Moody’s puts Chicago schools on notice amid governance and policy turmoil
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Moody’s Ratings on Tuesday put the Chicago Board of Education on notice that it will watch the school district’s next steps after Chicago Mayor Brandon Johnson appointed a new school board. All seven previous board members
Martinez was appointed by the previous mayor, Lori Lightfoot, though the board members who resigned were all appointed by Johnson.
Martinez took questions from City Council members Wednesday at a special meeting of the
Moody’s addressed that directly Tuesday.
“An increase in cash flow borrowing would indicate the emergence of a credit negative budgetary imbalance between revenues and expenditures,” Moody’s said. “CPS will be confronted with a much larger budget gap in fiscal 2026.”
Moody’s declined to respond to questions about its Tuesday release.
Martinez told city council members he favors using the surplus from the city’s tax increment financing districts to solve the district’s budget problems in the short term. He asked the City Council to release $484 million of TIF funds to the district, an idea that some council members questioned.
“If those TIFs didn’t exist, all of those funds would be with CPS,” Martinez said. Johnson is reportedly pressing for additonal borrowing amid a fight over
Martinez told the council members “we don’t have any obligation by law” to make the pension payment to the city.
Martinez said the city and its schools need to make common cause to argue for more school funding from the state government.
“We know already, for next year, our projected deficit is half a billion dollars,” he said. “I see a path where [we could use] the TIFs that have grown so much, for short-term support. The mayor’s team has been committed to working with us on a longer-term plan.”
Finance Committee Chair Pat Dowell seemed amenable to Martinez’s TIF request.
“We are in the intensive care unit on life support, and we need to work together,” she said, praising the mayor’s $1.25 billion
Dowell asked Miroslava Mejia Krug, the district’s chief financial officer, about the cost of a short-term financing.
“It would be very hard for us to do tax-exempt bonds for operating expenses, so we’d have to go for other ways to get money into our coffers, and it would pretty much have to be taxable bonds,” Krug said.
Martinez said the money for operating expenses would have to come from a refinancing.
“The original bond has to be for capital, by law,” he said, noting that they don’t favor borrowing for operating expenses.
“CPS has been advocating for additional TIF revenues for pension payment and labor agreements since the mayor took office,” Martinez said in a statement Wednesday. “We are excited to see more support for a higher release of TIF funding. The fact that our government and labor partners are coalescing around this revenue source means we can address these looming costs without cuts, without taking on expensive short-term debt and without waiting for additional funding to materialize from the state.”
The school board — which has historically been appointed by the mayor — is about to begin a transition
