Chicago Public Schools Look To Borrow $900 Million
Chicago Public Schools will look to borrow $900 million in the coming weeks — adding to the district’s $9 billion debt — but it remains unclear if anyone will actually give them all the money.
The loans are $500 million more than what Mayor Rahm Emanuel’s office announced last week when a financial rescue plan was outlined. That’s because the district is looking for loans not only to get through this school year, but also to start off next year with a financial cushion.
District officials told board members Wednesday that the district would likely “just run out of money” if it didn’t take out these loans.
“The consequences would be dire financial straits in June,” said Senior Vice President of Finance Ronald DeNard. “[The borrowing is] very critical to our cash flow.”
The board unanimously approved two different borrowing packages on Wednesday. The first, which Emanuel announced last week, allows the school district to borrow $396 million against unpaid state grants. The other allows the district to borrow $215 million.
District officials also said they will try to borrow an additional $285 million that it got the authority for last year and didn’t use.
It remains unclear if CPS, which already has a junk credit rating, will be able to find a lender for the additional loans approved by the board on Wednesday. DeNard said the vote allows the district to take out the loans if a willing lender is found.
“If we see that opportunity we will seize it, and that brings cash into our operating account and helps us out in Fiscal Year ’18,” he said.
If CPS does find a loan, it is expected to pay a high interest rate.
Some parents who spoke at the board meeting questioned the continued reliance on borrowing. Parent Jennifer Jones said the district should look to increase revenue, perhaps by asking voters to increase the property tax cap.
Board President Frank Clark said he and his fellow board members have limited authority. The board, as well as the school district administration, is appointed by Mayor Rahm Emanuel.
“No one sitting here feels good about continuing borrowing, you don’t do it in your personal life and frankly you don’t want to continue doing it for the board,” he said. “But we will do all we can to keep the schools open and this is the options we are left with in the time being.”
CPS CEO Forrest Claypool again blamed Gov. Bruce Rauner for forcing the school district to pursue what he called a “vile option.”
Claypool also responded to the Tuesday announcement that Chicago Teacher Union members overwhelmingly voted they had no confidence in him. He said the CTU and Rauner have similar talking points and are both blaming him and city officials for the district’s financial situation.
The board also approved three new graduation requirements that will force all students to take a financial literacy course; provide documentation of post-secondary plans; and take biology, chemistry and physics rather than three science classes of their choosing.
Chief Education Officer Janice Jackson said the school district will provide some extra training, as well as administrative staff, to help schools implement these new requirements. But Jackson pushed back on the idea that a lot more money, teachers and counselors will be needed.
Jackson also addressed concerns that not all students could handle harder science classes, like chemistry and physics.
“Believe it or not, there are still people who don’t believe our children can have access to the courses we are proposing today,” she said. “We know there are doctors, researchers, engineers on the South Side, West Side, North Side, and if we don’t expose them early to a robust science curriculum we are basically ensuring they won’t have access to those fields.”