CHICAGO (Reuters) - Despite its junk credit ratings, the Chicago Public Schools is gearing up to sell up to $945 million of bonds to finance capital improvements over multiple years, a spokeswoman for the district said on Tuesday.

The country's third-largest public school system has set an Aug. 24 public hearing and vote by its board of education on the general obligation bonds.

"CPS is committed to ensuring that our students have safe, comfortable and modern schools where they can learn," district spokeswoman Emily Bittner said in a statement.

Escalating pension payments, drained reserves and debt dependency have pushed CPS' credit ratings to junk. As a result, investors have demanded hefty yields for the district's bonds.

Even a private sale of $150 million of 30-year GO bonds by CPS last month to J.P. Morgan came at a 7.25 percent yield, which was 513 basis points over the yield for AAA-rated bonds on Municipal Market Data's benchmark scale.

The board of education, appointed by Chicago Mayor Rahm Emanuel, will also be voting next week on a $5.45 billion operating budget for fiscal 2017 that relies on optimistic assumptions of union givebacks and added funding support from Illinois’ gridlocked state government.

(Reporting by Karen Pierog; Editing by Peter Cooney)