTRACTION

AREA 11 Critical involvement and resourcesfrom various school communitypartnerships resulted in funding fora school-based clinic, ability toprovide backpacks for students andthe implementation of variousprograms - tutorial services, afterschool programming, and collegeawareness and preparation forstudents in 5th through 8th grade.

12

DAWESDAWES

TONTITONTIMORRILLMORRILL

SANDOVALSANDOVAL

MARQUETTEMARQUETTE

NIGHTINGALENIGHTINGALE

EDWARDSEDWARDS

KELLY HSDAVIS, N

GUNSAULUSUNO MARQUEZ

MCKINLEY PARK

COLUMBIAEXPLORERS (AMP)

LEE

PECKHALE

DORE

MCKAY

BYRNESAWYER

HURLEY

HEARST

GRIMES

MIDWAY

PASTEUR

HAMPTON

EBERHART

STEVENSON

BLAIR FAIRFIELD

TARKINGTON

DURKINPARK

KINZIE

CICE

RO

AV

87TH ST

HA

3900S

CENT

RAL AV

5600W

87TH ST

HARL

EM AV

7200W

7100S

79TH ST7900S

47TH ST4700S

NAAV

6400W

TWAIN

DAWES

TONTIMORRILL

SANDOVAL

MARQUETTE

NIGHTINGALECHRISTOPHER

EDWARDS

“There is nothing

more important to

our schools than

quality teachers.”

Mayor Richard M.Daley

HIRING MORE QUALIFIEDNEW TEACHERS …EARLIER This year, we had our strongestpool of teacher candidates ever:10 applicants for each position,five times as many as in 2001.Our teacher recruitment team isworking to enhance universityrelationships and developinnovative teacher pipelineprograms such as alternativecertification programs, teacherhousing resources, and theteaching residency andinternship program.

In just two years, we havereduced teacher vacancies atthe start of school to just 3percent. And in 2007, we hireda record number of specialeducation teachers. A prioritygoing forward is to increase thenumber of elementary schoolteachers with content areaendorsements, particularly inmath and science. Furthermore,our partnership with The New

0

200

400

600

800

1000

1200

School Year

Unfilled Teacher Positions

Source: CPS Office of Human Resources

Note: Numbers are approxmations and represent vacancies at the start of Sepember.

2004–2005 2005–2006 2006–2007 2007–2008

Num

ber

of U

nfill

ed T

each

er P

ositi

ons

1150

1060

790

720

CPS is making largeinvestments in instructional andleadership coaches. We havecollaborated with the NewTeacher Center–Santa Cruz tohelp our coaches be aseffective as possible. Coachingis a core component of ourmajor district instructionalinitiatives such as the ChicagoReading Initiative, the ChicagoMath and Science Initiative, andthe Instructional DevelopmentSystems strategy in our highschools.

Additionally, thanks to the five-year, $27 million federalTeacher Incentive Fund grant,this year teachers in 10 high-needs schools will receiveadditional professionaldevelopment, career pathopportunities, multipleobservations and performancecompensation through theRecognizing Excellence inAcademic Leadership (R.E.A.L.)program. The program willexpand to 40 schools over thenext four years.

Meanwhile, preliminary dataindicates the number of CPSteachers and administratorscertified by the National Board

of Professional TeachingStandards has risen from fewerthan 100 in 2001 to 860 today.An additional 415 enrolled inthis rigorous professionaldevelopment; our goal is tohave 2,400 National BoardCertified teachers in 2010.Having multiple National BoardCertified teachers in schools isa key part of our school-wideimprovement strategy.

AREA 12 Through the use of administrative staffprofessional development, academic theme-based workshops, course work endorsements,and interventions, Area 12 delivers newapproach strategies to address the needs of ourschools. The promotion of a least restrictiveenvironment, establishment of Writer’sWorkshop assessment, student attendanceintervention, and connection with feeder highschools to increase high school graduation havecontributed to the Area’s academic success.

13

ADDITIONAL TEACHERSUPPORTWe are providing additionalsupport to our new and veteranteachers.

At the start of this school year,CPS worked closely with theChicago Teachers Union (CTU) tosecure a historic new five-yearteacher contract that will supportteacher quality, development andrecognition. A joint CPS-CTUcommittee is creating a newteacher evaluation process to bepiloted in 2008–2009, building onthe work in the eight Fresh Startschools.

Ensuring that new teachersreceive the support they need isa high priority and the district ismoving toward providing intensiveinduction for all new teachers.This year, new teachers in Areas8, 13, 14 and 15 benefit fromstate-of-the-art intensive inductionprovided by the Chicago NewTeacher Center (CNTC).

O'TOOLEO'TOOLE

GOODLOWGOODLOW

RANDOLPHRANDOLPH

EARLEEARLE

HOLDE

ARMO

THEVERETT

LLY

BURROUGHS (AMP)

EZ

MCKINLEY PABRIGHTON PARK (AMP)

MCKAY

RRILL

L

FAIRFIELD

MARQUETTE

MAYO

TON

CHRISTOPHER

LARA

DALEYLIBBY

HEDGES

CARSON

CLAREMONT

HENDERSON

COPERNICUS

SEWARD

71ST ST

WES

TER

N AV

PES

TALMAN

CHAVEZ

SHIELDS

O'TOOLE

HAMLINE

GOODLOW

DAVIS, M

BONTEMPS

RANDOLPH

EVERGREEN

GREENE

FULTON

EARLE

CPS employs about24,700 teachers atan average teachersalary of $66,043.

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

0

500

1000

1500

2000

2500

School Year

National Board Certified Teachers and Administrators at CPS

Source: CPS Office of Human Resources

2003 2004 2005 2006 2007 2008 2010 Prelim. Goal Goal

Num

ber

of T

each

ers

and

Adm

inis

trat

ors

254383

478652

860

1200

2400

Because more than half of ourprincipals have less than threeyears experience, we aretargeting more resources thanever to support principals andensure their success as schoolleaders. We have raisedeligibility standards for newcandidates and are supportingrigorous preparation programs— such as the University ofIllinois at Chicago doctoralprogram and New Leaders forNew Schools — so that moreprincipals have the instructionaland managerial know-how tocreate great environments forteaching and learning.

