Chicago Schools’ Finances are a Mess; Credit Rating Lowered Again

The U.S. city of Chicago has been making headlines over the last several years for all the wrong reasons.

Besides earning the “Chiraq” moniker over its high rate of crime and violence, other internal factors are gaining negative attention. Low-quality education from the public school system is almost always a precursor to the other negative elements that befall the youth prior to spiralling into a life inspired by a criminal subculture.

This year, the Chicago Public Schools have unfortunately made a sad case as the district is on schedule to run out of money and credit by January 2016. The handwriting was on the wall at the close of the 2014-15 school year.

This past May, Moody’s Investor Service gave what they called “junk status” to describe the school district’s existing bonds.

The Chicago Tribune reported that the school district’s credit rating will most likely fall even lower due to the fact that school board members have decided to move forward in spite of higher borrowing prices

It has also been reported that the Chicago school district’s debt load will surpass $7 billion after its new bonds are taken to the market.

According to NBC News Chicago,  Moody’s based the downgrade of the school district’s credit on what the agency called a “precarious” condition. Also, the Chicago public school district has failed to balance its 2016 budget.

Board members have shared the notion that they believe the Illinois State Legislature will help out with a bill that proposes $500 million in funding to help the Chicago school district get back on track. However, no such move by state lawmakers has been approved as of yet.

Additionally, there seems to be a problem with pensions for retired workers for the state of Illinois, Chicago city workers, and those who have worked for Chicago Public Schools. A quarter of all the retirees from these respective agencies receive a yearly pension of $60,000 annually.

But politicians are the ones to blame here, not retirees. Government officials have failed to appropriate how to sustain funding for all these pension plans for the long-term future. They also continued to borrow in order to balance the budget instead of orchestrating plans to raise revenue.