CPS borrowing tab rises to $900 million
Thursday, May 25, 2017 - Posted by Rich Miller
* WBEZ…
Chicago Public Schools will look to borrow $900 million in the coming weeks — adding to the district’s $9 billion debt — but it remains unclear if anyone will actually give them all the money.
The loans are $500 million more than what Mayor Rahm Emanuel’s office announced last week when a financial rescue plan was outlined. That’s because the district is looking for loans not only to get through this school year, but also to start off next year with a financial cushion.
District officials told board members Wednesday that the district would likely “just run out of money” if it didn’t take out these loans.
“The consequences would be dire financial straits in June,” said Senior Vice President of Finance Ronald DeNard. “[The borrowing is] very critical to our cash flow.”
The board unanimously approved two different borrowing packages on Wednesday. The first, which Emanuel announced last week, allows the school district to borrow $396 million against unpaid state grants. The other allows the district to borrow $215 million.
District officials also said they will try to borrow an additional $285 million that it got the authority for last year and didn’t use.
* Fran Spielman…
Emanuel said he would wait until the Illinois General Assembly adjourns its spring session before identifying a local source of revenue to generate the $400 million to $600 million in annual revenue CPS desperately needs.
In other words, the mayor doesn’t want to show his hand too soon and let Springfield off the hook.
“If you think in the final seven days that I’m gonna tell Springfield everything I’m gonna do while they’re negotiating an education budget, you’ve got to get yourself another negotiator. That would be the dumbest thing you could do,” the mayor said.
“I’m supposed to … give them a road map of how to take them off their responsibility, which is in the [state] constitution, to fund education? The state of Illinois that is dead-last in funding education? The state of Illinois that is dead-last in actually paying their bills once they make their pledges? The state of Illinois that has one of the worst formulas [for] funding education for poor kids? I’m supposed to tell them what I’m gonna do so they don’t do their job? Not a chance.”
* Sun-Times…
CEO Forrest Claypool indicated he would continue to fight for fair funding against Rauner, whom he frequently blames for CPS’ budget troubles.
And yet, Claypool did not mention that late last week that his general counsel quietly refiled a civil rights lawsuit against the governor, a stark contrast to the publicity he sought with press conferences and tours of African-American churches for its original iteration. The original suit was dismissed in late April by a Cook County judge who invited CPS lawyers to take another stab at it.
The lawsuit also was one source of contention between Claypool and his longtime friend, Emanuel, who believed the case a lost cause, as the Sun-Times has previously reported.
* Related…
* Claypool on CTU, Rauner Criticisms: ‘We’re Doing Something Right’
- Huh? - Thursday, May 25, 17 @ 10:43 am:
1.4% starts bad-mouthing the bind sale in 3, 2, 1 …
- Ron - Thursday, May 25, 17 @ 10:46 am:
For the sake of Chicago’s citizens, allow municipal bankruptcy. In the long term that will be the best solution to CPS problems.
- Steve - Thursday, May 25, 17 @ 10:48 am:
A school district with less 400,000 students has debt of $9 Billion !!! This is truly amazing.
- Ron - Thursday, May 25, 17 @ 10:52 am:
Does the $9Billion include pension obligations?
- VanillaMan - Thursday, May 25, 17 @ 11:18 am:
This will end badly, or worse if Troll-meister Ron’s “advice” was followed.
He’s like the six year old, shouting out, “MAGIC!” anytime he interrupts a teacher’s question.
- Carhartt Representative - Thursday, May 25, 17 @ 11:21 am:
Why stop at only $900 million?
- Steve - Thursday, May 25, 17 @ 11:26 am:
At least Chicago is being run by a man who understands the finer points of accounting.
http://abcnews.go.com/Blotter/story?id=6201900
http://www.businessinsider.com/book-rahm-emanuel-dumped-tons-of-freddie-mac-stock-days-before-it-collapsed-2011-11
- Texas Red - Thursday, May 25, 17 @ 11:28 am:
Would love to see who is on the mayors pre-approval list for this package ..
The source of the borrowing has not yet been determined, nor has the interest rate. That must wait until the borrowing goes out to bid. The maximum interest rate allowed by state law is nine percent.
- NoGifts - Thursday, May 25, 17 @ 11:28 am:
I think they’ll get it. It’s backed by the real estate value of the entire city. That’s a lotta value!
- Rod - Thursday, May 25, 17 @ 12:11 pm:
If CPS can borrow its way through Jan 2019 and the Democrats can take back the Governor’s office in NOV 2018 along with maintaining their majority in the Assembly then there will be some options much short of bankruptcy. One option would be a restructuring plan, similar to what is happening in Puerto Rico or what happened in 1979 with CPS.
Effectively all the debt can be put into a pot and paid off with bonds issued by a state created finance authority that gets a lot of control over CPS finances and gets first take on all incoming money. This of course will result in significant budget cuts for CPS.
The less pleasant possibility in the even of a Democrat take over in Jan 2019 would be just appropriating more money for CPS without additional controls put in place. I honesty can’t see JB Pritzker going for that deal, but maybe he is a true Democratic hack without any vision. If Rauner wins again CPS is in very deep trouble indeed.
- City Zen - Thursday, May 25, 17 @ 1:13 pm:
Just borrow from next year’s budget. It’s not like CPS hasn’t done that before.
- Lucky Pierre - Thursday, May 25, 17 @ 2:13 pm:
And Alderman Pawar thinks it is a tragedy schools have consolidated that even though enrollment is down over 9% since 2000.
The schools have accumulated 9 billion in debt but according to Alderman Pawar no cuts are possible.
https://www.wbez.org/shows/wbez-news/3000-fewer-students-enroll-in-chicago-public-schools/6a220eba-0ba6-4637-937e-2f12ca6412e7
- Ron - Thursday, May 25, 17 @ 2:41 pm:
Lucky, CPS enrollment declined by almost 11,000 in the 2016-17 school year. Almost entirely made up of african american kids. A lot of schools need to be closed.
- wordslinger - Thursday, May 25, 17 @ 6:19 pm:
–The first, which Emanuel announced last week, allows the school district to borrow $396 million against unpaid state grants.–
Since the school year and state fiscal year are soon ending, and the state has shorted general state aid by $1B, I’m guessing you’ll see other districts make similar borrowings.
See how that works? You promise and brag about a $750M bump, but in reality you cut $1B.
That’s how a bust out king transfers his business practices to government.