October 12, 2011
Chicago Public Schools moved a step closer to attaining funding for needed capital projects today by issuing approximately $400 million in fixed interest rate bonds for fiscal year 2012. The bond issuance was approved by the Chicago Board of Education at its meeting last month; proceeds will finance ongoing construction, renovation and maintenance projects throughout the District.
The bonds issued by the District will be repaid over a period of 30 years at an interest rate of 5.25 percent. Proceeds can only be used to fund capital projects, but not operating expenses such as salaries and benefits.
The bond sale comes at a time when interest rates are at historic lows and follows announcements by the three major credit ratings agencies – Standard and Poor’s, Fitch Ratings, and Moody’s Investor’s Service – that assessed the District’s credit outlook as stable.
The District faced a $712 million budget deficit earlier this year. Officials spent several months developing a balanced budget that made significant cuts but kept those cuts as far away from the classroom as possible while protecting programs such as Early Childhood Education, World Language and school safety.
“Proceeds from these bonds will allow CPS to continue making critical investments in schools,” said Chief Administrative Officer Tim Cawley. “We have also saved the District money during these difficult fiscal times by making the tough financial decisions needed to make the system more efficient, which helped secure the bond ratings we needed to lock in better interest rates.”
In its bond resolution last month, the Board approved selling up to $500 million in bonds though only $400 million was issued today. CPS does not expect to sell any additional debt in FY 12, although it may seek Board approval to refinance existing debt costs as a cost-saving measure.
Chicago Public Schools serves 405,000 students in 675 schools. It is the nation’s third-largest school district.