S&P cuts Chicago Public Schools' rating to junk

Crains' Chicago Business reports:

Standard Poor's Ratings Service lowered the Chicago Board of Education's credit to junk, giving a thumbs-down to CEO Forrest Claypool's proposed budget for 2016.

S&P becomes the third ratings agency to drop the Board of Ed to below investment grade, following downgrades by Moody's Investors Service in May and Fitch Ratings in July.

"The rating action reflects our view of the proposed fiscal 2016 budget, which includes what we view as the board's continued structural imbalance and low liquidity with a reliance on external borrowing for cash flow needs," said S&P analyst Jennifer Boyd, according to a statement.

Kroll Bond Rating Agency is the only firm to give the Board of Ed an investment grade rating of BBB, one notch above junk bond status.

The Chicago Public Schools is facing a $1.1 billion deficit in the fiscal year that ends June 30, including a $676 million pension payment. Meanwhile, CPS must increasingly rely on very expensive borrowing to avoid running out money.

Chicago public schools get their "report card" reaffirmed. Imagine that.