Unit rooting our way through the Chiocago Schools budget

(Reuters) - Yields topped out at 5.63 pct for bonds due in 2039 in a $295.7 million Chicago Board of Education general obligation debt sale on Tuesday, according to an initial pricing scale obtained by Reuters.

The yield was 285 basis points over Municipal Market Data's benchmark triple-A scale. The financially struggling public school district is selling the debt through lead underwriter PNC Capital Markets after its ratings with Moody's Investors Service and Fitch Ratings were lowered last month to one notch above the junk level. (Reporting By Karen Pierog)

Chicago can never Unit Root their way through 25 years, this is risky though bond dealers deny it. Then this, 5.6% for a 25 year bond.  25 years includes three recessions with unemployment at 9%; and three collapses in home prices.   The interest rate is also about 1/3 what the school board needs to pay in on pension funds, likely close to 15% of teacher income.
Here is the opening line on the Chicago Schoold web site:

The Chicago Public Schools Fiscal Year 2014 budget protects critical investments in the future of Chicago’s next generation while reflecting the challenging financial realities of a district facing a historic $1 billion budget deficit. This year’s deficit, driven by a $400 million increase in pension payment obligations coupled by flat and declining revenues and increasing contractual and statutory obligations, has led to some difficult choices. But in spite of our financial challenges, our commitment to providing every child in every community with a high-quality education is as strong as ever, and the district, parents, teachers, principals, community members, local elected officials and business leaders must work together to protect investments in student learning that will maintain the tangible progress being made by our students. 

What does Moody's biobd raters say?

 New York, March 06, 2015 -- Moody's Investors Service has downgraded to Baa3 from Baa1 the rating on the Chicago Board of Education, IL's general obligation (GO) debt. The Baa3 rating applies to $6.3 billion of the district's outstanding GO debt. The outlook remains negative. The Chicago Board of Education is the primary debt issuer for the Chicago Public Schools (CPS).

Chicago schools put out their own budget forecasts and summary. Here we have funds used for debt service.  two year old data. The trend up, it is never goes down. The system is bankrupt.