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Debt Management

Debt Overview

The Board of Education is authorized by state law to issue notes and bonds,  enter into lease agreements for capital improvement projects, and to assist in the management of cash flow and liquidity. As of June 30, 2021, the Board has approximately $8.4 billion of outstanding long-term debt and $244 million of outstanding short-term debt. FY2022 includes appropriations of $763 million for debt service payments. Approximately $12 million of appropriations for interest on short-term debt is included in the operating budget.

Capital Improvements and Debt

CPS' Capital Improvement Program, described in the Capital chapter, funds long-term investments that provide our students with a world class education in high-quality learning environments. CPS relies on the issuance of bonds to fund the investments laid out in the program, which include roofs, envelopes, and windows; state-of-the-art high school science labs; high-speed internet and digital devices; playgrounds and athletic fields; and expansion of full-day pre-K and other high-quality programmatic investments. Bonds are debt instruments that are similar to a loan, requiring annual principal and interest payments. 

Typically, CPS issues long-term fixed-rate bonds, which pay a set interest rate according to a schedule established at the time of debt issuance. As of June 30, 2021, all CPS outstanding debt is fixed rate.

Debt Management Tools and Portfolio

As part of the Debt Management Policy, CPS is authorized to use a number of tools to manage its debt portfolio including refunding existing debt and issuing short-term or long-term debt. These tools are used to manage various types of risks, generate cost savings, address interim cash flow needs, and assist capital asset planning. CPS issues two types of long-term debt: Alternate Revenue General Obligation bonds and Capital Improvement Tax bonds.

Alternate Revenue General Obligation Bonds

Similar to most Illinois school districts, CPS issues bonds backed by the full faith and credit of the Board, otherwise known as General Obligation (GO) bonds. These GO bonds are paid for from all legally available revenues of the Board. CPS issues a special type of GO bond called an “Alternate Revenue” GO bond. These bonds are backed by two revenue sources and offer a number of other bondholder protections. 

The first revenue source that supports CPS alternate revenue bonds is one of the following: Evidence Based Funding (EBF) from the State of Illinois (known as “General State Aid'' prior to FY2018), Personal Property Replacement Taxes (PPRT), revenues derived from intergovernmental agreements with the City of Chicago (IGAs), and federal interest subsidies. The majority of CPS bonds are backed by EBF. In FY2022, approximately $480 million in EBF revenues will be required for debt service, compared to $446 million in FY2021 and $382 million in FY2020. In addition to debt service funded by EBF, $39 million of debt service will be paid from PPRT in FY2022. Debt service paid from PPRT revenues also reduces PPRT revenues available for operating purposes. Additionally, $142 million in debt service will be paid by revenue resulting from IGAs.

CPS has benefited from issuing bonds with federal interest subsidies, resulting in a very low cost of borrowing. These include Qualified School Construction Bonds (QSCBs) and Build America Bonds (BABs) created by the American Recovery and Reinvestment Act of 2009 (ARRA). The FY2022 budget includes $25 million of federal subsidies for debt service.

The second revenue source for all CPS Alternate Revenue GO bonds is a property tax levy which is available to support debt service should the first pledge of revenue not be available. On an annual basis, when the first source of revenue is available to pay debt service, the property tax levy will be abated, and not extended, as it has been every year.

The Board is authorized to issue alternate revenue bonds after adopting a resolution and satisfying public notice publication and petition period requirements in lieu of a voter referendum, which is typical in other school districts. The bonds are also supported by the GO pledge of the Board to use all legally available revenues to pay debt service.

Tax Anticipation Notes

In recent fiscal years, the Board has relied on short-term borrowing to fund operations and liquidity. These short-term borrowings have primarily consisted of the issuance of tax anticipation notes (TANs), payable from the collection of education fund real estate property taxes levied by the Board for a given year.

Capital Improvement Tax Bonds

In FY2016, CPS began levying a Capital Improvement Tax (CIT) levy to fund capital projects. As of June 30, 2021, CPS has sold three series of CIT bonds, and the total amount of CIT bonds outstanding is $880 million.

The FY2022 budget includes a CIT levy and appropriations of approximately $51 million to pay debt service on CIT bonds. The CIT bonds are not Alternate Revenue GO bonds. They are limited obligations of the Board payable solely from the CIT levy.

