NEW YORK (Reuters) - Standard & Poor's Ratings Services on Friday cut the credit rating for the Chicago Board of Education, responsible for the oversight of Chicago Public Schools, to "junk" status, dropping its general obligation bonds to a rating of 'BB' from 'BBB'.
The nation's third-largest public school system earlier this week released its $5.7 billion 2016 budget, which includes a historic $1.1 billion budget deficit driven by rapidly rising pension payments.
"The rating action reflects our view of the proposed fiscal 2016 budget, which includes what we view as the board's continued structural imbalance and low liquidity with a reliance on external borrowing for cash flow needs," said
Standard & Poor's credit analyst Jennifer Boyd.
Moody's cut the district's rating to Ba3, or "junk" in May, and Fitch ratings said it downgraded its rating on the Chicago Board of Education’s general obligation bonds by one notch to BB+ from BBB- in July.
(Reporting by Megan Davies; Editing by Ken Wills)