Chicago Public Schools Bad Credit: CPS' financial straits cost taxpayers with sharply higher interest rates on bond sale

The Chicago Sun-Times reports:

The Chicago Public Schools — already facing a federal criminal investigation of its CEO and a projected $1.1 billion budget deficit next school year — now must pay a price for those problems through higher interest rates on a new $300 million bond deal.

The rates lured investors to buy the bonds, which CPS says it will use to pay off recently completed construction projects. But they also mean Chicago taxpayers will pay more over the life of the borrowing deal, financial analysts said Wednesday.

The main bond issue — for $280 million to be repaid over 25 years — took place Tuesday in three phases. The interest rates CPS had to pay to borrow the money through the bond deal ranged between 5.25 percent and 6 percent, according to the federal Municipal Securities Rulemaking Board.

That came after Fitch Ratings, a Wall Street bond-rating agency, downgraded the Chicago Board of Education’s credit rating last month three notches, leaving it just one notch above junk status, and after school officials last week disclosed there is an ongoing federal investigation involving CPS chief executive officer Barbara Byrd-Bennett.

Great moments of public school finance.