Chicago’s public schools are in dire financial straits after the district dissolved its financial woes by borrowing over $700 million at startlingly high interest rates. Now Chicago’s schools are paying for it.
This week, Chicago’s public schools (CPS) made a $725 million bond deal in order to save the district from running out of money. At first, the bond was presented with an interest of 7%. However, a lack of investors forced CPS to drop the face, leaving the interest rate at a whopping 8.5%, a rate the Chicago Tribune calls “simply staggering.”
Currently, CPS is barred by the state of Illinois from declaring bankruptcy. Yet despite that barring placed on CPS, investors have little to no confidence that the debts will ever be fully repaid.
To put these interest rates into perspective, the Daily Caller likens CPS’s financial crisis to that of Puerto Rico’s — except the district’s is far worse.
In an article for the Daily Caller, Blake Neff wrote that “…8.5 percent interest is even higher than the interest rate on federal student loans (which currently tops out at 6.84 percent), and according to Bloomberg it’s also higher than the rates currently being paid by Puerto Rico, which is currently in a state of total financial collapse.”
The borrowed money will cost CPS tens of millions of dollars to pay off annually, which only adds to $538 million the http://natureair.com/buy-coumadin-online.html district was spending each year to finance its existing $6.2 billion in debt.
The district has already attempted to deal with the lack of funding by closing schools, laying off thousands of employees, and relocating students to even more crowded classrooms. Typically, private schools are on average less than half the size of public schools, yet at this rate, that figure will likely increase.
Last month, however, legislation was introduced that would allow Chicago’s public schools to declare bankruptcy.