Credit Ratings

Credit rating agencies are independent entities, and their purpose is to give investors or bondholders an indication of the creditworthiness of a government entity. A high credit score can lower the cost of debt issuance, much the same way a strong personal credit score can reduce the interest costs of loans and credit cards. Ratings consist of a letter “grade,” such as A, BBB, BB, or B, and a credit “outlook,” or expectation of the direction of the letter grade. Thus, a “negative outlook” anticipates a downgrade to a lower letter grade, a “stable outlook” means the rating is expected to remain the same, and a “positive outlook” may signal an upgrade to a higher rating.

CPS meets frequently with the credit rating agencies about its budget, audited financial results, debt plan, and management initiatives to ensure the agencies have the most updated information possible. The rating agencies take several factors into account in determining any rating, including management, debt profile, financial results, liquidity, and economic and demographic factors. In FY2021, CPS received general obligation credit rating upgrades from Standard and Poor’s (BB Stable) and Moody’s (Ba3 Stable). Fitch currently rates CPS GO bond series BB Stable. Kroll Bond Rating Agency currently rates CPS GO bond series BBB- Stable, and series issued between 2016 and 2019 BBB Stable.

In addition to the CPS GO bond rating, the CIT bonds––which were first issued in FY2017 as a new and separate credit structure from the existing CPS general obligation credit––contain a separate and distinct credit rating. The CIT credit structure received an investment grade rating from two rating agencies at inception in FY2017. Currently, Fitch Ratings rates the CIT credit A- Stable and Kroll Bond Rating Agency rates the CIT credit BBB Stable.

FY2022 Liquidity and Short-term Borrowing

It is anticipated that the Board will issue TANs in FY2022 to fund operating liquidity and cash flow needs similar to prior fiscal years. In the last three fiscal years, the initial issuance of TANs occurred in September or October. Subsequently, the principal amount of TANs outstanding increased with case flow needs and has typically peaked initially in February due to the annual debt service deposit for the Board's alternate revenue bonds required on February 15. The collection of the first installment of property taxes historically has improved the Board's cash position and resulted in a repayment of a portion of the Board's outstanding TANs. A second peak is typically experienced in July, due to additional cash needs and the Board's annual pension contribution required on June 30, before the TANs typically are repaid fully in August with the collections of the second installment of property taxes. The FY2022 operating budget includes appropriations of approximately $12 million to pay debt service on TANs. 

FY2021 Debt Service Costs

As shown in the table below, FY2022 includes total appropriations of approximately $763 million for long-term alternate bonds and CIT bonds. Of this total, approximately $519 million will be funded from operating revenues. In addition, approximately $12 million of total appropriations are budgeted for TANs interest within the operating fund. 

CPS is required to set aside long-term debt service one year in advance for EBF-funded debt and one-and-a-half years in advance for PPRT and CIT bond-funded debt service. The FY2022 revenues shown in the following table for debt service will be set aside for these future debt payments, which are required by bond indentures to be held in trust with an independent trustee. PPRT, used to pay alternate revenue bonds, is deposited directly from the state to a trustee; and the CIT levy, used to pay CIT bonds, is deposited directly from Cook County to a trustee. Because of this set-aside requirement, the majority of the appropriations for FY2022 will be paid from revenues set aside in FY2021. Table 1 provides information on the debt service fund balance at the beginning of the year, the expenditures that are made from the debt service fund, and the revenues that largely fund the debt service requirements for the following fiscal year.

Table 1: FY2020-2022 Summary of Long-Term Debt Service Funds*
($ In Millions)
  FY2020 Actual FY2021 Estimated FY2022 Budget
Beginning Fund Balance 774.0 793.5 853.9
Property Taxes 0.0 0.0 0.0
PPRT 62.7 39.4 39.4
EBF 383.1 445.4 480.4
Federal Interest Subsidy 24.9 25.0 24.7
Other Local (City IGA and Net of Interest Earnings) 165.4 151.3 151.3
CIT 50.9 51.1 51.1
Total Revenue 687.0 712.2 746.9
Existing Bond Principal payment 144.1 190.6 238.5
Existing Bond Interest payment 507.9 491.1 524.4
Fees 1.8 0.5 0.5
Total Existing Bond Debt Service 653.8 682.2 763.4
Other Financing Sources
Net Amounts from Debt Issuances (2.5)  34.8 0
Transfers in /(out) (11.2) (0.5) (0.5)
Total other Financing Sources /(Uses) (13.7) 34.3 (0.5)
Ending Fund Balance 793.5 853.9 803.2

*Note: Long-term debt only. Interest on Tax Anticipation Notes is included in the Operating Fund budget.

