With what for money?


“The future, according to some scientists, will be exactly like the past,
only far more expensive.”

~ John Sladek


Name of Agency 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Current
Kroll Bond Rating Agency BBB+ BBB-
Fitch Ratings A+ A+ A+ A+ AA- A+ A A- A- BBB- B+
Standard & Poor’s Rating Services A+ AA- AA- AA- AA- AA- A+ A+ A+ A- B+
Moody’s Investor Services A2 A1 A1 A1 Aa2 Aa3 A2 A3 Baa1 Ba3 B1


I don’t even know where to start with the Chicago Public Schools (CPS). Long ago in a galaxy far, far away I studied business at Rice University. I worked as a corporate and municipal bonds analyst afterwards. I understand bonds. CPS wants to issue (more)bonds to fund future district expenses.

Understanding how bonds work will help explain the CPS problem. A bond is basically a loan. The idea is that investors loan CPS $875 million so the district can meet its many obligations. In return, investors expect to get back the money they lent along with additional interest, extra money they receive for for giving up the use of their money for awhile. CPS promises to pay interest payments for the length of the loan. How much and how often interest is paid will depend on the bond, but interest will have to be high. CPS will end up paying a great deal of interest to get investors to fund its school system. When a bond reaches a pre-set “maturity” date, the principal, or amount of the original loan, will be repaid.

A bond is not like a stock. You don’t own part of the company when you buy a bond. Stocks represent slivers of corporate ownership. Bonds are simply loans. When government entities issue bonds, these are called municipal bonds or “munis.” Interest on munis offers some tax advantages and munis are frequently favored because they are safe. People who invest in U.S. government bonds expect to get their money back when the bonds mature, for example..

One important consideration when investing in bonds will be the interest rate associated with the bond. Safer bonds offer less interest. A search on safest municipal bonds turned up two interesting examples at http://www.municipalbonds.com/risk-management/the-top-10-safest-municipal-bonds/:

Williamson County Texas Unlimited Road Tax Road Bonds Series 2007 (969887UH9): These Texan AAA-rated, insured, general obligation bonds are backed by unlimited taxation with a 4.75% interest rate and long-term February 15, 2032 maturity date.

City of Arlington Texas Water and Wastewater System Revenue Bond Series 2007 (0484KEW1): These Texan AAA-rated, insured, general obligation bonds are backed by limited taxation with a 5% interest rate and short-term June 1, 2017 maturity date.

A variety of factors are considered when deciding on the quality of a bond. For the two bonds above, factors that jumped out at me were the unlimited taxation backing the Williamson County road bonds and the 2017 maturity date of the Arlington water bonds. More access to tax revenues helps ensure I will get my interest and principal back from Williamson County. A near maturity date doesn’t allow much time for economic changes that might interfere with Arlington’s ability to pay back what it owes.

Fortunately for investors, a few U.S. firms such as Standard & Poor’s, Moody’s, and Fitch rate bonds as their business. That “AAA” rating translates to “extremely safe investment.” Highly-rated, municipal bonds are considered one of the safest places to park money when investing, although these bonds have betrayed investors. Washington nuclear plant investors recovered only 40% of their money from one historic highly-rated, municipal bond disaster. Cities, counties and other municipal entities can and have gone bankrupt. When that happens, investors may not get all of their principal back, much less interest payments.

Which brings us back to CPS and bond ratings. The chart above shows a slide down to junk bond status.  Junk bonds are bonds that carry a rating of ‘BB’ or lower by Standard & Poor’s, or ‘Ba’ or below by Moody’s. We call these bonds junk bonds because they carry a higher default risk than so-called investment grade bonds. Default translates to “Oops! We can’t afford to pay you back.”

As the odds of default for a bond go up, interest has to go up in order to get people to buy the bonds. The greater the risk, the more money CPS must pay people to buy its bonds. Why? That junk bond status tells us that the rating agencies believe a real chance exists that, at some point, CPS will be unable to pay back interest and/or principal owed to investors. For investors to take a chance on the CPS bonds, they have to expect to receive high interest payments while they wait to (hopefully) get their principal back. Risk will also affect the amount of money investors can get if they want to sell their bonds after purchase, but that’s another issue, one that also pushes CPS to offer higher interest.

