CPS Senior Vice President for Finance Ron DeNard issued the following statement regarding CPS’ bond sale of $725 million in tax-exempt bonds today.
“Borrowing money was never a decision that we took lightly and though some wanted our efforts to fail, CPS needed to move forward in order to keep our doors open so we could educate our children. Along with the tough cuts announced yesterday and earlier this year, the sale of these bonds will produce sufficient proceeds to mitigate our cash flow challenges through the end of the fiscal year. CPS faces many financial difficulties ahead, but we are committed to working with CTU on a long-term contract and the State to finally address the inequitable state funding for CPS that is driving the District’s budget imbalance.”
Background
CPS will make its February 15 debt service payments.
CPS priced $725 million in tax-exempt bonds.
These bonds will largely reimburse the operating fund for expenses that the District has already paid, including capital expenses.
The bonds include $206 million of debt restructuring to provide immediate budgetary relief in FY16.
CPS will postpone its plan to convert variable-rate debt to fixed-rate debt.
CPS will postpone reimbursing the general operating fund for some of the swap termination fees.
About $615 million of tax-exempt securities due in 2044 are pricing for a preliminary yield of 8.5 percent and about $60 million of debt due in 2026 is pricing for a preliminary 7.75 percent, according to four people with knowledge of the deal who requested anonymity because the pricing isn’t final. The top yield is about 5.8 percentage points more than benchmark municipal debt that matures in 29 years, data compiled by Bloomberg show.
“They’re in very severe financial straits,” said Dan Heckman, a senior fixed-income strategist in Kansas City at U.S. Bank Wealth Management, which oversees $128 billion. “This is just an effort to hopefully buy some time so they can continue to get their house in order but what a steep price they’re paying.”
They have a statutory cap of 9 percent, so it’s gonna be tough to go back to the markets unless they improve their financial position.
According to a city spokeswoman, $665 million in bonds maturing in 2044 were sold at a price of 8.5 percent,and $60 million in 2026 maturity securities at 7.75 percent. That’s roughly 580 basis points—almost six full percentage points—more than would have been charged to an AAA-rated school district.
Part of that is due to the terrible condition of Chicago schools. And, city aides are suggesting, part of it is due to Gov. Bruce Rauner’s repeated suggestion that CPS file for bankruptcy, raising market skittishness.
Officials originally planned for an $875 million bond issue. There was no immediate indication how they will make up that shortfall.
Groundhog Day was yesterday, but Exelon appears to want to keep celebrating. The Chicago-based nuclear giant is back to threatening to close nuclear plants in Illinois without financial help from the state.
Three months after appearing to soften on demands for hundreds of millions in ratepayer-financed subsidies, Exelon CEO Chris Crane said today that the company needs financial help this spring from Springfield.
If that doesn’t happen, he said on the company’s fourth-quarter earnings call, “we’ll have to make the rational economic decision” on money-losing plants.
At risk of closure, he said, are two of its six Illinois nukes: the Quad Cities station in western Illinois and the Clinton plant downstate.
It was only in November that Crane said Quad Cities had gone from a money loser to break-even as the company looked forward to 2017. That is no longer the case as future wholesale power prices have dropped since then. […]
The renewed threats come as Exelon posted its first year-over-year earnings increase in years for 2015. The company gave investors the welcome news that it plans to raise its dividend 2.5 percent a year for the next three years.
* Some human service providers received this e-mail yesterday…
Good morning ….
Last week in his second State of the State address, Governor Rauner announced a transformation of the way we provide health and human services here in Illinois . The Governor’s vision rests on five important pillars: focusing on prevention and population health, transitioning from institutional to community care, promoting self-sufficiency and education, paying for value and outcomes rather than volume of services, and the use of data to better know and serve the people of Illinois .
Our health and human services leadership teams have been working to lay the groundwork for this historic transformation. You may have already noticed some changes within the state’s health and human service agencies. The agencies are committed to becoming more innovative, collaborative and effective in caring for the citizens of Illinois.