To ensure our new principalshave strong support, we haveselected some of our strongestretired principals to coach newprincipals. Through a redesignedprincipal evaluation system, weare identifying supportsnecessary from district, areaand community resources toensure all of our schools are ledby well-supported, outstandingleaders.

PRINCIPAL PREPARATIONAND DEVELOPMENTEffective leadership is at thecore of improving and sustainingthe quality of education for allCPS students. This improvementis guided by the CPS theory ofchange, which identifies theschool as the unit of changeand the principal as the leaderof that change. The mission ofthe Office of PrincipalPreparation and Development(OPPD) is to develop and ensurehigh-quality principal leadershipin every school.

The scope of work involvesfour responsibilities: 1 Identify and develop aspiring

principals to meet thechallenges of a CPSprincipalship

2 Develop and support newprincipals

3 Provide continualdevelopment opportunitiesfor experienced principals

4 Recruit principals in and outof Chicago

AREA 13 Area 13 obtained successful integration ofliteracy and science through the schools’participation in the Middle Grades Project,Experiencia, and Project NOAH with LincolnPark Zoo providing a unique laboratorysetting for students to interact with liveanimals, conduct experimental investigationsand create critical thinking solutions tonatural disaster scenarios.

14

ATTUCKSATTUCKS

WOODSONWOODSONSOUTHSOUTH

1

ABBOTTCHICAGO CHILD

CHOIR CHARTER

NE

EMPS

US

S

ROSS

DEWEYBURKE

HOLMES

FULLER

CARTER

OVERTON

BEASLEY

SHERMAN

PARKMAN

MOLLISONMCCORKLE

SHERWOOD

BEETHOVEN

HENDRICKS

GRAHAM ES

PRINCETON

D ST

COTTAGE

PERSHING RD PERSHING RDATTUCKS

WOODSONSOUTH

STRENGTHENINGPRINCIPAL LEADERSHIPBetween 2005 and 2009, weexpect to hire more than 450new principals, providingmultiple opportunities tocontinuously strengthen theleadership of our schools. Thisyear alone, 175 principalselections have been made,approximately 150 of whichwere new principals.

How does coaching improvestudent learning?

● Use data to drive decisions

● Plan curriculum

● Observe classroom

● Model and co-teach

corporate partners, CPSoperated 110 CommunitySchools during 2006-2007school year serving over 20,000students. Since 2003 over 400partner organizationsconcentrating in critical areassuch as health and socialservices, youth developmentand community advocacy, artsand cultural education, andrecreational services have beenengaged in CPS CommunitySchools. An additional 40Community Schools are slatedto open in 2007-08.

Renaissance 2010 is a bolddistrict initiative that isincreasing the number of high-quality educational options incommunities across Chicago.New schools are createdthrough a competitive,community-based selectionprocess, which gives schoolsincreased autonomy in exchangefor being held accountable tohigh standards. In the pastthree years, CPS has opened 79new charter, contract andperformance schools in high-priority communities.

EXPANDED OPTIONSAND OPPORTUNITIES

AREA 14 Area 14 schools embarked on severalnoteworthy projects – partnership with theChicago New Teachers Center designed toinspire, assist, advise and provide intensivesupport to new teachers throughprofessional development and on-sitecoaching; increased the number of year-round schools from two to 11; andimplemented several school wide projects.

Three Types of Schools

● Charter Schools are independent public schools. Free frommany state laws, district initiatives, and Board policies,charter school teachers and staff are employees of thenonprofit governing board or an education managementorganization hired by the nonprofit. Charters have existedin Chicago since 1997.

● Contract Schools are a newly created public school modelestablished as a part of Renaissance 2010. These schoolsare managed by independent nonprofit organizations inaccordance with Performance Agreements. Contract Schoolteachers and staff are employees of the nonprofit agency.

● Performance Schools are CPS-run schools with freedomfrom and flexibility on many district initiatives and policies.Teachers and school staff are employees of CPS.

15

Preparation for college andemployment begins with strongpreschool and kindergartenprograms. Fifty-four percent of 3-and 4-year-olds are enrolled inearly childhood educationprograms offered by the city andCPS. This year, we have added5,000 additional full-daykindergarten slots. Our goal is forall kindergartners to participate infull-day programs.

Because our school day andschool year are comparativelyshort, we have a specialresponsibility to supplementregular instructional time. To thatend, our after-school programcontinues to grow, now serving200,000 students in 550schools.

To be most effective insupporting student achievement,these programs should be part ofa Community School, which workswith public agencies and nonprofitorganizations to offercomprehensive academic,enrichment, health and socialservices to students and theirfamilies. Thanks in part to our

ALTGELDALTGELD

LD EARLE

O'TOOLE

GOODLOW

DAVIS, M

RANDOLPH

HARPER HSCLAREMONT

COPER S

SOUTHSIDE OCC HS

LINDBLOM HSURBAN PREPMENS CHARTER HS ROSSCICS - WASHINGTON PARK

REED

BOND YALE

BASSMAYS

STAGG

WOODS

JOHNSHINTON

PARKER

DENEEN

JOPLIN

BARTON

RUGGLESOGLESBY

KERSHAW

HARVARD

WESTCOTT

BANNEKER

WENTWORTH

NICHOLSON

GUGGENHEIM

PARKMANOR71ST ST

HALS

E

ALTGELD

BROWNELL

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

800

900

1000

1100

1200

1300

1400

School District

Student Hours in School

Source: CPS Office of Human ResourcesNote: Numbers are approximations and represent vacancies at the start of Sepember.

New York Houston Philadelphia National Los Dade Chicago Average Angeles County

Num

ber

of A

nnua

l Hou

rs in

Sch

ool

1272 1260 1249

1161

11101080

1000

16

increase the pressure on thegovernor and the legislature totake action on school funding.

