Chambana Sun

Illinois' Dist. 52 Senate candidate Mike Madigan, often referred to as "The Other Mike Madigan," is frowning upon a newly minted Chicago Public Schools bond deal that has incurred a lot of new debt for taxpayers by transferring Chicago Public School (CPS) wealth to capital markets through borrowing at steep interest rates, which has become common place and affects taxpayers outside Chicago.

Madigan, addressed the bond deal on his Facebook page.

“This is the type of stuff that has lit a fire in me to run for State Senate so I can do my part in turning around Illinois,” Madigan wrote. “Please help my campaign by spreading the word to your friends and ask them to follow my campaign page. We need to take back our state from these corrupt people, and it starts by voting out anyone and everyone who supports the current Chicago legislative "leadership" that is closer to destroying it with each passing day.”

Last month, shortly after paying up to 8.5% interest for market access, CPS chief executive officer Forrest Claypool said during an interview that he was unsure if the district would borrow from Wall Street again.

According to Claypool, the $725 million issued to CPS was a temporary solution to the school district's cash flow crisis, and allowed the district to make its February debt service deposit and make it through the next few months ahead.

But Claypool said the district could not borrow anymore and had to find a way to close the deficit and balance the budget. The district is relying on cuts, an increase in city property taxes for teacher pensions, additional state funds, and teacher contract concessions to cut a $1 billion deficit.

In exchange for the temporary financial relief – which some have dubbed as a band aid approach, CPS will be making payments on this new debt until 2044 at an interest rate of 8.5%?—?roughly triple what a top-rated borrower would be paying, according to an article on medium.com.

Approximately $40 million of the bond proceeds will used to pay the investors buying their bonds so the school district can use the money intended to service the debt for other purposes. In addition, CPS is extending the maturity on roughly $208 million so the district does not have to pay debt service payments.

Last year, the district unveiled a budget the relied on a $480 million subsidy from the state. So far, efforts to secure the subsidy have been in vain because the request could not have come at a worse time – when the state is struggling with budget issues of its own.

In January, Governor Bruce Rauner along with other Republican lawmakers called for legislation that would allow the state to take over CPS and allow the school district to declare bankruptcy. Democrats in the House and Senate opposed the legislation.

Madigan, a Republican candidate and local restaurant owner, has served Urbana's Ward 6 since May 2013, and sits on the Cunningham Township Board and the Urbana Traffic Commission. He is a former legislative staffer and aide to former Gov. George Ryan.