Chicago Public Schools' financial troubles are forcing the system to pay extraordinary borrowing costs.
WGN-TV reports that the school district sold $725 million in bonds Wednesday,at an 8.5 percent interest rate.
The district said the bond sale was necessary to keep schools operating.
“Borrowing money was never a decision that we took lightly, and though some wanted our efforts to fail, [the district] needed to move forward in order to keep our doors open so we could educate our children," says Ron DeNard, the school system's senior vice president of finance. "Along with the tough cuts announced yesterday and earlier this year, the sale of these bonds will produce sufficient proceeds to mitigate our cash-flow challenges through the end of the fiscal year."
The Chicago Sun-Times reports that the school system initially planned to issue $875 million in bonds last week, but officials postponed those plans. Instead of the 7.75 percent interest rate offered last week to buyers of the bonds, district officials promised a higher yield of 8.5 percent, sources say.
Illinois Governor Bruce Rauner called the bond sale a mistake; he ordered state education officials to pursue a takeover of Chicago schools, the nation's third-largest district.
Video from WGN-TV:
