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S&P warns CPS about another downgrade

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Illinois

S&P Global Ratings warned on Thursday that the Chicago public school system’s B-plus credit rating could fall deeper into the junk level due to its “extremely weak” cash position.

“Unless (the Chicago Board of Education) achieves what we view as a credible and sustainable long-term solution to its financial pressures while continuing to demonstrate that it can fund its cash-flow needs, further downgrades are possible,” the credit rating agency said in a statement.

S&P affirmed a B-plus rating for the Chicago Public Schools’ (CPS) outstanding general obligation bonds and assigned the rating to $150 million of bonds the district privately placed with J.P. Morgan in late July. But that rating remained on S&P’s watch list for a potential downgrade over the coming months. […]

S&P said it could drop the rating multiple notches if CPS is unable to obtain credit lines to aid cash flow. A downgrade would also be likely if $215 million in state funding does not materialize, it added.

posted by Rich Miller
Friday, Sep 2, 16 @ 9:36 am

Comments

the solutions are pretty limited. personnel is a huge piece of the pie, and running buildings. this is true of any government enterprise. there are limits to how large the classes can be/parents will accept,although in my youth, I recall very large public school classes that I was in. some necessary tough steps were taken in closing schools. salaries, and rating teacher quality seem to be the only real place any action can be taken.

Comment by Amalia Friday, Sep 2, 16 @ 9:50 am
“Unless (the Chicago Board of Education) achieves what we view as a credible and sustainable long-term solution to its financial pressures while continuing to demonstrate that it can fund its cash-flow needs, further downgrades are possible,”

I take this to mean that S&P is looking for a property tax increase for the CPS. With the State of Illinois having its own budget problems and continuing political grid lock, counting on help from the State would probably not be viewed as “a credible and sustainable long-term solution” by S&P.

Comment by Small town taxpayer Friday, Sep 2, 16 @ 9:58 am
All this ‘the world is falling’ talk from the rating agencies is starting to smell like a scam…,downgrade gov’t bonds, increase rate of return for large banks buying said bonds. Tell me again how often Illinois school districts declare bankruptcy?

Comment by Illinois O'Malley Friday, Sep 2, 16 @ 10:31 am
CTU will almost certainly strike in October. Time to allow municipal bankruptcy so CPS can actually rationalize its debt and finances.

Comment by Ron Friday, Sep 2, 16 @ 11:43 am
CPS is counting on $30 million in concessions form CTU. Let’s say the union gives in completely one everything. CPS isn’t going to save CPS. Charter expansion and debt service are the big money items.

Comment by Cathartt Representative Friday, Sep 2, 16 @ 12:57 pm

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