Tribune adds to expos� of Chicago Board of Education's bankers' deal on 'toxic swaps'... Cover up by Ruiz, Vitale and Zopp now becomes clear on the public record, despite years of stalling and FOIA violations
More than six years after Substance and some of the leaders of the Chicago Teachers Union first challenged the Chicago Board of Education's use of "toxic swaps" (variable interest rate deals on bonds issued by the Board), the Chicago Tribune in one of the most extensive investigative reports in history has exposed the roots of the hundreds of millions of dollars of losses the deals are costing Chicago's public schools and placed the blame squarely on the people who engineered the deals before they became legal -- current Board President David Vitale and the current U.S. Secretary of Education Arne Duncan.
Jesse Ruiz and David Vitale laughed while Jackson Potter challenged the toxic swaps during the October 24, 2014 Board of Education meeting. Substance photo by George Schmidt.The "swap deals," which the Board entered into in relative secrecy between 2003 and 2007, were not approved by CPS policy at the time, so the actions of Vitale and Duncan were in effect illegal. (The Board finally amended its policy on borrowing in August 2008, after Substance and teacher researchers challenged the swap deals during the three budget hearing held that month on the Proposed FY 2009 CPS Budget).
One of the many things exposed by the Tribune articles on November 9, 2014, is the fact that the career of David Vitale, ex banker and supposed financial whiz, began at CPS when the Board trumpeted the fact that Vitale would go to work for "free" after his Hyde Park neighbor Arne Duncan became Chief Executive Officer of America's third largest school system in 2001. Vitale was the first CPS bureaucrat to hold the title 'Chief Financial Officer.' The "hiring" of Vitale was considered such a wonderful thing by CPS propagandists at the time that they held a press conference, which resulted in a hagiographic piece of puffery in the Sun-Times by Rosalind Rossi on how wonderful Vitale's commitment to public service was.
CTU staff coordinator Jackson Potter once again told the Board of Education at its October 24, 2014 meeting that the Board should get out of the toxic swaps. On October 24, however, Potter was backed up for the first time by national experts who testified that the Board could apply for an arbitration to determine whether the risks of the swaps were fully disclosed during the era (2003 - 2007) when the swap deals were signed. The Board has refused through November 2014 to request the arbitration, and until the Tribune's expose of November 9, 2014, the role of David Vitale in undermining the Board's long-term finances was a secret. Substance photo by George N. Schmidt.It has never been explained what the duties of the so-called "Chief Administrative Officer" were supposed to be, since most corporate organizations do quite well with a CEO (Chief Executive Officer), COO (Chief Operations Officer), and CFO (Chief Financial Officer) among all the "chiefs." Nor was the assumption of the so-called "corporate model" for Chicago's schools ever explained, except in numerous reports basically claiming that it was a very good thing. Vitale was followed as CAO by Robert Runcie, another person who had never taught or administered a public school. The current CAO is Tim Cawley, whose previous job had been with AUSL (the Academy for Urban School Leadership) and Motorola inc.
TRIBUNE MAIN STORY NOVEMBER 9, 2014:
Fresh from the world of high-stakes trading, David Vitale arrived at Chicago Public Schools a decade ago with a plan to transform the way it borrowed money.
With the district thirsty for cheap cash, plain old municipal bonds weren't good enough anymore, and banks were standing by with attractive new options.
So Vitale, then the chief administrative officer at CPS, and other officials pushed forward with an extraordinary gamble. From 2003 through 2007, the district issued $1 billion worth of auction-rate securities, nearly all of it paired with complex derivative contracts called interest-rate swaps, in a bid to lower borrowing costs.
How the Tribune analyzed CPS' bond deals
How the Tribune analyzed CPS' bond deals
Heather Gillers, Jason Grotto
No other school district in the country came close to CPS in relying so heavily on this exotic financial product. In fact, market data show the district issued more auction-rate bonds than most cities, more than the state of California.
But the bold move disregarded an iron law of finance: Nothing is free. If money is offered at a lower price, it means there are associated risks � risks the district could ill afford to take.
As it turns out, the gamble likely will cost CPS an enormous sum, according to a first-of-its-kind analysis by the Tribune. Over the life of the deals, the district stands to pay an estimated $100 million more in today's dollars than it would have on traditional fixed-rate bonds.
lRelated Banks kept CPS in shaky bond market
WATCHDOG: BORROWING TROUBLE
Banks kept CPS in shaky bond market
SEE ALL RELATED 8
The district's risky decisions have contributed to ongoing financial troubles. CPS has yet to completely untangle the costly auction-rate deals, and it continues to pay high costs that burden the bottom line.
