Charter Schools Corporate Reformers Education Industry Massachusetts Privatization

Moody’s Warns that a “Yes” Vote for Charters May Hurt Credit Ratings of Boston and Other Massachusetts Cities

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Moody’s Investors Service released a warning earlier this week warning that if Massachusetts voters pass Question 2 to expand the number of charter schools in the state, it may have a negative impact on the credit ratings of Boston and three other cities in the state.

The story appeared in the Boston Globe, which earlier urged voters to pass the controversial referendum, even though it will drain millions of dollars from the state’s public schools and likely harm the nation’s most successful state system of public schools.

The credit-rating agency Moody’s Investors Service is warning Boston and three other Massachusetts cities that passage of a ballot measure to expand charter schools could weaken the municipalities’ financial standing and ultimately threaten their bond ratings.

In e-mails sent Monday, Nicholas Lehman, an assistant vice president at Moody’s, warned that passage of the referendum would be “credit negative” for the cities.

“Depending on the Nov. 8 vote, the general credit view is the following: A vote of ‘No’ is credit positive for urban cities. A vote of ‘Yes’ is credit negative for urban cities,” Lehman wrote.

Lehman told the cities he would provide a draft analysis of the referendum’s impact on Wednesday and solicit their comment, publishing a full report after the election.

The other three cities in Massachusetts are Lawrence, Fall River, and Springfield. A spokesman for the Boston Municipal Research Bureau said a “yes” vote might cause fiscal hardship, but would likely be offset by closing public schools with empty seats (as new charters open) and concessions from teachers.

So a “yes” vote would mean closing more public schools and reducing salaries or pensions or other benefits from teachers. Why does the corporate reform industry want to destabilize the most successful state school system in the nation?

Why are so many in the financial industry pouring millions into a campaign that will obviously undermine the fiscal stability of urban districts in the state? If Moody’s understands it, why don’t the equity investors and hedge fund managers? Maybe it is because so few of the donors to Question 2 live in Massachusetts or have ever set foot in a public school. They have no skin in the game. For them, it is a hobby, not a financial decision.

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