No one is more aware of this need for transformation than leaders such as yourself who have worked so hard for so long within our siloed, expensive, and too often ineffective system.
Governor Rauner invites you to be a partner in fixing this system. One of the most important lessons reinforced from your meeting with the Governor is that this transformation will require your help. Open communication between our office and your organization will be instrumental as we partner with you to transform Illinois into a national model for the delivery of more innovative, compassionate, and effective healthcare and human services.
Aloha,
Linda Lingle
Chief Operating Officer
Office of the Governor
Rape crisis centers cutting back, LSSI lays off nearly half its staff, Haymarket Center is closing its social setting detoxification program, but, yeah, they’re “committed to becoming more innovative, collaborative and effective in caring for the citizens of Illinois.”
* Dan Mihalopoulos is told one thing by the state’s attorney and another by Kim Foxx…
I filed a public records request with the state’s attorney’s office to get a list of all of the felony cases Foxx tried during her 12 years as an assistant state’s attorney, from 2001 to 2013. Though public officials often dawdle at least as long as legally possible to answer such requests, aides to the embattled incumbent state’s attorney, Anita Alvarez, quickly replied this time.
They said there was a single case — just one — in the Felony Trial Division where Foxx worked with a more experienced prosecutor to win guilty verdicts against the two defendants. […]
Foxx said that the office of Alvarez — the two-term incumbent she is challenging in the Democratic primary on March 15 — had purposely given me a list that was missing many cases she had worked on.
“It is extremely incomplete,” she said. “I did try quite a few cases. This is crazy to me.”
Alvarez’s aides said what they gave me is everything they have on Foxx.
Weird all around.
* From a press release…
Donna More’s campaign to unseat State’s Attorney Anita Alvarez has taken to the airwaves with a month long TV advertising campaign that will run in targeted cable TV regions of Cook County. The effort includes a :30 second spot that insists “Anita Alvarez must go.”
The schedule that the campaign purchased will have both :30 and :15 second ads running in primetime and daytime. The plan calls for the spots to air on major cable networks for now including CNN, MSNBC, Fox News, Lifetime, TBS, TNT and USA networks.
The ads draw a sharp distinction between More and her opponents in the upcoming primary. Citing Alvarez’ misconduct, one ad criticizes her term in office as “justice delayed, justice denied” and then ticks off More’s unique qualifications: a former federal prosecutor with felony jury trial experience and a plan to reduce gun violence.
More is not a politician; she is a prosecutor who is running for office for the first time. She is the only candidate in the March 15 primary that isn’t beholden to political bosses.
* Kerry Lester has an in-depth interview with Cook County State’s Attorney Anita Alvarez. From Kerry’s bullet points…
• She decided within weeks to hand the reins of the investigation over to federal authorities and that she frequently communicated with them in the months to follow.
• A 13-month delay before bringing first-degree murder charges against officer Jason Van Dyke stemmed from the difficulty of building a strong case, not just making an arrest.
• The timing of the charges days after a judge ordered release of a video showing the shooting of Laquan McDonald was “in the interest of public safety,” but she had decided on the charges weeks earlier.
— Illinois is not providing any funding for MAP grants or colleges and universities, which profoundly impacts women. Fifty-four percent of all undergraduates and 62 percent (more than 80,000 women) of MAP grant recipients are women, who will no longer be able to afford college. Research has shown that women with college degrees earn substantially more throughout their lifetimes. […]
— The budget impasse is costing women jobs. Seven in 10 workers employed in Illinois’ nonprofit sector are women and many of these organizations receive state dollars. An October survey by the United Way of 500 organizations that receive state funding found 22 percent have been forced to lay off staff.
— Economic opportunity has also disappeared for thousands of women in Illinois due to cuts to the Child Care Assistance Program. Seventy-eight percent of families using CCAP are female-headed, single-parent households. Without affordable child care, it’s impossible for many of those women to work. CCAP cuts put in place by the Rauner Administration in July remain in place for 10,000 children. In just one week last month, a local provider in Belvidere reported having to turn away two families seeking child care.
