Chicago’s cash-strapped school district is set to receive an additional $1.1 billion from Illinois over the next five years alone to pay for its teachers’ pensions, providing significant relief from the escalating costs that have reduced its bond rating to junk, Bloomberg News reported on Friday. The changes to how aid is distributed, ushered in by legislation Republican Governor Bruce Rauner signed on Thursday, triggered a rally in Chicago school bonds, pushing the price of some securities to a more than two-year high. The amount to be provided by the state marks an 18-fold increase from the $62 million it had previously been set to pay into the teachers fund, according to pension documents. Rising pension liabilities, triggered by years of shortchanging the retirement plan, have ravaged the finances of Chicago’s school system, the nation’s third-largest, with about 400,000 students. It’s been borrowing at punishing interest rates and raiding reserves to stay afloat.