State underfunding, combinedwith continued enrollmentdeclines, makes it all themore important that we putthe dollars we have wherethey will make the biggestdifference for our children —in classrooms and schools. Tothat end, we have cut centraladministrative costs by 19percent in the past five yearsand shifted those resourcesdirectly to schools.

RESOURCE ALIGNMENTWe cannot accomplish all thiswork with existing resources.Our government has againfailed us. The state of Illinoisranks 48th in the country inthe level of support providedfor public schools. In 2007,only 33% of our school fundingcame from the state, whereasthe national average is 47%.As a result, our per-pupilspending is very lowcompared to neighboringdistricts and other large urbansystems. This spring, we will

such as IMPACT, PeopleSoftand the upcoming DataDashboard help all staff toidentify and use dataproactively, so that educatorscan spend more time oninstruction and less onpaperwork. IMPACT providestools that track and reportschool- and district-level datafor student attendance, grades,schedules, and specialeducation and assessmentinformation. In addition, theSchool Improvement Plan forAdvancing AcademicAchievement (SIPAAA) processhas been streamlined andintegrated with the onlineOracle application.

For each major role in the district — teacher, principal,

area instruction officer and central office employee —

we are developing:

● A clear definition of excellence

● Data to track progress toward excellence

● Opportunities for discussions and decision-making aboutthese measures

● Predictable rewards and consequences for performance

PERSHINGPERSHING EAST EAST

ROBINSONROBINSON

FERMIFERMI

PERSHIWEST

ROSS

BURKE

FULLER

CARTER

OVERTON

BEASLEY

MOLLISONMCCORKLE

OD

BEETHOVENWOODSON SOUTH

ZEVILLE HSUSABLE CAMPUS- SHABAZZS MEDICINE

CICS - WASHINGTON

ECHNICAL CHARTER HS

OCCUPATIONAL LE LIGHTHOUSE

RAY

TILL

MAYO

DUMAS

PRICE

WELLS

HARTE

ARIEL

FISKE

DULLES

SEXTON

MURRAY

WOODLAWN

CARNEGIE

WADSWORTH

SHOESMITH

KOZMINSKI

DOOLITTLE

STATE

ST

71ST ST

COTT

ST ST

ES AV

D

PERSHING EAST

ROBINSON

REAVIS CANTER

FERMI

AREA 15 Instructional Area 15 serves approximately10,000 students with an incredible diversity ofschool types ranging from neighborhood to magnetcluster, International Baccalaureate DiplomaProgramme (IB), city wide magnet and giftedschools. The area’s diversity mirrors a range ofrecognitions: Pershing West School participated inthe ballroom dance competition and a partnershipwith the Oriental Institute’s interpretation ofNubian art are a few of many recognitions.

PERFORMANCE MANAGEMENT

Our Autonomous Managementand Performance Schools(AMPS) have greater controlover budgets and increasedfreedom from Central Officemandates. We continue togrant schools increased auton-omy because of their strongstudent performance andsound management. The dis-trict currently has 117 schoolswith AMPS status.School scorecards and regularsurveys of students, parents,teachers and principalsprovide annual, easy-to-understand updates on schoolperformance. Furthermore,technology enhancements

Total revenue amount per student

Per-Pupil Funding

Source: National Center for Education Statistics, 2004-2005

$0 $5,000 $10,000 $15,000 $20,000

Evanston HS, IL 202

Washington, DC

Rochester City, NY

New York City, NY

Evanston CC, IL 65

Providence, RI

Naperville, IL 203

Springfield, IL 186

Balitmore County, MD

Los Angeles Unified

Rockford, IL 205

Chicago Public Schools

Chicago Heights, IL 170

Aurora East, IL 131

CPS receives approximately $9,700 per student perschool year while many suburban schools receive $20,000per student per school year. Add that up over 12 yearsand the difference is almost $125,000 per child.

ACHIEVEMENT TESTSCPS elementary students takethe Illinois StandardsAchievement Tests (ISAT). Thiswas the second year that allstudents in grades 3-8 took theISAT Reading and Math tests inMarch. Along with being acomponent of CPS’accountability system, the ISATalso determines sanctionsunder the Federal “No Child LeftBehind Act.”

EDUCATIONALOUTCOMES

IMPROVEMENTSTRATEGIESThe ISAT gains come after CPSput a high priority on reading bylaunching the Reading Initiative in2001 and placing over 400reading specialists in poorlyperforming schools. Significantly,the gains were reflected acrossthe entire system with 81.3% ofschools improving in Math and60.5% improving in Reading andScience.

CPS has emphasized getting pre-schoolers ready to learn andproviding support to olderstudents in after-school settings.CPS also expanded akindergarten reading assessmentinto 1st grade last year. All

kindergarteners wereassessed at least twiceand all first-graders wereassessed three times.These assessments helpidentify learning issues ata much earlier stage.

AREA 16 With a focus on student success throughacademic achievement and parentalguidance, Area 16 held a Back to SchoolJam and an ISAT Parent Workshop. The focusof the Back to School Jam was to increasestudent attendance, while the workshopshared effective strategies with parents toassist their children. At a recent pressconference with Mayor Daley and Dr. BarbaraEason-Watkins, Area 16 proudly announced4 new full-day Kindergarten programs inconjunction to the district’s expansion of theEarly Childhood program.

17

63.5% MEET STANDARDS At CPS, 63.5% of all elementarystudents meet or exceed statestandards.

Test results show the district’ssystem wide composite scorefor reading, math and sciencerose to a new high of 63.5% ofall students meeting orexceeding state standards.However, that is up only 1%from the 62.5% of all studentsmeeting or exceeding statestandards reached in 2005,whereas the test scores jumped15.2% from 2005 to 2006.These minor gains werereflected across more than 500elementary schools with 67.7%of all schools showingimprovement.

