CHICAGO, April 27 Some Illinois school
districts, including the Chicago Public Schools (CPS), are being
squeezed by late payments due to the state's ongoing budget
problems, Moody's Investors Service said on Thursday.
The credit rating agency said a handful of districts it
rates "face increasing cash flow pressures or the potential for
a material decline in reserves amid the continued delays,"
creating a negative factor for their ratings.
The most vulnerable districts are heavily dependent on state
grant funding, which is more than $1 billion in arrears, as well
as districts with limited operating reserves, Moody's said in a
Illinois is limping toward the June 30 end of its
second-straight fiscal year without a complete budget due to an
impasse between the state's Republican governor and Democrats
who control the legislature. Full funding for primary and
secondary public schools was approved each year and districts
have been receiving general state aid payments on time. However,
grant money that covers items such as transportation and special
education has been delayed by nearly nine months, according to
The most vulnerable districts are also among the lowest
rated by Moody's, including CPS, which is deep in the junk level
at B3 with a negative outlook. A recent report by the Illinois
State Board of Education indicated the nation's third-largest
public school system had only enough cash on hand on average
this year to cover 12 days of expenses.
CPS has also drained its reserves and relied on short-term
bank loans to deal with its own budget woes caused by escalating
Other districts with low cash reserves cited in the Moody's
report were Will County Community High School District 210,
which is rated Ba1 with a negative outlook, and High School
District 200, rated Baa1.
CPS is awaiting a ruling due on Friday by a Cook County
Circuit Court judge on its motion to temporarily halt how
Illinois distributes money to schools. The district
sued the state in February seeking to invalidate a funding
system it contends discriminates against its largely black and
Hispanic student body.
Illinois also faces a separate lawsuit filed by 17 districts
outside of the Chicago area claiming inadequate funding.
(Editing by Matthew Lewis)