A major credit rating agency downgraded the Chicago Board of Education's credit rating three notches amid financial struggles with Chicago Public Schools now at the center of a battle between the city and the state.
Fitch Ratings on Tuesday lowered the rating for the Chicago Board of Education to a B-plus with a negative outlook, bringing it further into "junk" status.
"The downgrade reflects the limited progress Chicago Public Schools has made in addressing a structural budget gap approximating 20 percent of spending for the current fiscal year,' the credit rating agency said in a statement. "Following substantial drawdowns in fiscal years 2013-2015, reserves will likely be fully depleted by the end of fiscal 2017."
The agency cited CPS' inability to independently raise revenues and said "substantial changes are necessary to support ongoing operating and fixed cost spending."
The district plans to sell $875 million in bonds next week.
On Wednesday, CPS was the target of new legislation proposed by Republican lawmakers aiming to give the state control of the financially troubled school district and allow CPS to claim bankruptcy. The plan has been strongly opposed by Mayor Rahm Emanuel but is supported by Gov. Bruce Rauner.
Chicago Public Schools has been pleading with Rauner and Springfield to help fill a half a billion dollar hole in the district's budget. Without state funding CPS will be forced into thousands layoffs, which could come as early as next month.
"Sadly, given the financial trajectory of CPS, Fitch’s decision comes as no surprise," Rauner spokesperson Catherine Kelly said in a statement. "CPS spending has increased almost $800 million from the time Mayor Emanuel took office (2011) through this year’s budget while enrollment has declined."