KOHNKOHN

DUNNEDUNNE

VANDERPOELVANDERPOEL GREEN, WGREEN, W

LAVIZZOLAVIZZO

MOUNTMOUNTVERNONVERNON

ESMONDESMONDMOUNTMOUNTGREENWOODGREENWOOD

SUTHERLANDSUTHERLAND

FT DEARBORNFT DEARBORN

MORGANMORGANASHBURNASHBURN

CARROLLCARROLLDAWES )

HAMPTON

STEVENSON

DURKIN PARK

JO

BARTON RUGGLESOGLESBY

WESTCOTT

NEIL PD

MCDADE (AMP)

KIPLINGBUR

GILLESPIETURNER-DREW

OWEN

KOHN

DUNNE

CUFFE

WACKER

KELLER

KELLOGG

GRESHAM

CASSELL

BENNETT

BARNARD

FERNWOOD

VICK

CLISSOLD

HUGHES, LGARVEY, M

JACKSON, MFOSTER PARK

95TH ST

119TH ST

K

PULASKI

RD

PULASKI

R

VANDERPOEL GREEN, WEVERS

LAVIZZO

MOUNTVERNON

ESMONDMOUNTGREENWOOD

SUTHERLAND

FT DEARBORN

LENARTMORGAN

COOK

ASHBURNCARROLL

2007 KEY STATISTICS● In Math, 68.6% of all students met

or exceeded state standards, up3.9% from 2006

● In Science, 60.4% of all studentsmet or exceeded state standards,down 2.9% from 2006

● Elementary school attendance rateremained steady at 94% in 2007

● Math scores for students withIndividual Education Plans (IEPs)increased at all levels

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

WHAT CHALLENGESDOES CPS FACE?While some progress has beenmade in reducing the percent ofstudents in the lowest quartile,more efforts are needed tofocus on this underachievinggroup, which consistentlyaccounted for 24-28% of ourstudents.

There are still significant gaps inachievement for AfricanAmerican and Hispanic studentscompared to white and Asian/Pacific students in both Readingand Math. This gap is most

HOW ARE CPS’ HIGH SCHOOLSPROGRESSING?

pronounced at the top testscores.

Last year we reduced the gapbetween CPS and statewideresults, but we need moreprogress here as well.

To solve these gaps and meetour goals, we need to start inthe early grades to make sureour students are ready for futuresuccess.

AREA 17Corporate, community and civicleaders across the city of Chicagoserved as Principal for a Day in 600district wide schools. Engagement ofthe city’s leaders helps broaden anunderstanding of theaccomplishments and challengesfaced by students, teachers, andprincipals. As a result of thisinitiative, Pirie School receivedgenerous donations to remodel theschool’s library, support technologyplans, and purchase computers.

18

BUCKINGHAMBUCKINGHAM

MIRELESMIRELES

DAVIS DEVELOPMENTALDAVIS DEVELOPMENTAL

YALE

MAYS

STAGG

HINTON

PARKER

DENEEN

RUGGLESOGLESBY

HARVARD

WESTCOTT

BANNEKER BROWNELL

WENTWORTHROBESON HS

GUGGENHEIMPARK MANOR

ASHE

NEIL

MANN

BLACKRYDER

PIRIE

HOYNE

DIXON

COLES

POWELLTANNER

WARREN

REVERE

MCDADE

EARHART

MADISON

BOUCHET

MCDOWELL

SULLIVAN

CALDWELL

BURNSIDE

BRADWELL

GILLESPIETURNER-DREW

AVALON PARK

NINOS HEROES

WASHINGTON, H

SOUTH CHICAGO

STATE

ST

HALSTED

ST

STONY

ISL

ANA

AV

OKEEFFE

PARKSIDE

KIPLINGBUCKINGHAM

MIRELES

DAVIS DEVELOPMENTAL

“The focus on reading and classroom learning,

investing to build new schools, providing

after-school and summer-school learning

opportunities and creating new education

options are all making a difference.”

Arne Duncan, Chief Executive Officer

More students are takingAdvanced Placement (AP)courses and more students arepassing AP tests. In 2001,4,126 students took an APcourse, while 11,137 took onein 2007.

CPS is improving its ACT scoresfaster than the state and thenation.

ACT scores for graduatingseniors are up slightly inEnglish, Math and Science.Reading scores remained steadyat 16.8, the same as 2006.

This year’s CPS graduating classposted a composite ACT scoreof 17.2, up from last year’sscore of 17.0. 14

15

16

17

18

03 04 05 06 07

Reading Math Science English Composite

ACT scores2001 through 2007

Source: Chicago Public Schools, Research, Evaluation and Accountability; ACT.org

03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07

Five CPS high schoolswere selected from19,000 high schoolsby US News & WorldReport in its annuallist of the top 100 highschools in the nationfor their exceptionalacademic performanceand proven ability to prepare students forcollege: NorthsideCollege Preparatory,Walter Payton CollegePreparatory, WhitneyYoung, Lincoln Parkand Jones CollegePreparatory.

in fund balances. Theyprovide a greater level of detail of revenues andexpenditures and focus onhow well CPS has performedin the short term in the mostsignificant funds

● Notes to the basic financialstatements

What is the Management’sDiscussion and Analysis(MD&A)?In the MD&A section of the CPS’annual report, managementdiscusses numerous aspects ofthe organization, both past andpresent. Among other details,the MD&A provides an overviewof the previous year ofoperations and how the CPSfared in that time period.Management also touches onthe upcoming year, outliningfuture goals and approaches tonew projects.

FINANCIALR E P O R T What’s New This Year? CPS has again led the way with

early adoption of the followingGovernment AccountingStandards Board Statements:GASBS 48, Sales and Pledgesof Receivables and FutureRevenues and Intra-EntityTransfers of Assets and FutureRevenue; GASBS 50, PensionDisclosures – an amendment ofGASB Statements No. 25 andNo. 27.

