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CPS borrows another $112 million at exorbitant rate

Chicago Public Schools has borrowed the rest of the money it needs to start the new school year, again at interest rates about four times what a typical government with better credit ratings would have to pay.

A week after CPS borrowed $375 million from J.P. Morgan at a 6.39 percent, it secured another $112 million from the same lender at 6.41 percent. The short-term borrowing known as "grant anticipation notes" by the school district with "junk" credit ratings will eventually be repaid by state block grant money owed to CPS but not yet disbursed in the ongoing Illinois budget stalemate.

Experts say the sky-high interest rates reflect CPS' dire financial condition, but at least, said Matt Fabian, a partner at Municipal Market Analytics, said that consistent access to borrowing markets is something of an improvement.

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