As the city barrels toward a threatened teachers strike deadline just 10 days from now, absolutely central is the question of how much more Chicago Public Schools can afford to pay without again scuttling the district’s finances or forcing aggrieved taxpayers to dig deep—again.

Not surprisingly, the Chicago Teachers Union says CPS is flush with cash and needs to reward long-suffering teachers, while the Chicago Board of Education asserts its current proposal—"the most generous offer in CTU history," a top aide to Mayor Lori Lightfoot calls it—is as sweet as the city can afford.

But after talking to both sides and outside experts, it seems clear to me that the truth is far closer to the board’s position than the CTU’s. A district whose bonds are still rated at junk levels, whose financial reserves are a fraction of what they should be and which has a dramatically underfunded pension plan has great reason for caution.

The core issue in the dispute is just how much help CPS got from roughly $1 billion in new funding in the past three years, money that principally came from a new property tax for teacher pensions, which now is garnering $477 million a year, and a boost in state aid for pensions, through a higher state income tax, of $245 million a year.

“The board now enjoys unprecedented new levels of funding that necessitate a catch-up for years of depressed contract settlement,” the union argued in its brief to an independent fact finder. In other words: Pay up.

In fact, the fiscal picture is much more complicated than that.

The wealth of new property tax revenue and state funding merely got the board back to making the pension payments it should have been making all along, a big reason why the $11 billion Chicago Teachers' Pension Fund still only has 47.9 percent of the assets needed to pay promised retirement benefits.

As described in the fund’s most recent annual financial statement—see Page 25—CPS contributions that had been running roughly $600 million a year plummeted to $190 million in fiscal 2011, 2012 and 2013 under a state-authorized payment holiday, before soaring to as much as $733 million in 2017. Levels since have dropped to around $500 million, but now are again rising.

That huge jump in payments after the pension holiday drove CPS into what by most standards was technical bankruptcy, something parents all around the city whose schools lost staff and programs know all too well.

Now that the crisis is over, the union says the new money for pensions frees up money in CPS' operating budget for stuff it wants, like pay hikes above the 16 percent COLA over five years that Lightfoot has proposed, smaller class sizes and more support staff. That stance got some backing from the watchdog Civic Federation, which in its review of the new CPS budget said the new monies have “significantly reduced” the drain on classroom funds.

But that’s not all the federation said.

In its report, it noted that while unallocated cash in CPS accounts now is back in the black at $262 million, that’s still below where it was in 2014, and is only a quarter of the figure recommended by financial experts. At the same time, it added, CPS property tax collections have risen 32.8 percent in the last four years, to $3.135 billion; CPS long-term debt is up a third, to $8.4 billion; and the pension fund still is in significantly worse shape than it was a decade ago.

In other words, there’s one heck of a hangover from CPS' economic woes earlier this decade, and taxpayers will be suffering for that for quite a while.

"CPS is in better shape than it was, but it's still one of the worst-funded major local government units in the country," says Civic Federation President Laurence Msall. "There's not a lot of unallocated cash over there" for new staff and salary hikes, he adds. And reserves will be strained if we hit an economic recession.

As the federation put it in its report, an overly generous new contract “could put the district’s hard-earned financial stability and educational gains in jeopardy.” And Standard & Poor’s, though it upgraded its rating on CPS debt to a lesser level of junk, cautioned that a bad contract could "disrupt the board's recent financial progress."

According to Michael Frisch, Lightfoot’s point person on the contract talks, just the pay hike she’s put on the table would cost the district $350 million over the five years in play. CTU’s proposals to hire hundreds of other staffers and slash class sizes would cost more—in the billions, according to some board sources

While CPS finances have improved, “we’re not out of the woods yet,” Frisch said. That means any significant additional sweeting will either force higher taxes or cuts in some spending.

Despite recent statements that CPS can afford to pay a lot more without another tax hike, the union earlier had seemed to signal otherwise, with leaders urging consideration of a corporate head tax, a so-called LaSalle Street tax on financial transactions and other levies.

Add all of that together, and it’s clear that not only the future of school kids but the future of the city’s tax structure is on the table. This as Lightfoot prepares to unveil the new levies she’ll need to patch an $838 million hole in her own 2020 budget.

Keep watching, folks. It’s your money.