Moody's CPS Downgrade Induces Political Panic

CHICAGO—The Chicago Teachers Union released the following statement regarding Moody’s downgrade of the Chicago Public Schools bond rating:

“The downgrade is an example of how the rating agencies work in concert with bond holders in pushing our city and schools to the brink by recklessly increasing termination fees and costs of borrowing. Today’s action by Moody’s induces further political panic to force the city to implement even more misguided fiscal decisions that will hurt our students and public schools,” said CTU spokeswoman Stephanie Gadlin.

“Mayor Emanuel and his handpicked school board have refused to challenge big banks like Loop Capital and Bank of America for misrepresenting the risks of toxic swap deals or take responsibility for market conditions in the 2008 collapse that have greatly increased Chicago’s liabilities. Additionally, rating agencies have consistently argued that the mayor must get more revenue and repair a rocky relationship with the CTU in order to improve Chicago’s ratings.

“Instead of heeding this advice, the mayor has provoked more labor discord by demanding a 7 percent reduction in compensation for teachers and paraprofessionals while promulgating a fiscal ‘crisis’ of the Board’s own making. He has also refused to support progressive revenue options like a LaSalle St. Tax, releasing the TIF surplus, suing the banks for toxic swaps, advocating for a Millionaires Tax and other revenue options.”