Chicago Public Schools has borrowed the rest of the money it needs to start the new school year, again at interest rates about four times what a typical government with better credit ratings would have to pay.
A week after CPS borrowed $375 million from J.P. Morgan at a whopping 6.39 percent, it secured another $112 million from the same lender at 6.41 percent. The short-term borrowing known as “grant anticipation notes” by the school district with “junk” credit ratings will eventually be repaid by state block grant money owed to CPS but not yet disbursed in the ongoing Illinois budget stalemate.
Experts say the sky-high interest rates reflect CPS’ dire financial condition, but at least, said Matt Fabian, a partner at Municipal Market Analytics, said that consistent access to borrowing markets is something of an improvement.
Schools officials and Gov. Bruce Rauner have been trading jabs about who’s to blame for the ongoing financial woes of the country’s third-largest school district. The state also owes money to other districts.
Meanwhile, the borrowed money will help CPS make a $721 million payment due to the teacher pension fund on Friday and get the new school year started.