The Chicago Board of Education is looking to weather unfavorable financial forecasts as it tries to borrow to pay for upgrades to the third-largest U.S. school system, according to a Bloomberg analysis today. Moody’s Investors Service and Fitch Ratings cut it to one step above junk last month, delaying a planned $372 million bond sale. Then last week, before a pared-down $296 million version of the deal, set for Tuesday, Governor Bruce Rauner said the system may need bankruptcy protection, an option that’s not legally open to it. The system faces a projected $1.1 billion budget gap next fiscal year as retirement costs climb. Its relative borrowing costs are at a two-year high, and with negative outlooks from Moody’s and Fitch, a downgrade to junk may chase off investors. The fiscal strains are an amplified version of the city’s struggle to stave off insolvency. Chicago, with $20 billion of unfunded pension liabilities, has the lowest general-obligation grade among the 90 most-populous cities, apart from Detroit.