Future Debt Service Profile

The following graph illustrates CPS’ debt obligations on outstanding long-term bonds as of June 30, 2021. This graph does not show the impact of short-term tax anticipation note borrowings to support operating fund liquidity or any future bonds required to support future capital budgets or debt restructuring.

Chart 1: CPS Debt Service Funding Schedule (as of June 30, 2021)

Chart 1: CPS Debt Service Funding Schedule (as of June 30, 2021)

Note: Does not include future long-term bond financings or current and future short-term financings

Measuring Debt Burden

External stakeholders, such as taxpayers, employees, parents, government watchdog groups, rating agencies, and bondholders, frequently review CPS’ debt profile to gauge its size and structure as a crucial component of CPS’ financial position. In addition to evaluating the total amount of outstanding debt and the annual debt service payments, external stakeholders also look at the “debt burden” to gauge how much taxpayers bear in debt costs and determine how much debt is affordable for residents, which establishes true debt capacity. Several methods of measuring debt burden are commonly employed for school districts, including comparing existing debt to legal debt limits, measuring debt per capita, and measuring debt as a percentage of operating expenditures.

Legal Debt Limit

The Illinois School Code imposes a statutory limit of 13.8 percent on the ratio of the total outstanding property tax-supported debt a school district may borrow compared with a school district’s equalized assessed value, which generally represents a fraction of total property value in the district. Because the Board has issued alternate revenue bonds for which property tax levies are not extended, these bonds do not count against the legal debt limit imposed by the Illinois School Code. Therefore, total property tax supported debt is extremely low, at less than one percent of the legal debt limit.

Debt Per Capita

The Board’s per capita debt burden, or total debt divided by the City of Chicago’s population, has increased in the last decade. As reported in the FY2020 Comprehensive Annual Financial Report, General Obligation debt per capita is $2,775. This is still considered moderate to slightly above average relative to other comparable school districts. The Debt Management Policy is available at the Board’s website at

Table 2: Outstanding Long-Term Debt
(in $ as of June 30, 2021)
Description Closing Date Maturity Date Principal Outstanding Pledged Funding Source for Debt Service
ULT GO Series 1998B-1* 10/28/98 12/01/31 190,150,051 IGA / PPRT
ULT GO Series 1999A* 02/25/99 12/01/31 267,392,547 IGA / PPRT
ULT GO Series 2005A 06/27/05 12/01/32 134,910,000 EBF
ULT GO Series 2009D 07/29/09 12/01/22 2,000,000 EBF
ULT GO BAB Series 2009E 09/24/09 12/01/39 490,205,000 EBF / Federal Subsidy
ULT GO QSCB Series 2009G 12/17/09 12/15/25 254,240,000 EBF
ULT GO QSCB Series 2010C 11/02/10 11/01/29 257,125,000 EBF / Federal Subsidy
ULT GO BAB Series 2010D 11/02/10 12/01/40 125,000,000 EBF / Federal Subsidy
ULT GO Series 2011A 11/01/11 12/01/41 402,410,000 EBF
ULT GO Series 2012A 08/21/12 12/01/42 468,915,000 EBF
ULT GO Series 2012B 12/21/12 12/01/35 109,825,000 EBF
ULT GO Series 2015CE 04/29/15 12/01/39 280,000,000 EBF
ULT GO Series 2015E 04/29/15 12/01/32 20,000,000 EBF
ULT GO Series 2016A 02/08/16 12/01/44 725,000,000 EBF
ULT GO Series 2016B 07/29/16 12/01/46 150,000,000 EBF
CIT Series 2016 01/04/17 04/01/46 729,580,000 CIT
ULT GO Series 2017A 06/13/17 12/01/46 285,000,000 EBF
ULT GO Series 2017B 06/13/17 12/01/42 215,000,000 EBF
CIT Series 2017 11/30/17 04/01/46 64,900,000 CIT
ULT GO Series 2017C 11/30/17 12/01/34 305,930,000 EBF
ULT GO Series 2017D 11/30/17 12/01/31 68,590,000 EBF
ULT GO Series 2017E 11/30/17 12/01/21 22,180,000 PPRT
ULT GO Series 2017F 11/30/17 12/01/24 122,690,000 IGA
ULT GO Series 2017G 11/30/17 12/01/44 126,500,000 PPRT / EBF
ULT GO Series 2017H 11/30/17 12/01/46 280,000,000 PPRT / EBF / IGA
ULT GO Series 2018A 06/01/18 12/01/35 530,035,000 EBF
ULT GO Series 2018B 06/01/18 12/01/22 9,275,000 EBF
ULT GO Series 2018C 12/13/18 12/01/32 435,830,000 EBF
ULT GO Series 2018D 12/13/18 12/01/46 313,280,000 PPRT / EBF
CIT Series 2018 12/13/18 12/01/46 86,000,000 CIT
ULT GO Series 2019A 09/12/19 12/01/30 225,283,872 IGA
ULT GO Series 2019B 09/12/19 12/01/33 123,795,000 EBF
ULT GO Series 2021A 2/11/21 12/1/41 450,000,000 EBF / IGA
ULT GO Series 2021B 2/11/21 12/1/36 107,505,000 EBF
Total Principal Outstanding $8,378,556,471  
Table 3: Outstanding Short-Term Debt
(in $ as of June 30, 2021)
  Description Maturity Date Principal Outstanding Pledged Funding Source for Debt Service
Tax Anticipation Notes, Series 2020B 12/31/21* 86,000,000 Ed Fund Property Tax
Tax Anticipation Notes, Series 2020C 12/31/21* 158,000,000 Ed Fund Property Tax
Total Principal Outstanding $244,000,000  

