CHICAGO (CBS) — A top financial analyst said bond rating agencies probably won’t be troubled by the Chicago Board of Education’s vote to borrow more than $1 billion to help the Chicago Public Schools address a massive budget crunch in the coming year.
The school board approved the new borrowing on Wednesday, a day after the Illinois House rejected a three-week delay for a $630 million payment due to the teachers’ pension fund on June 30. The district also is facing a $1 billion operating deficit.
It might not sound like a good idea for CPS to borrow $1 billion more when it’s already heavily in debt, but Performance Trust Capital Partners director Brian Battle said CPS has no real options.
“They need to borrow this money short-term, so they can make a massive pension payment that’s coming due here in two weeks. And they do not have legislative relief from Springfield. So they have no choice, other than to take out a short-term loan – sort of a payday loan – until they can secure some longer-term funding,” he said.