Welcome to the first part of my new series, in which I’d like to compare Chicago Public Schools to Apple Inc. (AAPL) for two reasons; one is that an apple is the icon for a teacher and second is that Apple is the most successful, largest capitalized company in the U.S., a model of global efficiency and innovation and just hit $700/share. It has over $81 billion dollars in cash and about $116 billion in total assets. CPS has $4.2 billion in cash and receivables and $10.1 billion in total assets and just experienced the first teacher strike in 25 years.
Apple is 10 times larger than CPS in cash and assets alone and yet the Apple annual report is 83 pages long, and a 22-page Exhibit entitled, “Business Conduct-The way we do business world-wide.” The CPS annual report is 258 pages and weighs in at just over 2 and ½ pounds. This is just the start of the many differences between these two annual reports. I have long read articles where professionals have attempted to read and understand the CPS Comprehensive Annual Report and have come out with a headache complaining that the budget makes little to no sense. I must state that the budget is cumbersome and overwhelming. I will not say that I have read the entire 258 page report, but I will tell you that the CPS annual report is 310 percent larger than Apple, which I have read and found it to be efficient and clear.
Here are the three main points
- CPS has an annual budget of $5.1 billion dollars.
- CPS has 618 schools
- CPS has 403,000 students
I would think that with an annual budget per student of $12,694 or nearly $8.3 million per school, our schools would be supplied with the very best technology, equipment and learning comforts. Instead we have over 140 schools without air-conditioning and nearly that many without libraries and almost 100 schools without computers. So where has the money gone?
Let’s take it from the top. The Chicago Board of Education has a budget of $1,239,955 for eight positions (as the CPS budget overview states) that is $154,994/position. I want to offer kudos to the board for reducing their head count from 15 to eight saving CPS over $1,300,000 or $185,700/position. Chief Executive Officer of Schools Jean-Claude Brizard reduced positions from 8 to 1, but the budget for that one position is $316,423. I guess this is what they meant when they said, “man cannot live by bread alone.”
The office of the Chief Education Officer has a budget of $515.9 million that is an increase over the previous budget of $12 million for the 2,233 positions (these are the administrators that supervise all of CPS) at an average cost of $231,043/position. Now comes the Network Offices; these are the nine offices near the schools commissioned to make sure those teachers and principals are doing their jobs. The Network Office and Support budget is $34,396,095 for 225 positions at a cost of $152,871/position.
Next comes my personal favorite of the departments, the Talent Office. The Talent Office is described by Brizard as, “…responsible for ensuring CPS has a high-quality workforce. One of the key FY2013 initiatives is implementation of a new teacher evaluation system. Approximately $10 million is included in the Talent Office budget in FY2013 to support this implementation. In addition, $1 million is included to increase the number of principal interns, improving our pipeline of high-quality school teachers.”
If you are confused about the Talent Office, let me translate that for you. This is what the rest of the world refers to as the Human Resource Department or the Personnel Department. This “Talent Office” is so talented it has a budget of $46,089,655 for 275 positions or $167,598/position. The School Collaboratives is defined by the CEO as the total of the school budgets which is $3.5 billion, which divided by 618 schools (I know not all schools are created equal) is $5.75 million per school. How in the world can we have schools without air-conditioning when the “average” school budget is approximately $5.75 million? Wait maybe it’s the employees? Well if I take the $3.5 billion over the 35,461 employees throughout all 618 schools, the average is $100,232/position. Of course this includes principals, vice-principals, clerks and assorted clerical staff in addition to teachers.
We know teachers do not make an average of $100,232 per year because we were told at least twice a day during the strike that the average CPS teacher makes $76,000/year. That $76,000/year was the number that was mentioned in the news over and over. However, this number includes the mandatory contribution to their well-deserved pension, which is like your employer including their FICA matching contribution on your behalf as your actual salary. I will attempt to explain the pension disaster in my next column. So, we can conclude that the teachers using CPS accounting are by far the lowest paid of all the professional employees.
- The teachers earn 24 percent of what CEO Brizard earns
- The teachers earn 33 percent of what the Chief Education Office earns.
- The teachers earn 45 percent of what the Talent Office earns
- The teachers earn 50 percent of what the Network Office earns.
Not only are the teachers our first line with our children and parents, they are the lowest cost provider.
The average Apple employee makes $108,483/year. It is understandable that the average Apple employee would make more than a Chicago Public School teacher. It is not understandable that an average Apple employee makes 76 percent less than CEO Brizard, 67 percent less than his administrators, 55 percent less than his human resource (Talent Office) and 50 percent less than his network officers. Apple may be too expensive of a stock to own at $700/share but we already own a very expensive school district, CPS. I wish CPS were the apple of my eye.
The opinions and recommendations expressed herein are those of Mr. Garrido and do not necessarily reflect those of the firm and are subject to change without notice. This information is not to be construed as an offer to sell or the solicitation of an offer to buy any securities. The information contained herein has been derived from sources believed to be reliable but is not guaranteed as to accuracy and does not purport to be a complete analysis of the security, company or industry involved.