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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 assist in the management of cash flow and liquidity. As of June 1, 2022, the Board has approximately $8.6 billion of outstanding long-term debt and no outstanding short-term debt. FY2023 includes appropriations of $769 million for long-term debt service payments. Approximately $9 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 the expansion of full-day pre-k and other high-quality programs. 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 1, 2022, all CPS outstanding long-term 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 FY2023, approximately $502 million in EBF revenues will be required for debt service, compared to $480 million in FY2022 and $446 million in FY2021. In addition to debt service funded by EBF, $39 million of debt service will be paid from PPRT in FY2023. 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 FY2023 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 that 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.

Capital Improvement Tax Bonds

In FY2016, CPS began levying a Capital Improvement Tax (CIT) levy to fund capital projects. As of June 1, 2022, CPS has sold three series of CIT bonds, and the total amount of outstanding CIT bonds is $880 million.

The FY2023 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.

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. 

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, just as 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 FY2022, CPS received general obligation credit rating upgrades from Kroll Bond Rating Agency (BBB Stable and BBB+ for series issued from 2016 to 2019), Fitch (BB+ Stable) and Moody’s (Ba2 Stable). Standard & Poor’s currently rates CPS GO bond series BB 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. Both ratings received a one-notch upgrade in FY2022.

Table 1: Credit Ratings History (as of June 1, 2022)*KBRA rates GO bond series issued from 2016 to 2019 one notch higher than the underlying General Obligation credit (currently BBB+).
Credit Rating General Obligation Capital Improvement Tax
Rater KBRA* Fitch S&P Moody's Fitch KBRA
Current BBB BB+ BB Ba2 A BBB+






FY15 BBB+ BBB- A- Ba3    
FY14   A- A+ Baa1    
FY13   A- A+ A3    
FY12   A A+ A2    

FY2023 Liquidity and Short-term Borrowing

It is anticipated that the Board will issue Educational Purposes TANs in FY2023 to fund operating liquidity and cash flow needs similar to prior fiscal years. In the last three fiscal years, the Board closed on multiple annual series of TANs for working capital purposes. The TANs were issued as either public sales or direct placement with investors. The initial issuance of TANs typically occurs in October. Subsequently, the principal amount of TANs outstanding increased with cash 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. TANs are typically repaid fully in August with the collections of the second installment of property taxes. The FY2023 operating budget includes appropriations of approximately $9 million to pay debt service on TANs.

FY2023 Debt Service Costs

As shown in the table below, FY2023 includes total appropriations of approximately $769 million for long-term alternate bonds and CIT bonds. Of this total, approximately $542 million will be funded from operating revenues.  In addition, approximately $9 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 FY2023 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 FY2023 will be paid from revenues set aside in FY2022. Table 2 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 2: FY2021-2023 Summary of Long-Term Debt Service Funds1
($ in Millions)
  1. FY2022 and FY2023 were estimated as of June 1, 2022. This includes long-term debt only. Interest on TANs is included in the Operating Fund budget.
  2. A two-month delay in the Cook County property tax due date caused approximately $42.8 million in IGA revenues to be received after the end of the revenue recognition period in FY2021. These revenues have been added to the $142.3 million scheduled to be received in FY2022.
Table 2 Empty Cell FY2021 Actual FY2022 Estimated FY2023 Budget
Beginning Fund Balance 793.5 833.6 877.7
Evidence-Based Funding (State Aid) 454.5 480.3 502.1
Personal Property Replacement Tax 39.4 39.4 39.4
Intergovernmental Agreements 99.52 185.12 142.3
Federal Interest Subsidy 25.0 24.7 24.6
Capital Improvement Tax 51.5 51.1 51.1
Interest Earnings 1.2 2.0 3.0
Total Revenue 671.0 782.7 762.5
Existing Bond Principal payment 176.3 238.6 259.2
Existing Bond Interest payment 483.3 524.2 509.7
Fees 1.9 0.5 0.5
Total Existing Bond Debt Service 661.5 763.3 769.4
Other Financing Sources
Net Amounts from Debt Issuances 31.9 25.2 0
Transfers in /(out) (1.3) (0.5) (0.5)
Total other Financing Sources /(Uses) 30.6 24.7 (0.5)
Ending Fund Balance 833.6 877.7 870.2

Future Debt Service Profile

The following graph illustrates CPS’ debt obligations on outstanding long-term bonds as of June 1, 2022.  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 1, 2022)

