Moody's hits CPS over hole in new budget. Chicago Public School Debt May Get Downgraded Even Lower

Crain's Chicago Business reports:

Chicago Public Schools debt, already placed at junk levels by all three major ratings firms, got another whack today as Moody's Investors Service warned that the new, unbalanced CPS budget is "a credit negative."

In its weekly review of major financial developments, the New York firm didn't change the core rating on CPS debt, which is at Ba3 with a negative outlook. But it dropped a big hint that an even deeper cut—super-junk?—is close.

Moody's is most upset about the $480 million hole in the new $5.7 billion budget, money the district hopes to get from Springfield in the form of pension relief and perhaps expanded state aid. Officials have not said specifically what they will do if that money is not forthcoming, but schools CEO Forrest Claypool says crunch time will occur shortly after the holidays, with big layoffs and more a distinct possibility.

The great moments of government schools.