Vitale is now president of the Chicago school board. Since Mayor Rahm Emanuel named him to the post in May 2011, he has presided over slashed budgets, teacher layoffs and the closing of more than 40 schools. As the Tribune reported last year in its "Broken Bonds" series, tens of millions of dollars in borrowed money went into schools that are now closed.
To analyze the district's four auction-rate deals, the Tribune reviewed thousands of pages of documents. The district failed to release the public records for months and finally provided them only after the Tribune hired lawyers.
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Reporters combined that information with reams of market data to calculate interest payments and then adjusted the estimated costs for the present value of future dollars. Because such an analysis requires a variety of nuanced decisions � all of which affect the final numbers � reporters also consulted with leading municipal bond experts to ensure their methodology was sound.
The result is an unprecedented look at the price the public school system could pay for its decisions. Documents and interviews also offer troubling insights into how those decisions were made.
The district's longest-serving financial adviser, Adela Cepeda of A.C. Advisory, consulted on the deals before CPS signed off, but an examination of public records raises questions about whether her presentations detailed the full scope of the risks. The school board, meanwhile, unanimously approved complex debt contracts with blanket measures that didn't even specify the exact costs involved, records show.
Kathleen Hagerty, chair of the Finance Department at Northwestern University's Kellogg School of Management, said the pitfalls of CPS' auction-rate deals should have been evident at the time officials signed off.
cComments
Public funds should never be risked. This thing smelled from the get go. Whomever approved this should be prosecuted.
BIPARTISAN
AT 11:47 AM NOVEMBER 09, 2014
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"There's always a reason why these deals offer cheaper rates," she said. "The investment banks are smart, and they aren't doing you any favors."
In interviews, Vitale and Cepeda said they were aware of the risks.
"I have 30 years in the business," said Vitale, a former bank executive and former president and CEO of the Chicago Board of Trade. "I'm not a neophyte."
Cepeda strenuously objected to the Tribune's analysis and defended her role in the deals. She said she provided sound advice and emphasized that district officials had final say on all decisions.
"We were hired and retained for over 16 years because of the quality of our analysis and objectivity," she said. "We had no incentive to mislead."
Cepeda and CPS officials provided separate analyses to the Tribune that both concluded the deals benefited the district financially.
How two CPS bond deals went wrong
How two CPS bond deals went wrong
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But two nationally known municipal bond experts � Andrew Kalotay of Andrew Kalotay Associates and Matt Fabian of Municipal Market Advisors � endorsed the Tribune's more far-reaching analysis, saying the methodology was solid. Kalotay called it "a realistic analysis."
A third expert, Charles Jones, a finance professor at Columbia Business School, said the Tribune's methodology "makes perfect sense."
The analysis CPS provided to the Tribune did not take into account all of the costs the district stands to pay over the life of the bonds. Kalotay disagreed with that approach and said it made CPS' situation look better than it is.
"They are really making a mess of this," he said of the analysis by CPS officials.
Even if it's possible to reduce costs with unconventional borrowing strategies, some experts question whether local governments should take the risk. Taxpayers and public school students, they note, are the ones who suffer if the deals go sour.
In New Jersey, municipalities must obtain state approval to borrow money in nontraditional ways, and getting that permission isn't easy, said Tammori Petty, spokeswoman for the Department of Community Affairs. Swaps are off-limits altogether.
"These are complicated transactions beyond the ability of most local governments to manage appropriately," Petty said.
'Flavor of the day'
When CPS began borrowing large sums in the mid-1990s to pay for a school construction spree, it mainly used bonds that carried the same fixed interest rates over decades.
The approach may not have been cutting-edge, but it had distinct advantages: Risks were low, and officials knew exactly how much they would have to set aside for interest payments.
A decade later, with the district's campaign to build and renovate schools still in high gear, officials began exploring a new option � one that was riskier and more complicated but also could reduce borrowing costs. It involved issuing bonds at floating rates and entering into related interest-rate swaps that could lessen the impact of cost fluctuations.
If market conditions deteriorated, payments could rise sharply. But in the late '90s and early 2000s, a prolonged period of relatively low and stable interest rates helped make that risk seem small.
