Moody's lowers Chicago Public Schools' dismal credit rating

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CHICAGO (AP) — A major ratings agency has downgraded Chicago Public Schools' already dismal credit rating, citing the district's "precarious" financial situation and unbalanced 2016 budget.

Moody's Investors Service on Monday lowered the rating on CPS' general obligation debt from Ba3 to B1.

The agency — which dropped the district's credit to "junk" status in May — also warned CPS is under review for another downgrade.

Moody's noted the nation's third-largest school district has increasingly borrowed money to pay for operations and is counting on millions in state funding that lawmakers haven't approved.

CPS also faces escalating pension contributions and pressure from lawmakers' inability to approve a state budget.

The lower rating means CPS will likely see higher borrowing costs if the district moves forward with plans to issue bonds early next year.

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