The following is taken from an article by the Chicago News Tribune’s Heather Gillers and Juan Perez:

“We were asked by a couple of investors to just wait a couple of days and give them more time,” Carole Brown, the city’s chief financial officer, said in a midday conference call with reporters. “We are still optimistic that this transaction will go forward and will go forward in the next days.”

The bonds come with significant risk to any potential buyer. As of this month, CPS is rated three levels below junk status by all three major rating agencies.

CPS should not be taking on this debt in my view, but here’s the hole they are in, the hole they have buried themselves in: The district actually wanted to issue $1.2 billion in bonds in order to manage their obligations. They pulled back, I am sure because the markets would not accept that amount. Currently, they want to issue 25-year bonds at yields of up to 7.75%. In contrast, Illinois issued bonds a few weeks ago with an interest rate only a little over 4% — and Illinois has the lowest credit rating of all fifty states in the nation. CPS’s credit rating remains ahead of cash-strapped Puerto Rico’s rating — but not by much. Financial prospects for the Chicago Public Schools are so poor that even with this tempting interest rate, it’s not yet certain that the market will be willing to purchase the CPS bonds.

If CPS does manage to issue this debt, its leaders are counting on using $200 million of the planned bond money to make their upcoming twice-yearly debt payment. That’s a bit like using the AMEX card to pay off the VISA bill — debt used to pay debt. Once a person or organization starts down that road, the warning bells should be clanging all over the place.

I have oversimplified the complicated issue of municipal bonds somewhat, but I think I have laid out the idea so readers can understand. These monetary maneuverings should not become a financial story that gets hidden in back pages of newspapers or bottom spots in the Yahoo crawl. I believe that CPS is counting on the State of Illinois to rescue the district when the AMEX card can no longer cover the VISA bill.

With what for money? Illinois’s credit ratings are so low because Illinois does not have extra hundreds of millions sitting around waiting to rescue a bankrupt school mega-district. The state just gutted portions of social services. The state’s largest provider of social services, Lutheran Social Services of Illinois, has announced program closures and staff cuts throughout Illinois as a result of the state’s failure to pass a budget, an impasse that has been ongoing for the past seven months and shows little sign of nearing an end. Over 30 programs are closing and 43 percent of LSSI’s total employees are losing their jobs, because the state has failed to pay LSSI $6,000,000 that it owes the agency.


The budgetary problems of Illinois are beyond the scope of this blog, but the bottom-line for Chicago Public Schools is this: If district leaders are counting on their state government for a rescue, they need to put down their glasses and stop drinking that Kool-Aid now.

I don’t see the fix here. This post cannot offer any easy solutions or any solutions at all. Government and school district leaders are teetering near a cliff edge of their own making. I hope they will begin to communicate, and will manage to creep away from the crisis that overspending has created.

I am clear that this $875 million bond issue will only postpone and intensify the reckoning that is coming.


Brand new books

“The only winner in the War of 1812 was Tchaikovsky.”

~ Solomon Short

And the only winner from the new Common Core standards may be the publishing companies.

~ Ms. Q

common core math book

What are learning standards? Learning standards are written descriptions of educational objectives, describing what students are expected to know and be able to do at specific stages in their education. Until recently, students were operating with state learning standards, objectives that varied from state to state but were essentially similar. States put a great deal of effort into the creation of these academic goals. Here are two samples from the old Illinois math standards. The first is a late elementary standard, the second a middle school standard:

6.B.2  Solve one- and two-step problems involving whole numbers, fractions and decimals using addition, subtraction, multiplication and division.

8.C.3  Apply the properties of numbers and operations including inverses in algebraic settings derived from economics, business and the sciences.

Many states are now adopting a new set of standards, intended to be national standards, called the Common Core. A sample, middle school common core standard shows that standards are standards are standards. CCSS.Math.Content.7.RP.A.1 reads, “Compute unit rates associated with ratios of fractions, including ratios of lengths, areas and other quantities measured in like or different units.”

We are busy fixing the standards. But we have zero proof that our standards were ever broken. Can America’s academic deficiencies be laid at the door of those old standards? If so, I’ve never seen even a scintilla of proof to support that position.

