Bloomberg

Chicago School Bonds Rally Despite Governor's Veto Threat

• Lawmakers starting special session on school funding Wednesday

• Rauner wants to remove what he calls Chicago ‘bailout’

Chicago school bonds are rallying even asIllinois Governor Bruce Rauner repeatedly threatens to veto state aid for the cash-strapped district.

The average price of federally tax-exempt 

Chicago Board of Education general-obligation bonds due in 2046 was 100.33 cents on the dollar on Wednesday, yielding 6.95 percent, compared to 92.427 cents on the dollar to yield 7.65 percent when the bonds sold on July 10, according to data compiled by Bloomberg.

Lawmakers overrode Rauner’s veto of a budget package, including an income-tax hike, to enact Illinois’s first spending plan in more than two years on July 6. Tucked into the legislation is a requirement that Illinois use an evidence-based funding model to distribute money to schools. A measure that does just that -- Senate Bill 1 -- also includes more than $200 million to help Chicago’s schools pay pension bills.