— An estimated 66 percent of unpaid caregivers are female. One-third care for two or more people. Without a doubt, cuts to services for children, seniors and those with disabilities will fall upon the shoulders of unpaid or undercompensated female caregivers.
— 60 percent of seniors experiencing food insecurity, meaning they don’t have enough to eat or don’t know where their next meals will come from, are female. Funding to Meals on Wheels has been stopped, placing at risk the 6.5 million meals delivered each year. Many programs throughout the state have already been drastically cut back.
The cost of worker’s comp is the biggest factor driving our job losses. If we simply aligned our workers’ comp costs with those of a state like Massachusetts – which is hardly a bastion of conservatism – we can save state and local taxpayers over $300 million per year, while protecting those who suffer workplace injuries, and grow more careers at higher wages.
Rauner loves to talk about the economic success that Texas has experienced, and he has a point. Texas has had robust job growth, and its unemployment rate is only 4.7 percent—while Illinois’ is more than a point higher. These are achievements Texas should be proud of. But it must be noted that Mississippi has a higher unemployment rate than Illinois, and so do several other conservative states. Guess what else. Texas has a poverty rate of more than 16 percent—the fifth-worst in the country. Illinois’ poverty rate is 11.5 percent, putting us roughly in the middle of the pack.
In other words, although Texas’ achievements are real, they come at a huge cost: Lower wages, less regulation and a weaker safety net are causing poverty to rise and the middle class to shrink.
And while the anti-worker policies of the far right might have contributed to Texas’ record of mixed economic success, they obviously haven’t conferred the same benefits on all states where they’ve been tried. Yet they seem to have had the same costs.
On the other hand, the Democratic approach to economic growth mitigates poverty, raises wages and helps grow the middle class. What’s the unemployment rate in deep-blue Massachusetts? It’s 4.7 percent—the same as Texas.
And, by the way, some progressive states, such as Minnesota and Vermont, have unemployment rates that are far lower.
Biss told me a sentence was cut for space…
It isn’t clear exactly what about the Massachusetts system the governor is advocating for, so I can’t immediately comment on the specifics.
In its first 73 years, few dramatic changes were made to the Massachusetts compensation system. Meanwhile, other states implemented speedier procedures and paid more adequate benefits. In the early 1980s injured workers, unions, and health and safety organizations in Massachusetts campaigned for reform.
In 1985 these groups convinced the state legislature to revamp the system: the Massachusetts Division of Industrial Accidents was reorganized, benefits were increased, cost-of-living protection was added, and insurers were made responsible for workers’ legal expenses.
Five years later, however, the Massachusetts economy entered a downturn. Business groups, exaggerating the burden of insurance premiums and threatening to leave the state, demanded rollbacks in worker benefits.
In 1991, in a shameful display of blaming the victim, the legislature:
• Reduced the total-disability benefit rate to 60% of wages
• Shortened the duration of total-disability benefits to three years
• Reduced the partial-disability benefit rate by 10%
• Shortened the duration of partial-disability benefits to five years
• Eliminated payments for the first five days of disability (except for extended injuries)
• Eliminated benefits for scarring other than on the face, neck and hands
• Reduced cost-of-living benefits
• Eliminated certain injuries from coverage
The governor at the time was Republican William Weld. He did, however, have a Democratic legislature to deal with.
A gubernatorial candidate travels around Massachusetts and hears complaint after complaint from employers about the spiraling cost of insuring their employees. Annual double-digit rate increases have become the norm. Small businesses are wilting under the weight of these costs. Large businesses are considering relocating to places where insurance costs are lower. Many employees do not have access to quality healthcare. The candidate understands that a crisis exists and makes a priority of controlling, if not reducing, these costs. The candidate becomes governor. Is there any possible way this story ends happily?
