CPS credit plummets to junk again

Crain's Chicago Business reports:

Fitch Ratings cut the Chicago Board of Education to junk bond status, warning of a possible cash crunch to pay day-to-day-expenses.

The company today lowered the Board of Ed's rating to BB+, from BBB-, nearly two months after Moody's Investors Service also stripped the board of its investment grade rating. Today's downgrade comes after Chicago Public Schools already saw its cost to borrow climb in April amid the uncertainty created by a federal investigation and a looming annual budget deficit of more than $1 billion.

The action adds to the challenges confronting Forrest Claypool, whom Mayor Rahm Emanuel named this month as chief executive of the school system.

“The downgrade reflects the limited progress the Chicago Public Schools (CPS) has made in addressing a structural budget gap approximating 20% of spending,” the statement says. As a result, “the district is highly dependent on borrowing in the upcoming months to finance on-going operations,” according to the statement.

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