Ever-struggling and always in the news, Chicago Public Schools recently took out the last of $387 million in loans from JP Morgan, primarily to make payments to their teacher pension system. It’s not uncommon for public schools to sell bonds so they have extra cash to fund projects, renovate, and whatever else they can think of to spend other people’s money on. But continuing a streak of bad financial decisions, the district took out private short-term loans expected to cost $70,000 a day in interest. This all comes as they’re considering laying off 350 teachers and 600 support personnel. CPS is anticipating more than $400 million in education grants from the state, which is how they plan to pay back the loans. But the city and state have been in a funding stalemate, so that aid is far from guaranteed. The district has until December 28 to repay or refinance the loans, and since the state hasn’t passed a budget in 3 years, essentially holding up public school funding, CPS better have a backup plan for when those payments are due. Without any city or state aid, the district faces a $544 million deficit.
Charles Blain is the executive director of Restore Justice USA, a Houston-based criminal justice reform project. He also regularly writes on issues regarding the economic management of major cities.
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