Note: The maturity date of the 2020B and 2020C TANs is the earlier of (A) December 31, 2021 or (B) the 60th day following the Tax Penalty Date.

Table 4: Schedule of General Obligation Debt Service
Budgeted Requirements to Maturity*
(as of June 30, 2021)
($ in Thousands)
Fiscal Year ending June 30 Total Existing General Obligation Bond Principal Total Existing General Obligation Bond Interest Total Existing G.O. Bond Debt Service
2022 $251,662 $435,210 $686,872
2023 258,017 435,076 693,093
2024 267,283 427,624 694,907
2025 323,272 423,225 746,497
2026 305,942 411,221 717,163
2027 302,547 472,562 775,109
2028 282,964 427,723 710,687
2029 292,236 426,083 718,319
2030 277,139 400,710 677,849
2031 263,066 359,683 622,749
2032 238,025 243,856 481,881
2033 250,345 231,157 481,502
2034 242,500 220,295 462,795
2035 257,010 204,749 461,759
2036 265,160 184,745 449,905
2037 276,845 175,807 452,652
2038 290,960 160,959 451,919
2039 305,860 144,359 450,219
2040 322,010 127,041 449,051
2041 336,665 107,943 444,608
2042 314,039 79,793 393,832
2043 280,628 75,763 356,391
2044 285,753 49,579 335,332
2045 302,876 35,295 338,171
2046 301,880 17,940 319,820
TOTAL $7,094,684 $6,278,398 $13,373,082

Note: Table is based on budgeted debt service requirements to be deposited within each fiscal year. Excludes issues completed after June 30, 2021 and any future anticipated transactions which were included in the FY2022 budget.

Table 5: Schedule of Capital Improvement Tax Debt Service
Budgeted Requirements to Maturity*
(as of June 30, 2021)
($ in Thousands)
Budget Year ending June 30 Total Existing CIT Bond Principal Total Existing CIT Bond Interest TOTAL
2022   $51,084 $51,084
2023   51,084 51,084
2024   51,084 51,084
2025   51,084 51,084
2026   51,084 51,084
2027   51,084 51,084
2028   51,084 51,084
2029   51,084 51,084
2030   51,084 51,084
2031   51,084 51,084
2032   51,084 51,084
2033 42,615 51,084 93,699
2034 45,000 48,692 93,692
2035 47,535 46,164 93,699
2036 50,205 43,494 93,699
2037 53,170 40,531 93,701
2038 56,260 37,434 93,694
2039 59,540 34,157 93,697
2040 63,010 30,688 93,698
2041 66,685 27,015 93,700
2042 70,565 23,128 93,693
2043 74,680 19,013 93,693
2044 79,040 14,658 93,698
2045 83,645 10,048 93,693
2046 88,530 5,167 93,697
TOTAL $880,480 $993,192 $1,873,672

Note: Excludes issues completed after June 30, 2021 and any future anticipated transactions which were included in the FY2022 budget.

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