Free Republic

Connecticut has the most underfunded pension system in the nation, amassing more than $127.7 billion in liabilities.. The study entitled Unaccountable and Unaffordable showed Connecticut’s pension system dropping below Illinois and Kentucky when its pension liabilities were calculated with a “risk-free” discount rate equal to the rate of a U.S. Treasury bond. Connecticut’s unfunded pension liability rose from $99.2 billion in ALEC’s 2016 study to $127.7 billion in 2017, leaving the pension system only 19 percent funded. The debt from the public pensions amounts to $35,721 per person in Connecticut, the second highest per capita debt in the nation behind...

The Chicago Public Schools will pay 6.39 percent — an extraordinary interest rate by short-term lending standards — to borrow $275 million it needs to make a mandatory payment for retiree pensions before a June 30 deadline. That’s more than four times the interest rate a typical government would pay on the same borrowing deal ... It’s yet another sign of the dire financial condition of the nation’s third-largest public school system, which for months has had a “junk” credit rating from Wall Street financial institutions. CPS officials secured the $275 million on Monday from J.P. Morgan. It’s the final...

It's going to take much more money to keep Chicago's schools open through June than previously revealed, top Emanuel budget aide Carole Brown says. The Chicago Public Schools actually need $596 million to keep schools open the rest of the school year, and not just the $129 million officials have publicly discussed, a top aide to Mayor Rahm Emanuel said Tuesday. ... Brown said all options are on the table to find the cash needed to stave off an early closing of schools that CPS CEO Forrest Claypool has warned might be needed but that Emanuel has ruled out to...

Pension holidays, steep increases in teachers' salaries, and lopsided ratios of teacher contributions to pension payouts have caused the Chicago Teachers’ Pension Fund’s unfunded liabilities to shoot up to $9 billion in 2015. The Chicago Teachers Union, or CTU, has threatened to strike as early as April 1 over the issue of teacher pension “pickups,” according to the Chicago Sun-Times. Negotiations over a new contract to replace the 2012 contract that expired in June 2015 stalled after CTU rejected the most recent offer from Chicago Public Schools, or CPS, in February. In exchange for pay increases and a moratorium on...

Chicago has a simple financial choice: Stay in frying pan or get in the fire. That in simple terms is what Moody's Investors Service said in a report today about the difficult options the Emanuel administration faces over the city's woefully underfunded pension funds. The city must cut spending and raise taxes now or the risks of becoming insolvent will grow, forcing even harsher decisions later. The credit rating agency offers a sobering reminder of what's at stake in the eight-page report, which focuses on the pensions problems. ... A CUT ABOVE JUNK. Moody's, typically the most conservative of the...

The Chicago Public Schools — already facing a federal criminal investigation of its CEO and a projected $1.1 billion budget deficit next school year — now must pay a price for those problems through higher interest rates on a new $300 million bond deal. The rates lured investors to buy the bonds, which CPS says it will use to pay off recently completed construction projects. But they also mean Chicago taxpayers will pay more over the life of the borrowing deal, financial analysts said Wednesday. The main bond issue — for $280 million to be repaid over 25 years —...

Moody’s Investors Service on Friday announced it had reduced its rating on Chicago Board of Education debt to one level above junk bond status. Moody’s downgraded the rating to Baa3 from Baa1 on the board’s general obligation debt. That rating applies to a total of $6.3 billion in outstanding debt held by Chicago Public Schools. That lowered rating, according to Moody’s, “reflects CPS’s continued reliance” on its reserves to cover ongoing operating expenditures, “particularly pension contributions, which will steadily increase in the coming years.” ... the lowered CPS rating also takes into account the city’s own credit rating, which also...