"In the municipal market, there were more creative things being done," Vitale told the Tribune in an interview. "More floating-rate options at cheaper rates that you could fix with swaps. So, yes, we were going to take advantage of all those new instrument opportunities to finance the debt."
At the time, auction-rate securities were a particular darling of investment banks, which touted their low costs to governments across the country. From 2000 through 2004, issuance of this type of municipal bond grew nearly fivefold, according to data compiled by Federal Reserve economists.
Borrowing Trouble: The complete Tribune series
Borrowing Trouble: The complete Tribune series
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Banks also could offer governments much-needed lump sums of cash in exchange for their agreeing to pair bonds with interest-rate swaps. For example, two CPS swap contracts gave the district $43 million in upfront cash.
The banks benefited, of course. Derivative contracts created new profit opportunities, and fees on auction-rate securities were higher than for other types of bonds.
As early as 2000, a vice president of municipal finance at Goldman Sachs asked to meet with CPS officials about the possibility of issuing auction-rate bonds in a letter circulated to Cepeda and school and city officials. The letter highlighted the potential cost savings, and accompanying materials quoted an anonymous financial adviser as saying the product had "no downside."
Auction-rate debt "was the flavor of the day," said David Bryant, CPS treasurer from 2002 to 2010 and the official tasked with day-to-day management of the district's bond program. "Investment bankers are marketers in a lot of ways. They are always selling."
lRelated Banks kept CPS in shaky bond market
WATCHDOG: BORROWING TROUBLE
Banks kept CPS in shaky bond market
SEE ALL RELATED 8
Vitale, a former vice chairman and director of Bank One Corp., began serving as CPS' chief administration officer for $1 per year in May 2003 after several months as a pro bono adviser to the district. He held that position until June 2006, presiding over the bulk of the auction-rate deals, and then continued to advise on financial issues as chief operating officer through December 2008.
Records and interviews show that he closely managed the district's borrowing program and soon began pushing to take greater advantage of these newer options.
A July 2003 memo written by one outside financial adviser mentions Vitale's wish to meet weekly about his "stated priorities," including expanded use of derivatives and the potential cost savings from auction-rate securities.
To evaluate the complicated deals, CPS officials turned to Cepeda and her firm, A.C. Advisory.
CPS resisted sharing financial data with public
CPS resisted sharing financial data with public
Heather Gillers and Jason Grotto
Cepeda has an MBA from the University of Chicago and spent more than 10 years as a banker before founding A.C. Advisory. She also married into one of the most influential political families on Chicago's South Side. Her late husband, Harvard-trained lawyer Albert Maule, was a grandson of Corneal Davis, a longtime state senator known for delivering black votes for Chicago's Democratic machine. Maule later was appointed to the city's police board by then-Mayor Richard M. Daley.
Five months before Maule died of cancer in 1995, he helped Cepeda start A.C. Advisory, according to a 2013 Tribune profile. The firm got its first contract with CPS months later, and Cepeda continues to advise the district and the city. A.C. Advisory received about $4.7 million in fees on CPS deals from 1996 through 2013.
Cepeda's firm was the primary adviser on three of CPS' four auction-rate deals, district records show; on the first such deal, she was the secondary adviser.
Worst-case scenarios
cComments
Public funds should never be risked. This thing smelled from the get go. Whomever approved this should be prosecuted.
BIPARTISAN
AT 11:47 AM NOVEMBER 09, 2014
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In Cepeda's presentations to CPS, she detailed how the deals were supposed to work and � more important � how they could save money for the district.
By adding interest-rate swaps to floating-rate bonds, the district hoped to pay off the money it had borrowed at a lower-than-normal fixed interest rate.
Through the swaps, CPS would receive payments from an investment bank based on a common floating market rate; in return it would send payments to the bank based on a fixed rate.
If the floating rate on the bonds matched the floating rate from the swaps, the only cash coming out of the district's pocket would be the fixed payments to the bank.
Spreadsheets from A.C. Advisory on three bond issues from 2003 and 2004 showed that the district stood to save nearly $90 million in interest costs over the life of the bonds by using auction-rate securities and swaps instead of traditional fixed-rate debt.
There's always a reason why these deals offer cheaper rates. The investment banks are smart, and they aren't doing you any favors.
- Kathleen Hagerty, Northwestern University's Kellogg School of Management
But experts consulted by the Tribune questioned Cepeda's analysis and her depiction of the risks involved. "This is not a sophisticated analysis," said Northwestern's Hagerty, who reviewed the spreadsheets.
