CHICAGO (Reuters) - The Chicago Public Schools met a Thursday deadline to complete a $676 million contribution to its teachers pension system, a school spokeswoman said.
The nation’s third-largest public school system had to fully tap an $870 million bank line of credit to make the payment, according to Emily Bittner, the spokeswoman.
With fiscal 2016 ending at midnight Thursday, Bittner said the district has about $83 million in cash, which is up from a projection of just $24 million CPS made after it sold $725 million of bonds in the U.S. municipal market in February.
She added that the $83 million cash on hand estimate represents less than a week of operating expenses for the district.
“Junk”-rated CPS has become dependent on borrowing for cash flow as pension payments siphon off a big chunk of revenue.
CPS received a potential $555 million revenue boost from the Illinois legislature on Thursday mainly for pensions that came out of marathon negotiations this week between Illinois Governor Bruce Rauner and legislative leaders.
“This agreement will place our schools on stronger financial ground so that our parents, our teachers, and our principals can focus on the fundamentals of our children’s academic success,” Chicago Mayor Rahm Emanuel told reporters.
Bills that passed both chambers would pave the way for a possible $250 million Chicago property tax increase and a one-time $205 million state contribution for CPS pensions.
The governor said enactment of the latter bill was contingent on the passage of “major” statewide pension reform, a feat made difficult by Illinois Supreme Court rulings prohibiting retirement benefit cuts for public-sector workers.
Reporting by Karen Pierog and Dave McKinney; Editing by Matthew Lewis