One day after downgrading Chicago bond rating to junk status, Moody's Investors Service has downgraded the debt of both the Chicago Public Schools and the Chicago Park District to junk status.
Moody's on Tuesday, downgraded the city's debt rating on bond issues backed by property, sales and fuel tax revenue to Ba1, one notch below investment grade, from Baa2.
On Wednesday, Moody's gave a Ba3 rating to CPS debt, saying the district faces "increased strain on its precarious financial position" due to last week's Illinois Supreme Court decision overturning state pension reform.
Moody's tied the reduction of the park district's rating to Ba1 to the district's "governance ties to the city of Chicago."
“Today’s triple downgrade was prompted by the Illinois Supreme Court’s decision to overturn the state pension bill," CPS Interim CEO Jesse Ruiz said in a statement. "While this decision should not have impacted CPS’ credit rating – as Moody’s did not downgrade the state when the court rejected the pension bill – it does reaffirm why we must address Chicago Public Schools’ urgent financial crisis and finally bring equity to Chicago Public Schools and our city’s taxpayers."
"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," Ruiz continued. "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."