AREA 18 Area 18 was showcased by Chicago Magazinefor having two of Chicago’s top fifty performingelementary schools, Washington and PoeClassical. University of Chicago along with CPSOffice of Math and Science support Pullman,West Pullman, Songhai and Smith ElementarySchools for the Math Restructuring project. Thisorganization assists coaches and teachers withprofessional development for the Everyday MathCurriculum. Area 18 also had the highest numberof 2006-2007 DRIVE Awards finalists.

19

What is included in the CPSComprehensive AnnualFinancial Report (CAFR)?Each year, in addition to thispopular version of the annualreport, CPS produces aComprehensive Annual FinancialReport (CAFR). The CAFR isprepared using a reportingcombination of both government-wide financial statements andfund financial statements. Thesefinancial statements consist ofthree major components:

● Government-wide financialstatements include theStatement of Net Assets andthe Statement of Activitieswhich provide a broad, long-term overview of CPS’finances

● Fund financial statementsinclude the balance sheet and statement of revenue,expenditures, and net changes

THORP, JTHORP, J

DUBOISDUBOIS

COLEMANCOLEMAN

BROWN, RBROWN, R

METCALFEMETCALFE

WHISTLERWHISTLER

ASHENEIL

BLACK (AMP)RYDER

PIRIE

HOYNE (AMP)WARREN

MCDADE (AMP)

EARHART (AMP)KIPLING

MCDOWELL (AMP)CALDWELL

BURNSIDEGILLESPIE

BUCKINGHAMTURNER-DREW

BOWEN CA

WASHINGTON, H

GLOBAL VISIONS CHICAGO VOTIONAL HS NEW MILLENNICHICAGO DISCOVERY BOWEN ENVIRONMENTAL DAVIS DEVELOPMENTAL

KOHN

EVERS

DUNNE

WACKER

MORGAN

OND

LAVI

(AMP)

GRESHAM

BE

BARNARD

GREEN, W

FERNWOODJULIAN HS

HARL

HUGHES, LGARVEY, M

JACKSON, M

OEL

AND (AMP)

FOSTER PARK

MOUNT VERNON

FORT DEARBORN

CICS -ELLISON

PA

HABAZZ

CICS -LONGWOOD

POE

CLAY

SHOOP

MARSH

SMITH

OWENS

HALEY

TAYLORSCHMID

CULLEN BRIGHTADDAMS

CURTISHIGGINS SONGHAI

GRISSOM

GOMPERS

BURNHAM

LAWRENCE

ALDRIDGE

PULLMAN G

GALLISTEL

WEST PULLMAN

CARVER MIDDLECARVER PRIMARY

WASHINGTON, G ES

95TH ST

STATE

ST

HA

ASHL

AND A

V16

00W

THORP, J

DUBOIS

WHITECOLEMAN

BROWN, R

METCALFE

WHISTLER

CPS ANNUAL REPORT AND THE MANAGEMENT’SDISCUSSION AND ANALYSIS (MD&A)

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

Highlights from theGovernment-Wide FinancialStatementsTotal assets of $8.3 billionincreased due to larger year-endcash balances, new schoolconstruction, and otherimprovement projects as part ofCPS’ Capital ImprovementProgram.

Capital assets, net ofdepreciation increased $104million or 2.4% over the priorfiscal year due to continuedprogress of the CapitalImprovement Program. Capitalassets, net of depreciation, forfiscal year 2006 totaled $4.38billion and $4.48 billion in fiscalyear 2007. In fiscal year 2007,CPS issued $355.8 million inUnlimited Tax Obligation Bondsto fund the Capital ImprovementProgram with net proceeds of$366.5 million includingpremium.

Long-term debt increased$245.2 million, or 5.4%. Thetotal long-term portion of debtoutstanding and capitalizedleases was $4.58 billion infiscal year 2006 and $4.82billion in fiscal year 2007.

Accrued pension increased to$1.75 billion in fiscal year 2007from $1.51 billion in fiscal year2006, an increase of $238.4million, or 15.8%. The year-endbalance reflects the increase inthe net pension obligationrelated to the Public SchoolTeachers’ Pension andRetirement Fund of Chicago.

CPS ANNUAL REPORT AND THE MANAGEMENT’SDISCUSSION AND ANALYSIS (MD&A)

Other post-employment benefit(OPEB) liabilities increased to$425.1 million in fiscal year2007 from $213.3 million infiscal year 2006, an increase of$211.8 million, or 99.3%. Thisliability represents actuariallydetermined health care costsassociated with the PublicSchool Teachers’ Pension andRetirement Fund of Chicago.

Other long-term liabilitiesincluding current portiondecreased to $343.9 million infiscal year 2007 from $366.9million in fiscal year 2006, adecrease of $23 million, or6.3%. The year-end balancereflects decreases in accruedsick pay and vacation pay of$30.9 and $5 millionrespectively, and increases inaccrued workers’ compensation,accrued general and automobileand tort liabilities of $5.9million, $5.8 million and $1.2million, respectively.

AREA 19Instructional Area 19’s uniquedevelopment of the PenguinProject encompassesecological, biological, research,mathematical, social science,post-secondary, and artisticcomponents for school use.The Area’s excellence ineducation is exemplified by thepresentation of the prestigious$25,000 Milken FamilyFoundation National Educatoraward to a teacher at SchurzHigh School.

TAFT HS

VAUGHN OCC HS

FOREMAN HS

SCHURZ HS

CICS NORTHTOWN

NORTHSIDELEARNING HS

MATHER HS

NORTHSIDE HS

SULLIVAN HS

ROOSEVELT HS

VON STEUBEN HS AMUNDSEN HS

UPLIFT HS

LAKEVIEW HS

LANE TECH HS

DEVRY HS

SENN HS

PROLOGUE EARLY COLLEGE

20

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT REVENUE EXPENDTURES

GOING FORWARD

The Statement of Net Assetspresents information on all ofCPS’ assets and liabilities,with the difference betweenthe two reported as netassets. Increases ordecreases in net assets mayserve as a useful indicator ofwhether the financial positionis improving or deteriorating.

