CHICAGO — The weight of Chicago's credit woes has driven a fresh round of downgrades for the Chicago Board of Education and Chicago Park District.
Moody's Investors Service late Friday lowered the park district's rating two levels to A3 from A1 and assigned a negative outlook. The action on the park district impacts $826 million of general obligation debt.
Moody's lowered the Chicago Public Schools' rating one level to Baa1 from A3 and assigned a negative outlook. The action impacts $6.3 billion of general obligation debt.
Moody's last year lowered its ratings on both issuers.
Both reports said the ratings reflect the two issuers' "close governance ties to the city of Chicago." Moody's downgraded the city's general obligation rating by three levels last summer and earlier this month acted again, lowering the rating to Baa1 with a negative outlook.
The city's credit plunge has been driven by the strain of more than $19 billion of unfunded obligations and the ongoing lack of action on reforms or plans to address a $600 million spike in the city's public safety pension payments next year. Moody's also revised its local government general obligation rating criteria earlier this year giving more weigh to pension.
The park district and CPS financial profiles are strained by their shared reliance on the same tax base as Chicago. CPS also is weighed down by severe pension liabilities and faces a nearly $1 billion deficit in its next budget. State lawmakers last year approved a pension reform package for the park district aimed at stabilizing its system. The action weighed in the district's favor in Moody's review, but failed to stave off the downgrade.
Mayor Rahm Emanuel holds sway over both issuers through his board appointment power. He also handpicks the parks' superintendent and school's chief executive officer.
