KIMBERLY, Wis. (WTAQ) - 5 Wisconsin school districts that lost almost $200 million in risky retirement investments might end up paying even more when they borrow in the future. Moody’s Investors Service has put the 5 districts on a watch list for possible downgrades in their credit ratings. Moody’s analyst Beth Dougherty says they’ll probably take 3 months to study the schools’ finances before making a final decision.
The Kimberly, Kenosha, Waukesha, Whitefish Bay, and West Allis-West Milwaukee school districts have sued 2 investment firms, saying they were misled when they bought collateralized debt obligations that virtually became worthless during the recession. The lawsuit is still in court. The attorney for the school systems, C.J. Krawczyk, says all 5 districts have varying credit ratings – and some have no plans to borrow money any time soon. The districts had borrowed $165 million from the Depfa Bank of Europe to pay for the most of the investments – and the bank recently demanded full payments of those loans.