Chicago Schools Face Financial Warning

The credit ratings company S&P has issued a warning to Chicago Public Schools (CPS). They said how the district manages its upcoming contract with the Chicago Teachers Union (CTU) will impact its financial health for years to come. CPS needs to either find more money or cut costs. If they don't, their credit rating could drop. A lower rating means CPS would have to pay more to borrow money. This could cost millions over time. CPS wants to keep its current credit rating, which is a "BB+/Stable. " To do this, they can't use their $1 billion in reserves or take on new debt to pay for the CTU contract. The district’s CEO, Pedro Martinez, has been in a tough spot because of the ongoing negotiations with the CTU. There's a budget amendment vote coming up before the end of the school year. The current $9. 9 billion budget didn't account for the CTU contract or a pension payment. CPS bosses say they're committed to maintaining their credit rating. They plan to look for new revenue and ask for more local and state funding. But there's a big gap between what CPS and CTU want in terms of salary increases. CTU wants more money for smaller classes, more support staff, and better teacher retention. They say state officials should provide more funding to help meet these needs. A finance expert, Marguerite Roza, said that if a district can't balance its expenses and revenue, it's going to face serious problems. It's better to solve this through compromise now rather than later with layoffs or state intervention. States can take over districts that can't pay their debts or fix their buildings. S&P believes new money from the state is unlikely. They think cuts might be the best way to avoid a negative credit rating. They also worry about the stability of CPS leadership. The mayor wants to replace the current CEO, but that could make the district's financial future uncertain. In recent weeks, both CTU and the school board have been pushing the CEO to finalize the contract. They want it done by Christmas to protect vulnerable students. The district says the contract isn't the only way to protect student and staff rights. They have 16 policies in place to do that. Fact-finding hearings to help resolve the contract have been postponed.