The first public school teachers strike in 25 years is threatening the credit quality of school district bonds for the third largest city in the nation.
New York-based ratings agency Fitch said that the strike in Chicago would make it difficult for the nation’s third largest district to balance its budget and improve educational standards.
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District bonds currently hold the fifth highest rating from Fitch, A+. There is also ancillary fallout in the form of working parents suddenly having to find other ways to take care of their children who would normally be going to school.
Disruption in work flow and people being able to come to work could have other economic repercussions. Over 400,000 students are being affected.
The Chicago Teachers Union (CTU) and the city’s Board of Education have been in talks since last November.
The cause of the strike
is said to emanate from Chicago mayor Rahm Emmanuel’s fulfillment of his campaign promises to lengthen both the school day and school year and to eliminate a scheduled 4% pay raise for teachers.
Teachers instead were asking for a 29% pay raise over a period of 24 months. The Board of Education offered annual increases of 2% over a four-year period.
The CTU says teachers should be compensated for the additional work load caused by the longer school day and year. The union notified authorities on August 29 that it would strike if an agreement could not be reached.