Mayor Richard M. Daley and Chicago Public Schools officials said today that the school system has issued more than $750 million in bonds supported by the American Recovery and Reinvestment Act (ARRA) to build new schools, expand and renovate existing buildings and reduce debt service.
“The federal program has been a huge undertaking, but we have made sure that Chicago has received the greatest possible benefit from its funding,” Daley said at a news conference held at Hitch Elementary School, 5626 N. McVicker Av., at which he thanked U.S. Treasurer Rosie Rios for the support provided by the “Build America” and “Qualified School Construction Bonds” programs.
Among other things, the federal support is making it possible to repair the roof and make the Hitch building ADA-compliant with new fire alarms, elevator, bathrooms, and ramps.
Daley called ARRA one of the most important tools the City has had over the past year to stimulate the economy and help people get through difficult times.
The City has been awarded more than $1.1 billion and applied for an additional $1.5 billion in competitive grants under the program. The funding has been used to create jobs and improve infrastructure in areas such as energy and environment, transportation, housing, workforce development and public safety.
“With the money, we have re-surfaced streets, replaced subway tracks and bought new hybrid buses, rehabilitated 6,800 public housing units, helped people facing foreclosure and provided more than 7,000 young people with summer jobs – to name just a few of the uses,” Daley said.
“And one of the most important ways we use federal stimulus funding is for programs that support the Chicago Public Schools,” he said.
Chicago Public Schools has received about $400 million in stimulus grant allocations over two years which support programs for economically disadvantaged youth, early childhood and English Language Learner services, educating students with disabilities, homeless youth programs, neglected children and noise reduction projects.
But perhaps even more significantly, Daley said, through its “Build America” and “Qualified School Construction” bond programs, the federal program has made it possible for CPS to issue more than $750 million in bonds that provide funds for capital projects and debt service reduction.
“Remember, in a time of severe budget pressure, every dollar we can save on annual debt service is a dollar we can use to improve classroom education,” he said.
Specifically, under ARRA’s Build America Bonds (BABs) program, CPS issued $518 million in taxable BABs in September as part of its annual capital program. ARRA provides for the BABs to subsidize CPS’ borrowing costs with a direct payment tax credit of 35 percent and greatly reduces CPS debt service costs compared to traditional tax exempt financing. The BABs issue was the largest single issue bond offering ever brought to market by Chicago Public Schools.
Under ARRA’s Qualified School Construction Bonds (QSCBs) program, CPS received a direct allocation of $254 million for calendar year 2009 and $254 million in 2010. Under the QSCBs, the Treasury provides bond investors with tax credits in lieu of traditional interest payments from the issuer, reducing CPS debt service expenses to the lowest cost of borrowing.
CPS used approximately $22 million for emergency repairs at Bond, Caldwell, Ebinger, Harlan, Gallistel, Schneider, Sumner and Yale schools this fall. The funding also assisted in the $7 million renovations of four CPS turnaround schools Bethune, Dulles, Fenger, and Johnson. Upcoming new construction and renovation projects will also benefit from the expected issue of $200 million in BABs in spring 2010.
CPS expects to save about $6.2 million per year in debt service over a 20-year period.
“Some may ask why building new schools and renovating existing ones is so important. To me and many others, it's clear,” Daley said. “When you open a new school or fix an existing one, you give students and staff a fresh start, greater hope and of course, an improved learning environment. You provide a new anchor for the community.
“The schools we are able to build and renovate because of this federal program are the schools of tomorrow and decades to come and they reflect our ongoing commitment to improving education in neighborhoods all across Chicago,” he said.
Daley thanked the Obama Administration and Congress for putting ARRA in place.
“We are responsibly using these funds to help Chicago's working and middle class get through these challenging times in the short-term, and we are using them to build a brighter future for the school children of our City,” he said.