Despite the turmoil the last week, it looks like CPS is going forward with selling $300 million in general obligation bonds. At the Friday press conference addressing CEO Barbara Byrd-Bennett’s leave of absence amid a federal investigation, Board President David Vitale said officials have been told that they can go forward with the sale. Also, Bond Buyer notes that the deal is still on the calendar. One analyst says that investors who like risk because it often results in a high yield won’t be scared off, but those on the fence about the bonds because of the district’s low credit rating might not go forward. The bonds are being sold to pay for capital projects that are already completed.
But leadership problems only add to concerns about CPS from investors,. Last month, both Moody’s Investors Service and Fitch dropped ratings to just above junk level. That immediately caused two big problems for the school district. Last month when it refinanced some variable general obligation bonds, it paid a much higher rate than it did just a few years ago, reports Reuters. Also, investment bankers who entered into debt swaps could demand payment of an estimated $228 million.
The Sun-Times points out that if investors demand this cash it would wipe out CPS’ reserves and calls it a “time bomb.”
2. SUPES roundup … Lots of good stories over the past few days about the FBI investigation into Byrd-Bennett’s financial ties with SUPES Academy. Here’s a quick roundup: The Sun-Times reports that interim CEO Jesse Ruiz has asked district attorneys to prepare options to terminate the contract if any wrongdoing is found. The newspaper also looks into the murky past of one of SUPES’ owners, Gary Solomon, a former dean of Niles West High School.
Channel ABC 7 reports on controversy that surrounded Byrd-Bennett during her tenure in Cleveland. Meanwhile, the Baltimore Sun reports that the Baltimore County school district is unaware of any federal probe into that district’s no-bid contract with SUPES. Last year that district’s superintendent, Dallas Dance, got into trouble with an ethics panel after failing to report he was getting paid to work for SUPES after the contract was approved.
The Tribune editorial board asks whether Mayor Rahm Emanuel should continue to have confidence in the Board of Education, which approved the contract, while the Sun-Times editorial board says the FBI probe would be no excuse for Springfield to abandon CPS. Finally, Crain’s Chicago Business has a column about how competitive bidding is a basic tenet of financial management, appropriately titled “How could Chicago be so dumb?”
3. Immigrants and early ed … The City of Chicago is offering up to $325,000 in grants to organizations that can increase the number of children from immigrant families who enroll in early childhood programs. Earlier this month the city’s Department of Family and Support Services issued a Request for Proposals (RFP) for groups that can design and implement “unique, targeted, replicable programming aimed at reducing some of the most prevalent barriers to participation in comprehensive early childhood education and development programs, and supporting families’ enrollment in and continued use of those same programs.”
Organizations whose proposals are accepted can get between $50,000 and $75,000 per year during the two-year initiative. The deadline is next Thursday. A press release sent by the Mayor’s Office late Friday explained the need for such an RFP: “Children from immigrant families represent the fastest growing sector of children in the United States and nearly all of them are native born citizens. Despite being citizens themselves, these children are more likely than their native born counterparts to encounter a variety of barriers that put them at increased risk of developmental delays and poor academic performance once they enter Kindergarten.”
4. Out of reach … After years of state cuts to higher education and more likely on their way, college is becoming hard to afford for many Illinois families — and first-generation and minority students are the being hit the hardest. That’s one of the conclusions of a report brief issued this week by the group Young Invincibles, which analyzed the impacts of recent cuts to higher education spending.
“Over the last decade, tuition in Illinois has increased by 57 percent at public four-year universities and by 38 percent at public two-year colleges,” according to the report. “These increases are over 40 percent higher than the national average and as the state slashed financial aid, making college more out of reach for low-income students, especially.”
The report notes that while Illinois is regularly touted as a state that has increased spending on higher ed, mos of that increase has gone to increased pension payments — not direct aid to colleges and universitie that could help keep tuition down. Finally, the report criticizes Gov. Bruce Rauner’s proposed FY2016 budget, which would cut state money to the operational budgets of public universities by 30 percent. “In the long run, if these cuts are maintained, tuition will ultimately continue to increase,” the report notes. “State disinvestment consistently leads to increases in tuition and consequently to high levels of student debt.”
Catalyst’s winter issue was devoted to the issue of college persistence and why so many CPS grads who make it to college ultimately drop out.
5. Meanwhile in L.A… The U.S. Securities and Exchange Commission is investigating Los Angeles school officials’ use of construction bond funds for its controversial — and now abandoned — $1.3-billion iPads purchase. The Los Angeles Times reports that the federal agency is looking into whether the L.A. Unified School District properly disclosed how the bonds would be used.
According to the Times story, that state law allows school construction bond money to be spent on technology, though districts are supposed to spell out the intended uses of bond funds when the issue goes to voters. “In ballot materials, L.A. Unified clearly designated funds for technology, but did not mention tablets or that students would be allowed to take home the devices. In fact, iPads did not exist when voters approved the most recent bond issue in November 2008.”
The school district recently sought a refund from Apple over the curriculum supplied on the devices by Pearson. The iPad scandal has already prompted the resignation of the district’s superintendent, whose communications with tech executives prior to the bidding process have raised questions about fairness. In addition, the software provided by Pearson was unfinished and problematic when the iPads finally got to schools.
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