In the meantime, districts all across America are buying books designed to match the new Common Core standards, reasoning that those books may be essential to surviving the new harder tests spawned by the new standards. How a harder test will help us when we had so many students unable to pass earlier, easier versions, I can’t imagine.

Eduhonesty: Just trying to keep it real. What do we have now? New standards, new books, and new tests, with the standards determining the tests and the tests determining the books. The representative marketing the book above had one main selling point: Her book had not been adapted to match the Core. They had written the whole book with the Core specifically in mind.

As we overhaul American education, we should be asking ourselves, “Who profits?”

The answer may not be, “America’s students.”

Duct tape games

poor kid_n

The above picture shows a fourteen-year-old boy named Skylar Fish who almost died last week, and may suffer long-term consequences from playing a game called the Duct Tape Challenge. Kids wrap duct tape around a person to see how quickly that person can escape. Skylar had played the game before and I am sure he had fun. But this time, he was standing in the wrong place at the wrong time.

“(Skylar) Fish and his two friends decided to try the challenge again, taping Fish’s arms and legs while he was standing up. When he tried to break out of the duct tape, he fell face first, hitting his head on a window frame and slamming into the concrete on the ground.” (USA Today)

He ended up with a crushed eye socket and bleeding in the brain. With luck, Skylar will be fine, but doctors are not guaranteeing 100% recovery at this time. Skylar, his family and friends are just grateful he’s alive.

I remember my attempts to shut down the marshmallow game after a little girl died in a local cafeteria from seeing how many marshmallows she could stuff in her mouth. Similar games are played with Skittles and other candies. To all the teachers who read this blog, and other readers who work with kids regularly, games like this demand a deviation from the lesson plans. The Duct Tape Challenge is worth 5 or 10 minutes of classroom time with a picture of Skylar on the Smartboard and a full class discussion about the dangers of immobilizing yourself so you can’t put your arms out to block a fall. I’d add the dangers of blocking your windpipe with round or sticky objects that can’t easily be removed.

Eduhonesty: Mostly, I think our kids are scared enough by the dangers they see every day in the media, but the Duct Tape Game merits an exception. I’d bet there are thousands of injuries out there from that game, none of which were quite large enough to hit national or local news. A broken arm here, an infected scrape there, a few painful sets of healing ribs across the country — no one keeps track of cracked patellas. Games like this can take off easily because they are fun. I remember jumping off the garage roof with my friends when I was a kid. We had a great time until mom shut that particular pastime down. But the fact that no one got hurt was pure luck. Kids don’t see possible consequences when they get a chance to jump off the roof. That roof feels like the roller coaster, a rush of excitement and a chance to show off in front of friends. Adults need to fill in the blanks about a downside most kids today cannot even imagine.

P.S. I’d be careful about this one, though. I might inquire with a few students first if they had ever heard of this game. You don’t want to give kids ideas. For some kids, the surest way to get them to jump off a roof is to tell them not to do it. If I took class time for this, I’d focus on how utterly helpless people are when they can’t move their arms, and how dumb it is to let someone take your arms away from you. No kid wants to be helpless and dumb.

She was your nurse, she was your teacher


My junior high school Spanish teacher and I are friends on Facebook. I found her after a bit of internet searching and met her for coffee one day when I had flown home to visit my parents. Some decades have passed since I did dialogs in her class in Tacoma, Washington, but I still remember snippets of those exchanges.

“¿A dónde vas Tomás, a clase?”
“No, voy a la oficina del director.”

Those junior high Spanish classes led to high school Spanish (as well as French and Latin) and months of travel in Mexico. I went on to take Spanish in college, mostly to pick up an easy “A” or two along the way, accidentally accumulating a minor’s worth of credits. Years later, I found I had all the credits I needed for a Spanish teaching endorsement in Illinois. That endorsement got me my first job. I finished my student teaching in high school mathematics, but could not find a local mathematics position, so I accepted a high school Spanish position instead. My Spanish helped me segue into bilingual education a few years later.

Eduhonesty: Your mission, readers, should you decide to accept it, is to try to find that nurse, teacher, social worker, or other adult who made a difference when you were a kid. That quest may fail. I was too late to thank the marvelous Bolivian guy who taught me high school Spanish.

