Chicago Public Schools seeks $1.55 billion credit line
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CHICAGO (Reuters) - The cash-strapped Chicago public school system will rely on a $1.55 billion line of credit in fiscal 2017 to boost cash flow, up from $1.065 billion in fiscal 2016, according to a briefing document released by the district on Monday.
The bigger credit line will be on the agenda for the Chicago Board of Education's Wednesday meeting, along with a $5.4 billion operating budget, a $250 million property tax hike earmarked for teacher pensions and authorization to issue up to $945 million of general obligation bonds for capital projects.
The nation's third-largest public school district said it needs access to $485 million more in short-term funding as it ends the practice of restructuring outstanding bonds to push off debt payments and because its receipt of property taxes will be a few weeks later next year.
Chicago Public Schools (CPS) said it was working to finalize deals with lenders. Interest costs for the credit lines are budgeted at $34 million in fiscal 2017. The district tapped a bank line of credit in June to complete a $676 million fiscal 2016 contribution to its teachers' pension fund.
Escalating pension payments, drained reserves and debt dependency have pushed CPS' credit ratings to junk. As a result, investors have demanded hefty yields for the district's bonds.
The proposed budget to be voted on by the board of education, appointed by Chicago Mayor Rahm Emanuel, relies on optimistic assumptions of union give backs and added funding support from Illinois' gridlocked state government.
(Reporting by Karen Pierog; Editing by Bill Trott)
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