Chart 1 Legend

Note: Does not include future long-term bond financings or current or 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 general obligation 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. The Board currently has no outstanding property tax-backed general obligation debt that counts toward the 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 FY2021 Annual Comprehensive Financial Report, General Obligation debt per capita is $2,639. 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 3: Outstanding Long-Term Debt
(in $ as of June 1, 2022)
*Outstanding principal excludes accreted interest.
Description Closing Date Maturity Date Principal Outstanding Pledged Funding Source for Debt Service
ULT GO Series 1998B-1* 10/28/98 12/01/31 $170,553,052 IGA / PPRT
ULT GO Series 1999A* 02/25/99 12/01/31 253,191,576 IGA / PPRT
ULT GO Series 2005A 06/27/05 12/01/32 125,670,000 EBF
ULT GO BAB Series 2009E 09/24/09 12/01/39 482,615,000 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 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 12/01/34 282,590,000 EBF
ULT GO Series 2017D 11/30/17 12/01/31 62,960,000 EBF
ULT GO Series 2017F 11/30/17 12/01/24 96,695,000 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 12/01/35 507,165,000 EBF
ULT GO Series 2018B 06/01/18 12/01/22 4,730,000 EBF
ULT GO Series 2018C 12/13/18 12/01/32 419,490,000 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 12/01/33 123,295,000 EBF
ULT GO Series 2021A 2/11/21 12/1/41 450,000,000 EBF / IGA
ULT GO Series 2021B 2/11/21 12/1/36 100,975,000 EBF
ULT GO Series 2022A 2/1/22 12/1/47 500,000,000 EBF
ULT GO Series 2022B 2/1/22 12/1/41 372,170,000 EBF
Total Principal Outstanding $8,649,748,500  
Table 4: Outstanding Short-Term Debt
(in $ as of June 1, 2022)
Note: The maturity date of all 2021 TANs is the earlier of (A) December 31, 2022 or (B) the 60th day following the Tax Penalty Date. As of June 1, 2022, there was no short-term debt outstanding or issued from the authorized 2021 TANs with a capacity of $950 million remaining.
Description Maturity Date Principal Outstanding Pledged Funding Source for Debt Service
Tax Anticipation Notes, Series 2021A 12/31/22* $0 Ed Fund Property Tax
Tax Anticipation Notes, Series 2021B 12/31/22* 0 Ed Fund Property Tax
Tax Anticipation Notes, Series 2021C 12/31/22* 0 Ed Fund Property Tax
Total Principal Outstanding $0  
Table 5: Schedule of General Obligation Debt Service
Budgeted Requirements to Maturity*
(as of June 1, 2022)
($ in Thousands)
Note: This table is based on budgeted debt service requirements to be deposited within each fiscal year. Excludes issues completed after June 1, 2022 and any future anticipated transactions that are included in the FY2023 budget.
Fiscal Year ending June 30 GO Bond Principal GO Bond Interest Total GO Bond Debt Service
2023 $258,017 $450,359 $708,376
2024 267,283 442,907 710,190
2025 323,272 438,508 761,780
2026 305,942 426,505 732,447
2027 302,547 487,846 790,393
2028 282,964 443,006 725,970
2029 292,236 441,366 733,602
2030 277,139 415,993 693,132
2031 263,066 374,967 638,033
2032 238,025 259,139 497,164
2033 250,345 246,440 496,785
2034 242,500 235,578 478,078
2035 253,530 220,032 473,562
2036 261,350 200,354 461,704
2037 272,480 191,975 464,455
2038 285,640 178,081 463,721
2039 299,500 162,523 462,023
2040 314,655 146,197 460,852
2041 328,395 128,017 456,412
2042 350,114 101,668 451,782
2043 355,583 96,195 451,778
2044 385,143 66,637 451,780
2045 403,776 48,004 451,780
2046 425,560 26,220 451,780
2047 65,000 2,850 67,850
TOTAL $7,304,062 $6,231,367 $13,535,429
Table 6: Schedule of Capital Improvement Tax Debt Service
Budgeted Requirements to Maturity*
(as of June 1, 2022)
($ in Thousands)
Note: This table is based on budgeted debt service requirements to be deposited within each fiscal year. Excludes issues completed after June 1, 2022 and any future anticipated transactions that are included in the FY2023 budget.
Fiscal Year ending June 30 CIT Bond Principal CIT Bond Interest Total CIT Bond Debt Service
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
2047 - - -
TOTAL $880,480 $942,109 $1,822,589

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