For one, the calculations were based on a worse credit rating than the district had at the time. They also ignored the fact that CPS always bought insurance on its fixed-rate bonds, which results in better interest rates. Both of those decisions drove up the predicted cost of the fixed-rate option.
In an email to the Tribune, Cepeda said the rates she used were based on the rates CPS likely would have paid.
More significantly, her analysis assumed that the interest-rate swaps linked to the auction-rate bonds would insulate the district completely from fluctuating rates. It predicted that the district would be responsible only for the fixed-rate payments specified in the swap.
But the auction rate CPS would pay on the bonds and the floating rate it would receive from the swap were unlikely to match exactly.
The swaps in A.C. Advisory's analysis were relatively inexpensive products linked to the London Interbank Offered Rate, or Libor, the rate banks charge one another for short-term loans. Experts say that rate cannot be counted on to move in lockstep with municipal bond rates, particularly auction rates. In the years ahead, they would diverge dramatically.
Eventually auction rates would soar above Libor, reaching as high as 9 percent and eating into the projected savings. But while the bond contracts mentioned the possibility that payments could hit these maximum rates, A.C. Advisory did not point out that potential cost in any of the documents that CPS supplied in response to the Tribune's public records requests.
That worst-case scenario should "absolutely have been clearly laid out" in any analysis comparing the cost of fixed-rate debt with auction-rate bonds, said Florida Director of Bond Finance Ben Watkins, who chairs the debt committee of the Government Finance Officers Association.
The district's use of swaps also jacked up the cost of refinancing the bonds in the future and left the district unlikely to benefit if rates dropped � a risk Watkins said he would never take.
"You're taking a position that rates will never be better," he said.
Bill Morris, another adviser who worked with CPS from 2003 through 2006, said he tried to caution the school district about the risks of increasing its portfolio of floating-rate debt.
But Morris said he sensed that the more warnings he and colleagues at his firm issued, the more they lost credibility with the district's financial staff.
"CPS fell in love with the swap," said Morris, who worked for Kirkpatrick Pettis, the primary adviser on the district's first auction-rate deal and secondary adviser on two others as well as on several swaps. (Kirkpatrick Pettis became part of another firm, D.A. Davidson, in 2004, partway through its work for CPS.)
"Vitale, coming out of the private sector and out of banks where swaps were a day-to-day activity, was not as troubled by swaps as we were," Morris said.
David Vitale helped engineer complex CPS bond deals
David Vitale encouraged Chicago Public Schools to use complex borrowing strategies in a bid to cut expenses, but a Tribune analysis found the move could cost an estimated $100 million more than if CPS had used traditional bonds. (Zbigniew Bzdak, Chicago Tribune)
The district, he said, "simply did not have adequate staff with the skill set to engage in widespread use of auction rate and swaps and always looked at the short-term upside while minimizing our concerns with the longer-term downside risk."
CPS did not renew its contract with Morris' firm in 2007, and Morris is now retired. A school district spokesman disputed "any claim that CPS was or is anything less than a sophisticated issuer with a strong financial team."
In an interview, Cepeda defended the auction-rate bond issues, calling them "fine deals for the board."
Cepeda also said some of the potential costs not factored into the spreadsheets were discussed orally or in other presentations. She said Vitale and CPS officials understood what could go wrong.
lRelated Banks kept CPS in shaky bond market
WATCHDOG: BORROWING TROUBLE
Banks kept CPS in shaky bond market
SEE ALL RELATED 8
"What nothing you have captures is the extent of the dialogue," she said. "They were willing to take the risk. The board took the risk. David Vitale was comfortable with that risk."
Later, in a letter to the Tribune's editor, Cepeda wrote that CPS managed its risks appropriately and that nobody could have predicted that a global economic crisis would wreak havoc on the markets.
"Anyone can be a brilliant 'financier' with 10 years of hindsight," she wrote.
Although the global economic downturn contributed to the deals' high cost, experts said CPS did not have to predict the financial crisis to know that such borrowing could get it into trouble.
The terms of the deals clearly exposed the district to the risk that swap payments would not cover bond costs, to the possibility that auction rates would soar and to the chance that restrictive swap contracts would prevent the district from benefiting if bond rates dropped, said Fabian, a managing partner of Concord, Mass.-based Municipal Market Advisors.