All of CPS’ services arereported in the government-wide financial statements,including instruction, pupilsupport services, instructionalsupport services,administrative supportservices, facility supportservices and food services.Property taxes, replacementtaxes, state aid, interest andinvestment earnings financemost of these activities.Additionally, all capital anddebt financing activities arereported here.

NETASSETS

AREA 21Numerous accolades exemplify the schools’leadership and students’ successful drive –from the principal’s prominent participationin the Leadership and Ethics Conferencecomparative study of schools in Englandand schools in the U.S.; CollegiateScholar student award by the University

of Chicago; prestigious GatesMillennium Scholarship, a fullacademic student scholarship

through a PH.D. program; nation-widepool selection of three Area 21principals’ participation in a tour ofschools in Beijing, China; to thegrand prize of $2,000 in TCFBank’s “Art in YourCommunity” contest.

STATEMENT OF NETASSETS As Reported inGovernment-Wide FinancialStatementsThis Statement of Net Assetsis aimed at citizens who areinterested in a government’sfinance, but do not have directaccess to the detailedaccounting data. Thegovernment-wide financialstatements are designed toprovide readers with a broadoverview of the schooldistrict’s finances in a mannersimilar to a private sectorbusiness. Government-WideFinancial Statements areavailable in CPS’Comprehensive AnnualFinancial Report (CAFR).

NOBLE ST-ESCALANTE COLLEGE PREP HSNOBLE ST-ESCALANTE COLLEGE PREP HSNOBLE ST-RAUNER COLLEGE PREP HSNOBLE ST-RAUNER COLLEGE PREP HS

NORTH LAWNDALE NORTH LAWNDALE CHARTER HSCHARTER HS

STEINMETZ HS

LINCOLN PARK HS

PAYTON HS

JONES HS

PERSPECTIVESCHARTER HS

JUAREZ HS

SIMPSON ALT HS

YOUNG HS

BEST PRACTICE HS

CRANE HS

MANLEY HS

PROSSER HSKELVYN PARK HS

NOBLE-PRITZKER COLLEGE PREP

NORTHGRAND HS

RAMIREZ COMPUTER SCIENCE

NOBLE ST CHARTER HS

ASPIRA ANTONIO PANTOJAEARLY COLLEGE CAMPUS

WELLS HSNOBLE ST-ESCALANTE COLLEGE PREP HS

NOBLE ST-RAUNER COLLEGE PREP HS

CLEMENTE HS

CLARK HSMARSHALL HS

DOUGLASS HS

AUSTIN CAMPUS

NORTH LAWNDALE CHARTER HS

COLLINS HS

ACT CHARTER HS

NOBLE ST-ROWE-CLARK ACA HS

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

CONDENSED STATEMENT OF NET ASSETS(Millions of dollars)

GOVERNMENTAL ACTIVITIES2007 2006 Difference % Change

Current Assets $3,848 $3,288 $ 560 17.0%

Capital Assets, Net $4,488 $4,384 $ 104 2.4%

Total Assets $8,336 $7,672 $ 664 8.7%

Current Liabilities $ 934 $ 877 $ 57 6.5%

Long-term Liabilities $7,288 $6,622 $ 666 10.1%

Total Liabilities $8,222 $7,499 $ 723 9.6%

Net Assets:

Invested in Capital Assets

Net of Related Debt $ 267 $ 268 $ (1) –0.4%

Debt Service $ 414 $ 357 $ 57 16.0%

Specific Purposes $ 131 $ 86 $ 45 52.3%

Unrestricted $( 698) $ (538) $(160) 29.7%

Total Net Assets $ 114 $ 173 $ (59) –34.1%

21

22

AREA 23 Kennedy High School ispreparing its students tosucceed in today’s intricatetechnological environmentthrough a partnership withWright College of the CityColleges of Chicago byoffering free enrollment toA+ Networking andSoftware evening classes.As an incentive and uponsuccessful completion ofthe course, studentsreceive a stipend.

As Reported in the Fund Financial Statements

HOW ARE CHICAGOPUBLIC SCHOOLSFUNDED?The Chicago Public Schools arefinanced through a combinationof Local, State and Federalsources. CPS uses fundaccounting to ensure and todemonstrate compliance withgovernment accounting and legal requirements.

Resources from all sourcestotaled $5,216 million for fiscalyear 2007. The Federalgovernment contributed 14.3% of all revenues for CPS in fiscalyear 2007, while State aid was32.6%. The remaining 53.1% ofresources are raised locally andinclude property and replacementtaxes as well as net proceedsfrom bonds issued for the CapitalImprovement Program in theamount of $366.5 million.

Fund Financial Statements areavailable in CPS’ ComprehensiveAnnual Financial Report (CAFR).

U OF C CHARTER HS U OF C CHARTER HS WOODLAWNWOODLAWN

KENWOOD HSKENWOOD HS

DUNBAR HSDUNBAR HS

GRAHAM GRAHAM OCC HSOCC HS

KELLY PARK HS

FARRAGUT HSSPRY HS

CURIE HS

HANCOCK HS

HUBBARD HS

KENNEDY HS GAGE PARK HS

LINDBLOM HS

HARPER HS

RICHARDS HSTILDEN HS

HOPE HS

U OF C CHARTER HS WOODLAWN

HYDE PARK HS

ACE TECH CHARTER HS

DYETT HS

KENWOOD HS

KING HS

PHILLIPS HS

YOUTH CONNECTIONS CHARTER HS

DUNBAR HS

GRAHAM OCC HSYOUNG WOMEN’S

LEADERSHIP CHARTER HS

RESOURCES

Investment Income 2%

Federal Aid 14%

Property Taxes 34%

State Aid 33%

Other Local 5%

Replacement Taxes 4%

Other Financing Sources 8%

Resources by Sources2007 — All Funds

Source: Chicago Public Schools

Resources by Sources2007 — All Funds

Source: Chicago Public Schools

03 04 05 06 07$0

$1000

$2000

$3000

$4000

$5000

$6000

Property Taxes

Replacement Taxes

State Aid

Federal Aid

Investment Income

Other Local

Other Financing Sources

In m

illio

ns

AREA 24 An unrelenting belief in its students throughinnovative programs and teaching methods,schools and teachers provide their studentsa unique opportunity to explore a world ofpossibilities. The nation’s most prestigiousteaching award—$25,000 Milken NationalEducator award, was presented to a teacherfrom Las Casas High School while distinctiveagricultural programs at Chicago HighSchool for Agricultural Sciences offerstudents new experiences outside theclassroom. The Ag School was a recipient ofa $50,000 grant as a result of the SteveIrwin fellowship awarded to one of its ecoscientist students.