Actually, it did, in an almost fairy-tale-like fashion, though not without a lot of angst. The year was 1990, the candidate was Bill Weld, and workers’ compensation insurance rates had gone up a staggering 92 percent over four years. Then, shortly after Weld took office in 1991, things went from bad to horrible. Insurers filed for another rate increase, this time a record 45.6 percent. Faced with this mess, the governor pushed through the Legislature a reform bill that he promised would eliminate the need for any rate increase. Very few people thought he would be able to keep that promise.
Let’s skip to the happy ending. Workers’ compensation rates have plummeted by about 60 percent since passage of the reform, in what many observers have described as the most remarkable turnaround in any insurance market in the country.
So, it did work. Now, all Gov. Rauner has to do is figure out how to be as effective as Bill Weld.
/snark
*** UPDATE *** From Rep. Mark Batinick…
Rich,
I’ve been studying the Mass. model for work comp for a long time. Attached is an LRU report from January of last year I requested. They do several things there well that we don’t. When I look at their model I see a system that focuses on the worker getting paid and healed as fast as possible. Any case open more than 12 weeks after an injury must be reviewed “to ensure that the treatment is necessary, reasonable, effective, and of good quality.” While indemnity costs per worker were near the median, the percentage of claims paid within 21 days of the injury was the highest. The benefit of getting the worker paid and healed quickly is self-evident.
And yes. They do have a causation standard.
The Massachusetts information starts on page 4 of the attached report. But in the interest of transparency, I attached the entire document.
As Illinois moves into its eighth month without a budget, Eastern Illinois University plans an estimated 200 layoffs of non-instructional employees — as well as furloughing all administrative and professional staff additionally in March to make it through the spring semester.
These layoffs, along with cash flow reserves and budget cuts and freezes enacted last week, will be used to push Eastern through the semester financially considering no appropriations from the state have been allotted for higher education. […]
In regard to the layoffs, 30-day notices will be sent out to those employees either late this week or earlier next week, President David Glassman told the Faculty Senate on Tuesday. This will start the normal “bumping” process associated with the layoffs such as in the fall, when employees with higher seniority who get a layoff notice can instead “bump” those with less seniority. […]
While the university will run through spring, uncertainty still lingers in regard to what will happen over the summer and in the fall. Glassman said he along with Paul McCann, interim vice president for business affairs, have started looking into if continuing operations during the summer will be possible, relying on tuition alone as income.
“If I find out from Paul that we would not generate enough tuition dollars to operate the university (in the summer), then I have to figure out what’s our other alternatives,” he said.
Eastern is in a similar boat regarding the fall semester. If funds do not come in from the state by the July, August and September time frame, Eastern will not be able to afford the expenses of the semester at its current capacity without changes. This is also dependent on tuition and federal funding.
* I’ve been wondering aloud lately whether the governor has been deliberately attempting to sabotage CPS bond sales since last April. Greg Hinz follows up…
Though no one will speak for the record, insiders are charging that Rauner, who wants to bust the CTU by forcing it into bankruptcy, is trying to block the system’s ability to borrow that $875 million.
The specific charge is that last month, when Claypool was in New York trying to schlep the bonds, Rauner knew it and intentionally scheduled a press conference to announce revived legislation to allow the state to take over CPS and force it into bankruptcy.
“Rauner knew,” says one source who won’t be named. “He did it on purpose.”
Sources close to the governor shrugged off such charges, one saying that Rauner is willing to give CPS a little help if only Emanuel will “give a little help” to Rauner in his campaign to weaken the power of CPS and other public-sector unions.
But there is a bit of a pattern of Rauner, a conservative Republican, opening his mouth in a high-profile way at very inopportune times for CPS and its proposed bond issue.
Rich Miller of Capitol Fax reported on a pair of Rauner statements, one stemming back to April. Then yesterday, after it became clear CPS would try to go to market today, Rauner told reporters that he’s begun considering who to send in to run CPS, even though it’s doubtful he has the legal authority to do that.
Rauner is not backing down. Says a source close to him, “City Hall is spinning out of control. . . .(Investors) see a CPS balance sheet that is fundamentally broken and a financial plan that is a fairy tale. Chicago is crumbling before our eyes.”
