recently adopted new Illinois education funding formula resulted
in a $450 million funding boost for the Chicago Public Schools
(CPS) through increased aid and pension contributions from the
state and a local property tax increase.
"The outlook revision is based on our view of the district's
higher state aid revenue as a result of the state's new funding
formula, and lower pension costs, with the state now picking up
more of the employer pension contribution, and the district's
ability to extend a higher property tax levy to support the
pension contribution," S&P analyst Jennifer Boyd said in a
The rating agency affirmed the district's B rating.
Escalating pension payments have led to drained reserves, junk
credit ratings and debt dependency for CPS, the nation's
third-largest public school system.
Last week, Fitch Ratings upgraded CPS from B-plus to BB-minus,
which is three notches below investment grade. Fitch said higher
state funding "improved prospects for financial balance and
eventual restoration of a positive reserve position."
CPS CEO Forrest Claypool said the rating actions acknowledge the
district "is on much stronger financial footing that we were
just a few months ago and that we’re on the right track."
The actions come as CPS prepares to refinance about $630 million
of outstanding debt and issue about $290 million of new bonds in
(Reporting By Karen Pierog; Editing by David Gregorio)
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