But you might get lucky. And on a gray, January day, or any other day, teachers, nurses, social workers, paraprofessionals, security guards, and all those many people who dedicate their lives to helping kids can use a boost, a reminder of how much their work matters.

P.S. The former elementary school teacher pictured above is also a Facebook friend. The picture was taken at her 95th birthday party.

The long dark

long dark

From https://www.pinterest.com/pin/34691859608138813/ which is pretty funny and worth a visit.

Most classrooms are well-lit, but the days can still feel dark. Consider bringing in a desk lamp for extra lighting. You might even string up some of the holiday lights that you recently took down. A little light goes a long way on a gray, January day. So do Hershey’s Kisses.



Maybe your school already has regular Lou Malnatis or Buffalo Wild Wings rituals. I hope so.

We are in the old, cold months now. The lights on the trees in the windows have gone out. The fun of shopping has been replaced by the nagging voice of those few items that still need returning. Any scintilla of bloom left on this year’s teaching rose vanished under the latest set of benchmark tests, while colleagues from the Northlands may even now be shoveling snow.

If no one else is putting together after-work functions, I’d like to recommend readers become the driving force behind a Friday trip to the local sports bar. Go eat some wings. Share some nachos. Tell the funny stories from the last week’s teaching adventures. You have funny stories. You just have to enjoy them with an appreciative audience. Even if it’s Tuesday when Marty stuck the pencils in his nose and then wanted to go to the nurse because his nose hurt, there’s a story there somewhere.

What with all the meetings, grading, and prepping, teachers sometimes start hunkering down when what they really need are bright lights, greasy chicken wings and large flat-screen TVs shared with friends and colleagues.

Eduhonesty: Your mission, readers, is to plan an outing for your coworkers or attend one that’s already scheduled. Take some time today to suggest a Friday get-together. Ask your fellow teachers, counselors, or mortuary attendants (I don’t know who you all are…) where they might like to go after work at the end of this week.

I hope I can spread some fun and cheer here. Please pass this post on, too.

P.S. To my non-teacher readers, random January and February parties are for everyone. Maybe you want to call a few friends to check out that new Italian place down the road?

Yada yada yada tests — which is part of our problem

2014-10-06 21.23.29
(Actual student unit test.)

My topic ought to be “Reining in the tests” but who wants to read about more tests? I am afraid we are reaching a saturation point on this topic. Like the squabbles between Ted Cruz and Donald Trump, many Americans reach for the remote now when testing comes to the forefront. Like death, taxes, politics and other forever-topics that somehow never seem to come out right, testing has become a quiet thrum in the background of daily life, one that sounds faintly unpleasant and spurs a desire for distraction.

The testing octopus has long, sticky tentacles wrapped around students and teachers, but our students and teachers have been trussed up in those tentacles for so long that the drama of their capture is now old news. Old news in America too often becomes non-news. We are outraged at the lead levels in Flint, Michigan right now. Will we be as outraged in a few years when the long-term effects of those lead levels begin to impact our schools? Americans today are barraged with bad news. We grapple with Flint, Iran, major storms, terrorist bombings, college costs, Ebola outbreaks, global warming, an erratic stock market and suspicious Chinese puppy treats, part of the nonstop feed from our phones and computers that dulls normal reactions to real problems. Humans are only build to sustain so much outrage for so long. Then we tend to look for the chocolate stash and check the DVR.

Nevertheless, I feel I must wade into this topic one more time. We need to cap total testing days. Total testing days now border on absurd. Government requirements vary from state to state, but any requirements that result in more than a week of standardized and benchmark testing should be adapted or repealed.

School demands for assessment have gone over-the-top as well. How much time are we using when administrators demand weekly quizzes to produce student-tracking data? My last year provided the perfect example. If I include the math unit tests written by a now-bankrupt, outside consulting firm — a firm that my school was required to hire as part of a government grant — and throw in the weekly math quizzes designed by the math department (with only minor input on my part) tailored to those unit tests, standardized and benchmark tests, the total percentage of time my students spent testing comes in around a staggering 20% in my poor, under-instructed math classes. I also had to give extra quizzes or assessments beyond those required each week since grades were based 100% on tests, quizzes and assessments. Those extra quizzes were designed to keep grades above failing levels, a necessity in classes where the average East-Coast-written unit test was pitched three or more years above almost all students documented, academic levels.