Right. “Crumbling before our eyes.” You might say that game is on, too.
He’s actually done this three times, first in April, then last week and again yesterday.
*** UPDATE 1 *** Gov. Rauner just called the allegation that he’s attempting to sabotage CPS bond sales “ridiculous.”
…Adding… He also said that “Bondholders will make their own decisions. I don’t care about them one way or another.”
*** UPDATE 2 *** Greg Hinz has the 5th Floor’s react…
Responding to the governor’s remarks, Emanuel spokeswoman Kelley Quinn shot back: “So much for the governor’s pledge to change his tone in an effort to actually get something accomplished. That lasted almost a week. While it seems he would rather continue pointing fingers and hurling insults, the rest of us will continue working on solutions to the range of challenges facing our city and our state.”
Owed about $200,000 by the state of Illinois, a rape crisis center in Urbana has cut its staff hours and salaries.
And the Rape Advocacy Counseling and Education Services says that without state funding it will have to close by mid-April. RACES, located in Urbana’s Lincoln Square, is among the social service agencies that are not being funded because of the ongoing budget dispute between Republican Gov. Bruce Rauner and Democratic legislators. In 2015, RACES said it served more than 37,408 individuals, ages 3 through adult.
Beginning Monday, the agency cut its staff hours and salaries by 20 percent. […]
The cuts will limit the availability of counselors, legal advocates, and community educators who provide valuable services to survivors of sexual assault, the agency said.
Liberty Principles PAC, which received a $1.8 million contribution from Rauner’s own PAC last month, has moved to boost the campaign of Forest Park Commission Chris Harris who is challenging incumbent State Rep. Chris Welch (D-Hillside), purchasing $14,166 in newspaper advertising for the challenger, according to state election board records.
Run by political operative and radio personality Dan Proft, Liberty Principles PAC, an independent expenditure committee that is prohibited from coordinating its activities with a campaign it backs, is also supporting the reelection campaign of the governor’s Democratic ally in the Illinois House, State Rep. Ken Dunkin (D-Chicago).
Harris, who had at the end of the fourth quarter only $7,727 in the bank, echoes Rauner’s rhetoric on key issues, such as property taxes. […]
Harris reacted to Proft’s purchase of advertising in his behalf saying that he was “uncertain” what triggered the support.
“I did not know this and I haven’t seen any ads. I am not sure if there is a certain issue that they have picked up on that I support that Rep. Welch doesn’t and I guess I won’t know until I see an ad,” Harris told The Illinois Observer in a statement. “This is a Democratic Primary so it doesn’t make a whole lot of sense, in the big picture.”
*** UPDATE *** From the Chris Harris campaign…
The recent discovery that outside PAC money is being
spent in the 7th District State Representative race has raised concerns this group’s motives.
“In modern day politics, you can’t control most of what goes on around you, but you hope you can control your message,” said 7th District State Representative Candidate Chris Harris. “Even that can be altered by 3rd party sources hijacking it, though.”
As first reported by the Illinois Observer, an outside PAC that has received money from Governor Rauner purchased newspaper advertising against current State Rep Chris Welch in the 7th District race.
Harris stated: “There are many reasons PAC’s get involved in races: they want to advance a candidate; they don’t like a particular candidate; or they want a group to have to spend money they may not have planned to. We have yet to see what their plans are for this race, but I am certain that it is not to echo any backing of myself for Governor Rauner. The devastation caused by the budget stalemate should horrify everyone, and I reject Governor Rauner’s strategy of holding Illinois’ most vulnerable people hostage.
“Furthermore, I feel that that it is wrong-headed for Governor Rauner’s people to insert themselves into a Democratic primary election. The people of the 7th District are well aware of Rep. Welch’s poor record, and it is their voices that should decide this election.
“I am a mainstream Democrat. I believe we can have common sense compromise that will secure the financial future of this state. I support increasing funding for our schools and making sure that education is a priority. I am a small business owner who was union-backed in my local race, because I am focused on practical accomplishments that move us all forward.