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

BOGAN HS

SOUTHSIDE OCC HS

SIMEON HS

CICS-ELLISON

JULIAN HS

MORGAN PARK HS

CHICAGO AGRICULTURAL HS FENGER HS

BROOKS HS

HARLAN HS

CORLISS HS

WASHINGTON HS

CHICAGO VOCATIONAL HS

LAS CASAS VOCATIONAL HS

ROBESON HS

CALUMET CAMPUS

HIRSCH HS

23

RESOURCES BY TYPE The following schedule presents a summary ofrevenues and other financing sources by type forthe general operating fund, capital projects fundand debt service fund for the fiscal year endedJune 30, 2007. It also depicts the amount andpercentage changes in relation to prior yearrevenues and other financing resources.

Local property taxes provide approximately 34%of all revenues. The other local revenues comefrom personal property replacement taxes,interest income, lunchroom fees andmiscellaneous items.

● Property Taxes increased by $50 millionfrom fiscal year 2006 due to increases in taxlevies and new properties.

● Personal Property Replacement Taxesincreased $16 million from fiscal year 2006as a result of higher corporate profits.

● State Aid increased by $99 million due to a$170 per pupil increase in foundation level,up to $5,334 per student.

● Federal Aid decreased $30 million due todecreased spending on E-rate projects andless federal grants funds.

● Investment Income increased $45 millionfrom fiscal year 2006 due to higher interestrates and higher cash balances.

RESOURCES AND OTHER FINANCING SOURCES(Millions of dollars) Percent

Increase Increase 2007 2006 Percent (Decrease) (Decrease)

of Total from 2006 from 2006Property Taxes $ 1,768 $ 1,718 33.9% $ 50 2.9%

Replacement Taxes 201 185 3.9% 16 8.6%

State Aid 1,702 1,603 32.6% 99 6.2%

Federal Aid 746 776 14.3% (30) –3.9%

Investment Income 117 72 2.2% 45 62.5%

Other 286 163 5.5% 123 75.5%

Subtotal $ 4,820 $ 4,517 92.4% $ 303 6.7%

Other Financing Sources 396 401 7.6% (5) –1.2%

Total $ 5,216 $ 4,918 100.0% $ 298 6.1%

* Minor differences in percentages occur due to rounding.

● Other Income increased $123 million primarilydue to debt service funding from the City ofChicago used to decrease some of CPS'general obligation bonds and the swapproceeds from fiscal year 2006.

24

AREA 25—Instruction Office for Small Schools Area 25 is successfully implementing Community Schoolmodels as both a place and a set of partnerships betweenthe school and other community resources. Its integratedfocus on academics, community services and partnershipopportunities leads to improved student learning, strongerfamilies and healthier communities. Infinity, Math, Scienceand Technology Academy and World Language High Schoolbecame the recent recipients of a Fry Foundation grant toimprove reading across the curriculum in two small highschools. This is a program of reading and discussionactivities to help high school students engage with readingand comprehend difficult text.

ORR CAMPUSORR CAMPUSVINES HSVINES HSAASTA HSAASTA HSEXCEL HSEXCEL HS

LITTLELITTLEVILLAGE CAMPUSVILLAGE CAMPUS

INFINITY HSINFINITY HSSOCIAL JUSTICE HSSOCIAL JUSTICE HS

MULTI-CULTURAL ARTS HSMULTI-CULTURAL ARTS HSWORLD LANGUAGE HSWORLD LANGUAGE HS

WILLIAMS CAMPUSWILLIAMS CAMPUSBIG PICTURE WILLIAMS HSBIG PICTURE WILLIAMS HS

DUSABLE CAMPUSDUSABLE CAMPUSBRONZEVILLE HSBRONZEVILLE HSDUSABLE-SHABAZZDUSABLE-SHABAZZWILLIAMS PREP SCHOOL WILLIAMS PREP SCHOOL OF MEDICINE OF MEDICINE

ENGLEWOODENGLEWOOD CAMPUS CAMPUSTEAM ENGLEWOOD ACADEMYTEAM ENGLEWOOD ACADEMY

SOUTH SHORE CAMPUSSOUTH SHORE CAMPUSSCHOOL OF THE ARTS HSSCHOOL OF THE ARTS HS

SCHOOL OF TECHNOLOGY HSSCHOOL OF TECHNOLOGY HSSCHOOL OF LEADERSHIP HSSCHOOL OF LEADERSHIP HS

SCHOOL OF ENTREPRENEURSHIP HSSCHOOL OF ENTREPRENEURSHIP HS BOWEN BOWEN CAMPUSCAMPUSNEW MILLENIUM HSNEW MILLENIUM HSGLOBAL VISIONS HSGLOBAL VISIONS HSBOWEN ENVIRONMENTAL HSBOWEN ENVIRONMENTAL HSCHICAGO DISCOVERY HSCHICAGO DISCOVERY HS