To those of you out there who are taking on the Testing Monster, please keep fighting. This has to stop. We must assess student progress, but I believe teachers should be pointing out the opportunity costs from testing time. Every assessment, necessary or not, represents one more missed teaching opportunity.


One plus for teaching and unions

Apparently Gillian Anderson, otherwise known as FBI Special Agent Dana Scully in the X-Files, was offered only half the pay of her co-star, David Duchovny, both in the past and in the present. She has negotiated improvements, but Gillian still got slammed with the reality of unequal pay between genders.

I’d like to note one positive aspect of teaching, as it was traditionally practiced: The union contract took into account how much education a teacher had finished and how many years he or she had worked. That determined teacher pay. Women with 2 years experience and 50 credits beyond a bachelor’s degree received exactly the same pay as men with the same credentials. You might make extra money by coaching or sponsoring a club, especially at the high school level, but overall men and women could expect to receive the same compensation. If a woman needed maternity leave, she was not crippling her career by taking two months off, either.

As politicians crow about their success in breaking unions, I’d like to point out that the highly unusual fairness in compensation in teaching has been a direct result of union negotiations. Those same negotiations helped provide retirement packages that did not differ by gender. They made taking time off to care for elderly parents “safe” in the sense that your job did not disappear from under you because mom slipped and fell or dad had a heart attack. Yes, federal laws are supposed to protect family and maternity leaves, but those laws don’t apply to many positions in today’s economy and employers still find ways to marginalize employees whose family situations demand time away from the job.

I have taught school and worked in the corporate world. One difference between the two that I never thought about much until tonight: In the corporate world, women sometimes hide pregnancies for as long as possible. In the teaching world, the news spreads months before anyone could guess. Teachers can share their good news without fear.

A million here, a million there

From the Chicago Sun Times, written By Lauren Fitzpatrick  and posted: 01/22/2016 :

“Chicago Public Schools laid off 227 non-teaching employees Friday and eliminated another 180 vacant central and administrative positions, “painful” cuts the school district says will save $32 million this year when it faces a $480 million budget gap.”

From the Associated Press 14 hours ago:

Chicago Public Schools announces 227 administrative layoffs

CHICAGO (AP) — More than 200 administrative employees with Chicago Public Schools are being laid off and another 180 already-vacant positions will be closed, changes that officials on Friday said will help save the nation’s third-largest district $45.1 million a year as it grapples with deep financial problems.
crit stemsThirteen million dollars was lost or found between these articles. If the Chicago Public Schools want to inspire confidence as they navigate the treacherous waters of near-insolvency, their leaders need to avoid these financial peculiarities. Does anyone know how much is being spent over in that central office? And if 227 employees are being paid $45 million, I want one of those positions. Doing the division, I find that $45,000,000 divided by 227 = $198,237. I thought I would share a few strange numbers on this cold, January morning.

A river too wide

Poverty Rate of Children Ages 5 to 17 by County

Poverty Rate of Children Ages 5 to 17 by County

(Click on the map to enlarge.)

Some readers respond hesitantly when I discuss reforming school funding. I thought the above picture might help. Poverty falls in pockets, pockets that contain school districts dependent on property taxes for funding. Where poverty runs high, property values run low. School districts become dependent on supplemental funds from their state or the federal government, funding that comes intermittently, whimsically and with strings attached.

Property-tax-based funding can sound innocuous because so many numbers are in play that the numbers become unreal and the patterns become tough to tease out. But the net result of the current system is that our poorest children often go to our most economically-challenged schools. The kids who need the most help may get the least help because they were born in red patches on the map.

Yes, the pattern can be deceiving. Our richest districts may contain homeless students. America remains diverse. The Federal government may open the tax-dollar spigot, allowing dollars to rush out in the form of school improvement grants and other rescues. But under the diversity and grants, a pattern can be seen, a pattern I consider to be fundamentally unjust.

We have to move away from property taxes as the basis for America’s school funding.