Moody’s downgrades Chicago Public Schools and Chicago Park District

When Mayor Rahm Emanuel went to SXSW to pitch Chicago as a destination city, he touted the city’s buzz. There’s no denying Chicago’s arts and tech scene is on the rise. But Emanuel failed to tell Austin crowds there’s a buzzkill on the way – the city’s fiscal collapse. Chicago continued its decline when two of...

When Mayor Rahm Emanuel went to SXSW to pitch Chicago as a destination city, he touted the city’s buzz. There’s no denying Chicago’s arts and tech scene is on the rise.

But Emanuel failed to tell Austin crowds there’s a buzzkill on the way – the city’s fiscal collapse.

Chicago continued its decline when two of the city’s sister governments suffered another round of credit downgrades. Moody’s Investor Services downgraded both the Chicago Public Schools, or CPS, and the Chicago Park District, or CPD.

These downgrades follow Moody’s recent downgrade of the city last month. Chicago is now rated Baa1, just three notches above junk bond status. Only Detroit has a lower rating than Chicago when comparing the nation’s major cities.

CPS now has the same rating as the city, Baa1. CPD received a double-notch downgrade to A3 from A1, which is one notch higher than the city.

The recent slew of downgrades is based mainly on the pension shortfalls that threaten to force a Chicago bankruptcy. The shortfalls aren’t just from the four city-run funds that cover firefighters, police, municipal employees and laborers. They also include those of the city’s sister governments – CPD, CPS and the Chicago Transit Authority.

The total pension shortfall for the city of Chicago and its sister governments was $28.6 billion as of fiscal year 2012. When you add what Chicagoan’s owe for their share of Cook County’s pension shortfalls, the bill rises to $32 billion.

In total, Chicagoans are on the hook for more than $63 billion in long-term debt, pension and retiree health insurance shortfalls. That’s more than $23,000 in debt for each and every Chicagoan.

Which makes me wonder. If Emanuel succeeds in convincing some new techie to Chicago, will he personally welcome her with a Goose Island 312 and a $23,000 bill?