Video: How auction-rate bond deals burned CPS
When tight budgets strained Chicago Public Schools' massive construction and renovation campaign, the district turned to a risky and exotic borrowing instrument: auction-rate securities paired with interest-rate swaps.
"These were identifiable risks at the time CPS did these transactions," said Fabian, who has testified before Congress about government finance.
In her letter, Cepeda questioned the Tribune's motives in writing about her role in the CPS bond deals and wanted to know why her presentations were being scrutinized. "I consider the slant of the reporters for this article to be absolutely biased and outright sexist," she wrote.
Tribune reporters had asked CPS for pertinent presentations and analyses by all financial advisers who may have been involved in the district's auction-rate bond and related swap deals. The key documents that the district provided all had been prepared by A.C. Advisory.
Taking on risk
Between 2003 and 2008, the amount of variable-rate debt CPS had outstanding had grown sixfold � and the risk to the district had escalated along with it.
cComments
Public funds should never be risked. This thing smelled from the get go. Whomever approved this should be prosecuted.
BIPARTISAN
AT 11:47 AM NOVEMBER 09, 2014
ADD A COMMENTSEE ALL COMMENTS 52
By 2008 the district was carrying $1.8 billion in bonds that were subject to fluctuating rates, accounting for more than 40 percent of the district's outstanding debt. Five years earlier it had been $300 million, or 10 percent. The district also had entered into 15 swaps, 10 of them on auction-rate bonds.
All floating-rate bonds are risky because they expose the issuer to fluctuations in interest rates, but CPS' embrace of the auction-rate market placed it in particular danger.
In this market, the bonds were put up for sale on a weekly or monthly basis. To bid, potential buyers stated the interest rate they were willing to receive from the borrower, such as CPS. The lowest bidders won shares of the bonds and held them until the next auction.
CPS' contracts specified that if there weren't enough bids to cover all the available bonds, then the auctions failed and interest rates owed on the bonds would go as high as 9 percent, an outcome that could obliterate any projected savings.
CPS did very well.
- Adela Cepeda, A.C. Advisory
In fact, the market had always been so shallow that the banks for years quietly submitted support bids to help keep interest rates down and prevent the auctions from failing. A Tribune analysis based on a study by Federal Reserve economists found that banks propped up more than half of CPS auctions from 2005 through 2008.
But in summer 2007, the brewing economic crisis sent tremors through the economy and investors began leaving the auction-rate market. The interest costs on the bonds began to rise as remaining investors � and banks, which held an increasing share of the bonds � demanded higher rates.
Growing short on cash, banks were increasingly uncomfortable propping up the auction-rate market. Goldman Sachs, which in its 2000 pitch had promised "an aggressive commitment of capital (to minimize) rate fluctuations," was the first bank to pull support for all its auctions, according to the study by Federal Reserve economists.
Among the auctions that failed was one for CPS debt. When that happened, the district's interest rates on that debt rose to 9 percent.
Other banks soon followed suit. In February 2008, A.C. Advisory reported that the additional interest costs on the CPS bonds exceeded $3 million per month, nearly the annual budget of some elementary schools.
CPS needed to exit the auction-rate market quickly, but that meant it had to find a way to refinance nearly $1 billion worth of debt during an economic crisis. The district turned to A.C. Advisory, which would receive $100,000 to help extract CPS from the deals.
The low-risk, fixed-rate bonds that the district had shunned just a few years earlier now looked appealing. In April 2008, the district borrowed enough money at fixed rates to refinance two of its four auction-rate bonds, worth about a half-billion dollars.
CPS had to pay a lump sum of $20 million to terminate swap contracts linked to the two bonds, which couldn't be transferred to the new fixed-rate debt. The district's swaps worked only in tandem with floating-rate bonds, including auction-rate securities.
The other two auction-rate bonds, which were also worth about $500 million, were linked to swap contracts as well. But those were more costly to terminate � in part because two of those swaps had included massive upfront payments to CPS. And the district didn't have the roughly $75 million needed to end them.
So Cepeda helped the district find another kind of floating-rate bond to accommodate the old swaps. But because of difficult economic conditions, the help would come with a punishing long-term cost: CPS would have to pay the rate banks typically charge corporate borrowers rather than the lower rate usually paid by governments.
The resulting interest costs far exceed the payments CPS receives through the swaps.
Video: How interest-rate swaps work
When borrowers like Chicago Public Schools issue floating-rate bonds, swap contracts are often added to protect against fluctuating interest rates. But CPS saw payments soar on its auction-rate deals anyway.
