Another bond rating service has lowered the Chicago Board of Education's investment grade rating to junk status.
Fitch Ratings on Monday cited a looming annual budget deficit of more than $1 billion for the move. Chicago officials had no immediate comment on Fitch's move.
In a statement explaining its action, Fitch noted the school district faces a key test in October, when it must borrow money. Having already drained most of its cash reserves, the board was forced to tap $700 million in short-term loans to make its pension payment. The loan comes due in three months, and must be refinanced.
Fitch notes even if it passes that obstacle, the district is likely to run out of cash by the end of the current fiscal year.
Moody's Investors Service in May stripped the district of its investment grade rating, saying it faces "increased strain on its precarious financial position" due to an Illinois Supreme Court decision overturning state pension reform.
"Despite cutting more than $740 million from the Central Office and operations, we are projecting a deficit of $1.1 billion, driven by $700 million in pension costs," Jesse Ruiz, who was acting as Interim CEO for CPS at the time, said in a statement. "This crisis is now at our classroom doors and we urge Springfield to prioritize education funding and end the broken pension system that forces Chicago taxpayers to pay twice for teacher pensions."