One day after Chicago Public Schools announced its plan to cut $100 million in staff and spending, the Chicago Teachers Union’s house of delegates is meeting to determine its next move.
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Pricing data show a majority of the $725 million bond offering priced to yield 8.5%, almost a 6-percentage-point premium over what states and cities with top-rated credit pay.
Union president Karen Lewis said teachers have already given more than $2 billion back to the district over the last five years, including a raise that was rescinded in 2011 and layoffs, including those resulting from school closures. The deal had been…
School officials call it an act of necessity.
The CTU said it rejected the offer because “the offer does not address school conditions, a lack of services for some students or the fiscal crisis the nation’s third-largest district faces”, said ABC News.
“They’ve done the right and necessary step of withdrawing their money from Bank of America, because Bank of America’s greed has cost our children tens of millions of dollars, has cost our schools tens of millions of dollars”, the alderman said.
On Wednesday, J.P. Morgan leads an underwriting team that would price the junk-rated general obligation bonds, which the district pulled from the municipal market a week ago amid investor skittishness over bankruptcy talk for CPS. According to the union, Bank of America has collected $77 million in profits off of its interest rate swaps with CPS.
Rauner on Wednesday condemned the district’s second attempt at borrowing by the Chicago Public Schools but denied trying to sabotage the system’s bond issue by publicly advocating bankruptcy for CPS. Illinois Gov. Bruce Rauner recently called for a state takeover and state legislation that would give the district the option to file for bankruptcy.
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“The numbers don’t lie”, he told reporters. The balance sheet is stunningly bad.