CHICAGO ACADEMY HS

AL RABY HS

ORR CAMPUSVINES HSAASTA HSEXCEL HS

LITTLEVILLAGE CAMPUS

INFINITY HSSOCIAL JUSTICE HS

MULTI-CULTURAL ARTS HSWORLD LANGUAGE HS

WILLIAMS CAMPUSBIG PICTURE WILLIAMS HS

BIGPICTUREBACK OF

YARDS HS DUSABLE CAMPUSBRONZEVILLE HSDUSABLE-SHABAZZWILLIAMS PREP SCHOOL OF MEDICINE

ENGLEWOOD CAMPUSTEAM ENGLEWOOD ACADEMY

SOUTH SHORE CAMPUSSCHOOL OF THE ARTS HS

SCHOOL OF TECHNOLOGY HSSCHOOL OF LEADERSHIP HS

SCHOOL OF ENTREPRENEURSHIP HS BOWEN CAMPUSNEW MILLENIUM HSGLOBAL VISIONS HSBOWEN ENVIRONMENTAL HSCHICAGO DISCOVERY HS

EXPENDITURESAs Reported in the Fund Financial Statements

WHERE DOES THE MONEYGO?These graphs display fiscal year2007 expenditures acrossspecific program areas. DetailedFund Financial Statements areavailable in CPS’ ComprehensiveAnnual Financial Report (CAFR).

Instruction includes basiceducation and special educationfor students with physical,mental, emotional and/or learningdisabilities. Also included arevocational education, summerschool, supplementary bilingualeducation and education foreconomically deprived students.

Pupil Support Services includesguidance counseling, social work,speech pathology, nursing,psychology, occupational andphysical therapy services.

General Support includes:

● Instructional Support includesprograms designed to enhancecurriculum development,educational staff training andlibrary services.

Expenditures by Function2007 — All Funds

Community Services 1%

General Support Services 19%

Instruction 52%

Teacher Pension 3%

Food Services 4%

Capital Outlay 7%

Source: Chicago Public Schools

Pupil Support 7%

Debt Service 7%

Expenditures by Function2007 — All Funds

In m

illio

nsSource: Chicago Public Schools

03 04 05 06 07$0

$1000

$2000

$3000

$4000

$5000

Instruction

Pupil Support

General Support

Food Services

Community Serv./Other

Teacher Pension

Capital Outlay

Debt Service

In m

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AREA 26 Military Schools and JROTC met or exceededprojected enrollment! Cadets participated innumerous cadet competitions, leadershipdevelopment programs, citywide support staffopportunities with monetary awards presented to170 cadets to recognize exemplary achievement andservice. With a generous $92,000.00 grant, fourSpring Break trips were provided for 225 cadets toFort Knox, Kentucky, Gettysburg/Washington, DC,Springfield, Illinois and a multi-site trip to the UnitedStates Military Academy, United States NavalAcademy, Norwich University and Antietam. RickoverNaval Academy was included in the ACTQualityCore® pilot program.

CPSPROFILE

NEWPROCESSES

FUNDING EDUCATION

CORE STRATEGIES

EDUCATIONALOUTCOMES

FINANCIALREPORT

GOING FORWARD

25

● Facilities Services includes operation andmaintenance of plant and studenttransportation.

● Administrative Support includes schooladministration such as school principaland assistant principal compensation aswell as central and area officeadministration.

● Food Services includes student lunchesand breakfasts.

● Community Services includes after schoolprograms and programs provided for non-public schools.

● Teachers’ Pension includes CPS’semployer share of teacher pensionfunding.

● Capital Outlay includes major newconstruction and renovation costs.

● Debt Service includes the payment ofgeneral long-term principal and interest.

EXPENDITURES BY FUNCTION

The following schedule represents a summaryof the general operating fund, capital projectsfund and debt service fund expenditures forthe fiscal year ended June 30, 2007, as wellas the percentage change in relation to prioryear amounts.

EXPENDITURES(Millions of dollars) Percent

Increase Increase 2007 2006 Percent (Decrease) (Decrease)

of Total from 2006 from 2006Instruction $2,492 $ 2,539 51.6% $ (47) –1.9%

Pupil Support Services 349 334 7.2% 15 4.5%

General Support Services 914 895 18.9% 19 2.1%

Food Services 180 173 3.7% 7 4.0%

Community Services 45 46 0.9% (1) –2.2%

Teachers’ Pension 156 75 3.2% 81 108.0%

Capital Outlay 346 311 7.2% 35 11.3%

Debt Service 342 213 7.1% 129 60.6%

Other 8 23 0.2% (15) –65.2%

Total $ 4,832 $ 4,609 100.0% $ 223 4.8%

Operating expenditures increased by 1.4% or$59 million. The expense by function in theaccompanying table shows a decrease inInstruction, but is largely offset by theincrease of $81 million in Teachers’ Pensionas well as smaller increases in Pupil Support,General Support and Food Services. CapitalOutlay increased by 11.3% or $35 million dueto the continuation of the CapitalImprovement Program. Debt serviceexpenditures have increased by 60.6% or by$129 million due to defeasance of CPS’bonds series 2004F, 2004H and 2005C.

RICKOVER RICKOVER MILITARY HS MILITARY HS

LAKE VIEW LAKE VIEW

LANE TECH LANE TECH FOREMAN FOREMAN LINCOLN PARK LINCOLN PARK PROSSER PROSSER

WELLS WELLS DOUGLASS DOUGLASS

YOUNG YOUNG

JUAREZ JUAREZ

PHOENIX MILITARY HS PHOENIX MILITARY HS

CHICAGO MILITARY HS CHICAGO MILITARY HS PHILLIPS PHILLIPS DYETT DYETT

HUBBARD HUBBARD ENGLEWOOD ENGLEWOOD

HYDE HYDE PARK PARK

SCHOOL SCHOOL OF LEADERSHIP OF LEADERSHIP

CHICAGO VOCATIONAL CHICAGO VOCATIONAL

MORGAN MORGAN PARK PARK

ROOSEVELT

RICKOVERMILITARY HS

SENN

LAKE VIEWSCHURZ

LANE TECHFOREMAN KELVYN PARK LINCOLN PARKPROSSER

WELLSDOUGLASS

YOUNG

MANLEY JUAREZDUNBAR

MARI