The city's school district will dip into its reserves instead  of raising taxes to cover a $97 million budget shortfall, school officials and Mayor Richard M. Daley said today.

The shortfall, blamed on rising salary, pension and health-care costs, along with a smaller than hoped for share of state funding, will be covered with a $100 million draw from the district's $480 million reserve fund.

The decision marks the first time in four years that CPS has had to draw from its reserve fund, according to CPS Chief Financial Officer Pedro Martinez.

The move also marks the first time since 1995 that the board has opted not to seek a tax increase.

CPS Chief Executive Officer Arne Duncan says the 20 percent reduction in reserves is a practice the district cannot afford to continue.

"Going much deeper than what we're doing this year could jeopardize our financial security," he said.

Lise Valentine, Vice President of the Civic Federation of Chicago, an organization that examines the effectiveness of city budget plans, says the move will provide taxpayers a much needed break on the heels of a hefty increase in sales taxes.

"In the context (of several tax increases), it's very admirable that (CPS) has shown restraint in its levy by keeping it flat this year," Valentine said.

Valentine says using reserves is something that should never be done lightly, but she is confident it will not negatively impact the district.

"The schools have shown they can build up reserves and keep them at a level that is responsible," she said.

Chicago Teachers Union spokeswoman Rosemaria Genova says the decision is preferable to teacher layoffs and larger classrooms

"Using the reserve funds will keep class sizes at an acceptable level and not compromise the quality of education," she said.

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