“I am in this race because our current State Representative has a long history of corruption and patronage that devastated our local schools. We need a Democrat who will focus on fixing our communities and our state, not be a pawn for either Speaker Madigan or Governor Rauner.”
A nonprofit research group says poverty rates in Illinois are up to three times higher for racial minorities.
The Chicago-based Heartland Alliance’s research arm released a report Wednesday outlining significant racial disparities for income, unemployment, birth rates and housing, among other things. The 44-page document is called “Racism’s Toll: Report on Illinois Poverty,” and looks at institutional racism in the state.
* From the press release…
Poverty rates are two to three times higher for Illinoisans of color, and they fare far worse on nearly every measure of well-being. In the latest of its annual reports on poverty in Illinois, “Racism’s Toll,” Heartland Alliance’s Social IMPACT Research Center lays bare the moral, human, and economic cost of the deep inequities in the state and calls out public policies that have and are actively creating these racial inequities.
The disparities are remarkably persistent on nearly all quality of life domains:
Black children in Illinois are nearly 4 times more likely to live below the poverty line than white children.
The Illinois school districts with the most students of color receive 16% less in funding per student than districts serving the fewest students of color.
Unemployment rates are far higher for black Illinois workers than whites at every educational level.
Illinoisans of color are 2 to 3 times more likely to not have health insurance.
Black Illinoisans on average live 6 years less than whites.
Poor black (16%) and Latino (22%) Illinoisans are more likely to live within a mile of a hazardous chemical facility than poor whites (13%).
Nationally, the median net worth for a white household is $110,500 versus $6,314 for a black household.
The consistency and persistence of these severe disparities by race in Illinois underscore how much more work we have to do. As the report makes clear, these inequities are the product of the public policies, market forces, and institutional practices of both yesterday and today, which systematically place barriers in the path of Illinoisans of color.
Labor unions were forced to come to the rescue of their endorsed primary candidate in the 5th state Senate district, Democrat Patricia Van Pelt of Chicago.
On Monday, Van Pelt’s primary opponent, former alderman and unsuccessful mayoral candidate Bob Fioretti, joined the lawmaker for a newspaper endorsement session at the Sun-Times.
“I nearly fell off my chair when Van Pelt said she wants city governments to be able to declare themselves right-to-work zones,” Fioretti told supporters in an email.
“That means she’s against unions, she’s against the prevailing wage, she’s against all the gains unions have gotten for us,” Fioretti said.
What the heck?
* Sen. Van Pelt’s response…
Senator Van Pelt spoke on her longstanding opposition to right-to-work laws and support for unions in a statement today.
“I am against all implementations of right to work in Illinois, including locally,” the senator said. “Right to work in any form is an attempt to undermine unions and working families. Unions are critical in representing the voice of our workers. Having served as a union steward for many years, I know unions have increased fairness, safety, and employer accountability.”
“My opponent is attempting to slander my pro-union record. In a recent interview with the Sun-Times Editorial Board, I misspoke when I misheard a question on right to work zones. I clarified my answer with the board immediately after the interview.
“I’m proud of my record of standing up for unions. I won’t let my opponent distort it.”
The Illinois AFL-CIO, which recently endorsed Senator Van Pelt in the Democratic primary, reiterated their support for the senator. “Senator Van Pelt is a strong voice for unions. She has stood with unions on issues that affect working families and has stated her opposition to wage-killing statewide right to work and local right-to-work zones. We strongly support her re-election,” Illinois AFL-CIO President Michael Carrigan said.
During her tenure in the state senate, Van Pelt has been a tireless advocate for working families. She was a co-sponsor of the legislative override of Governor Rauner’s veto of the AFSCME no strike/no lockout arbitration bill, co-sponsor of civil rights legislation protecting pregnant employees, and co-sponsor of legislation to raise the minimum wage. She is running for re-election for in the 5th legislative district.
