Chicago Public Schools borrow $275 million at sky-high interest rate

The Chicago Sun-Times reports:

The Chicago Public Schools will pay 6.39 percent — an extraordinary interest rate by short-term lending standards — to borrow $275 million it needs to make a mandatory payment for retiree pensions before a June 30 deadline.

That’s more than four times the interest rate a typical government would pay on the same borrowing deal, financial experts say.

It’s yet another sign of the dire financial condition of the nation’s third-largest public school system, which for months has had a “junk” credit rating from Wall Street financial institutions.

CPS officials secured the $275 million on Monday from J.P. Morgan. It’s the final chunk of cash needed to make the $721 million payment for teacher pensions that’s due at the end of the month, senior vice president of finance Ron DeNard said in a statement.

An additional $112 million that’s needed to fund district operations will be borrowed separately.

The great moments of government schools in Blue America!