June 02, 2026
by Daniel Vesecky
Click here to read the Full Report
Executive Summary
Debt is an essential part of every local government’s budget, but often a confusing one. In the Chicago region, many local governments are overburdened by debt, often citing it as a high “legacy” cost that constrains discretionary spending. This report serves as a basic primer on how municipal debt works and how it is meant to be used, using the debt load of one local government as a case study: the Chicago Public School District (CPS or ‘the District’). The report is grounded in widely accepted principles from public finance literature, guidance from organizations such as the Government Finance Officers Association, and research by government finance experts.
CPS currently carries approximately $9.3 billion in outstanding debt and is projected to spend more than $629 million on debt service in FY2026. The District’s debt burden is high compared to peer school districts, and its below-investment-grade credit rating significantly increases borrowing costs. These challenges are driven by a combination of factors, including aging facilities, declining enrollment, recurring structural deficits, and years of difficult fiscal decisions made under significant budget constraints.
CPS’ debt portfolio is heavily backloaded, meaning a substantial share of repayment obligations has been pushed into future years. While this approach can provide near-term budget relief, it increases long-term costs and limits future financial flexibility. The report also examines recent CPS debt issuances and refinancing transactions, finding that while recent refinancing decisions generated meaningful short-term savings and avoided the most harmful debt practices, they were largely driven by immediate budget pressures and did not materially improve the District’s long-term debt structure.
Ultimately, CPS’ debt challenges are not the result of any single decision or administration, but rather decades of structurally imbalanced budgets and recurring fiscal pressures. Improving the District’s long-term financial outlook will require reducing reliance on backloaded debt structures, pursuing sustainable solutions to recurring budget deficits, rebuilding financial reserves, and improving its credit rating. While debt management alone cannot resolve CPS’ broader fiscal challenges, it can help reduce future costs, restore flexibility, and support a more sustainable financial future.
Click here to read the Full Report