CHICAGO, Oct 23 (Reuters) - The Chicago Board of Education will decide on Wednesday whether to issue up to $1.1 billion of bonds in the wake of a new Illinois school funding formula that provides more money to the cash-strapped district, a school spokesman said on Monday.
The Chicago Public Schools (CPS) would refund about $630 million of existing bonds for savings and sell $355 million or more of new bonds next month to fund capital projects.
The historic state education funding agreement put CPS on stronger financial footing and created an opportunity to significantly reduce borrowing costs so that more district resources can reach classrooms," Chicago Public Schools spokesman Michael Passman said in a statement.
Illinois Governor Bruce Rauner signed into law in August a new method for distributing $6.7 billion in state aid to 852 school districts. Under the law, CPS received a $450 million funding boost from increased aid and pension contributions from the state and a local property tax increase.
Escalating pension payments have led to drained reserves, junk credit ratings, and debt dependency for CPS, the nation's third-largest public school system.
The school board will also take up a revision of the $5.75 billion fiscal 2018 budget it approved in August in order to incorporate the increased state funding.
(Reporting by Karen Pierog; Editing by Matthew Lewis)