Chicago City Council is scheduled to meet Wednesday to decide whether to sell controversial refinance bonds and address the resignations of all seven Chicago Public Schools Board members scheduled for Friday. It is.
According to the agenda, the Board of Finance approved an ordinance at its Oct. 2 meeting authorizing the refund of the city’s 2024 series general obligation and sales tax securitization corporate bonds. According to the passed ordinance, the city also plans to include a tender offer.
The proposed sale has grown to $1.5 billion, with Mayor Brandon Johnson’s administration claiming it would save $90 million this year.
Illinois State Comptroller Susana Mendoza questioned the proposed bond.
Illinois State Comptroller’s Office
However, Illinois State Comptroller Susana Mendoza said in an op-ed Friday that a provision in the master agreement included in the proposed bond deal would allow the mayor and the city’s chief financial officer to take a cut of the proceeds under certain conditions. He argued that the amount could be used for operating expenses.
Mendoza asked City Council members to review the administration’s calculations of the $90 million in savings and explain how exactly the $1.5 billion would be spent.
“Are there any dedicated sources of revenue other than sales taxes or the general fund to repay the bonds? If so, what are they?” Mendoza asked in an op-ed. “A better solution to ensure taxpayers are protected from excessive debt would be to introduce an alternative ordinance that deals only with the cost-saving refinancing portion.”
On Tuesday, Jill Jaworski, Chicago’s chief financial officer, wrote in an op-ed that the permitting ordinance allows the transaction to be used only for cost-saving refinancing and does not allow for any other use of the proceeds. They responded that they would need permission from the city council.
In a credit recommendation released Tuesday, City Market Analytics said the planned refinancing “highlights the city’s reduced fiscal flexibility in the current and upcoming budget cycles.”
“Depending on how the repayments are structured, i.e. how far behind the current principal payments are, this sale could represent an end to the city’s decade-long upward trend in credit quality. “This could be another signal that the city’s creditworthiness could be improved,” MMA said, adding that if the city were successful in improving its creditworthiness. Unable to find new revenue, fail to make deep spending cuts, and fail to get aid from the state, “Chicago’s credit profile and credit rating may well be starting to decline.”
The bond was not discussed during Johnson’s press conference Monday, during which he announced he would nominate six school board members to replace the group that resigned in protest over the weekend.
“The fact that things are moving and changing means that I am doing exactly what I was elected to do,” Johnson told a news conference. “I am confident that these new candidates will work hard to lead CPS into the world-class school system our children deserve. This is the first of many recommendations.”
The new candidates are Olga Bautista, Misila Blaise, Mary Gardner, Debbie Pope, Pastor Mitchell Johnson, and Frank Niles Thomas.
The mayor said his children attend Chicago Public Schools, but “as it stands now, the mistakes of the past that left students behind, we are not doing that.”
Chicago Mayor Brandon Johnson will speak at the Democratic National Convention in August. Mr. Johnson is appointing new school board members to replace those who resigned this weekend, reportedly in part due to a short-term loan offer from the mayor’s office and from CPS’s Pedro There is a plan by Mr. Johnson to fire CEO Martinez.
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Johnson connected today’s “so-called experts” on fiscal responsibility with antebellum opponents of emancipation.
“We now have detractors who are making the same claims as the Confederates when it comes to public education in this city (city),” he said. “The current vision is to leave students behind and fire teachers. … There may actually be school districts that won’t accept austerity.”
“City leaders have long resisted investing in our children,” he added, urging them to embrace not only the basics of education but also the arts, trades and sports. “I was chosen to fight, and I am the one to fight.”
Deputy Mayor for Education, Youth and Human Services Jen Johnson thanked the former board members, but added: “The work is not done yet…with the impending expansion to a 21-member hybrid board in January” We need a transition, and we begin that process by bringing in new board members.”
A letter with many signatures from City Council argued that the mayor’s press plan to use short-term loans to pay for expenses and fire CPS CEO Pedro Martinez, who balked at the debt plan, was short-sighted.
“It is not a wise decision to take out a $300 million high-interest payday loan when CPS is already facing a huge deficit and the city is running a deficit of almost $1 billion,” the letter said. It’s dark. “CEO Pedro Martinez and school board members understood the reality of the situation by passing a budget that does not include this loan.”
Last year, Fitch Ratings rated the district’s unrestricted taxable general obligation bonds at BB+ and affirmed the BB+ issuer default rating and the A rating for its capital improvement only tax bonds. The outlook is stable.
KBRA rates the school board’s fiscal year 2022 and fiscal year 2023 general obligation debt BBB, and its capital improvement tax bonds a BBB-plus rating with a stable outlook. Moody’s Ratings upgraded the school board from Ba2 to Ba1 in January. The rating outlook is positive.
S&P Global Ratings has assigned a BB+ long-term rating to the district’s general obligation and alternative resource bonds. The outlook is stable.