Over the life of the bonds, which won't be fully paid off until 2034, the school district stands to spend $100 million making up the difference, according to the Tribune's analysis. The extra costs add to the district's crushing debt burden; last year, the school system's debt payment was $338 million.
CPS records and the Tribune analysis show that the auction-rate deals have already cost the district tens of millions in unexpected payments, with the interest costs far exceeding A.C. Advisory's predictions.
Both CPS and Cepeda still defend the decision to issue those bonds, saying that � despite the added expense � the cost of the deals and subsequent refinancings still amount to less than what the district would have paid for fixed-rate debt.
lRelated Banks kept CPS in shaky bond market
WATCHDOG: BORROWING TROUBLE
Banks kept CPS in shaky bond market
SEE ALL RELATED 8
CPS "managed the risk and despite the risk, they came out ahead," Cepeda said. "I'm totally comfortable with that and I'm totally comfortable with what they did and with what we did as a group."
In her recent letter to the Tribune, Cepeda objected to the fact that reporters had contacted a "New York firm" for input on methodology and for expert opinion, saying she considers that firm to be a rival for business in Chicago.
Kalotay of Andrew Kalotay Associates in New York City, who has testified about government borrowing before the U.S. Securities and Exchange Commission, advised the city of Chicago on a recent bond deal, but his firm does not do business with school districts.
Past Tribune coverage: 'Broken Bonds' series
Past Tribune coverage: 'Broken Bonds' series
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In response to Tribune questions, Cepeda hired New York City-based Stanley P. Stone & Associates to analyze the auction-rate deals. The firm, which provides support services to municipal advisers and underwriters, concluded that CPS will spend $64 million less over the life of the deals than it would have spent on fixed-rate debt.
But Stone's analysis showed different amounts paid to date on the auction-rate bonds than those reported by CPS � $20 million less, in the case of one bond. It also assumed that if CPS had issued fixed-rate bonds it would not have chosen to save money by refinancing them, even though interest rates have hit historic lows.
Moreover, the analysis left out one of the four deals, the 2007 bond issue that the Tribune found to be the costliest. When contacted by the Tribune about the omission, Cepeda strongly disputed the Tribune analysis of that deal and said "CPS did very well."
cComments
Public funds should never be risked. This thing smelled from the get go. Whomever approved this should be prosecuted.
BIPARTISAN
AT 11:47 AM NOVEMBER 09, 2014
ADD A COMMENTSEE ALL COMMENTS 52
She also said it wasn't proper to compare the 2007 deal, which refinanced older debt, with a fixed-rate alternative because the school district "believed it could not" refinance those bonds at a fixed rate under terms of a 1997 intergovernmental agreement.
The Tribune examined the agreement, which allows CPS to use city property tax revenue to help pay off bonds, and found that it contains no such prohibition. Cepeda later told the Tribune that CPS officials "may have been technically able" to refinance at fixed rates.
CPS did not raise the intergovernmental agreement as an issue in its response to the Tribune, and the school district's analysis compared all four deals to fixed-rate alternatives.
But school officials objected to any attempt to compare the cost of the auction-rate debt versus fixed-rate over the life of the deals.
Jennie Huang Bennett, the CPS treasurer, provided the Tribune with an analysis that covered the first 11 years of the 30-year bond deals, stopping at the present day. It concluded that CPS has saved $30 million over what the district would have paid on fixed-rate bonds.
But Kalotay said any analysis that ends in the present would have to include the cost for CPS to extricate itself from the deals � a cost that today stands at $126.5 million, according to the district's annual financial report. That's the amount the district would have to pay banks in order to terminate its four remaining swap contracts two decades early.
While CPS' analysis ignored the future costs of its swaps, it took full credit for the tens of millions of dollars in upfront cash payments the district got in exchange for doing the deals, a decision that dramatically decreased the total costs to date.
"They cannot stop today and say, 'This is what happened,'" Kalotay said. "It's like you're traveling cross-country and you stop in Chicago and say, 'This is the cost of my trip.' You haven't gotten to the coast yet."
Bennett said it was not appropriate to project any longer-term costs, even though Cepeda did so and CPS regularly estimates interest payments over the life of its bond deals.
"I don't know what's going to happen in the future," Bennett said.
jgrotto@tribune.com
hgillers@tribune.com
Twitter: @JasonGrotto
Twitter: @hgillers
