Many school districts incurred debt to cover normal operations
SPRINGFIELD, IL – The Illinois State Board of Education (ISBE) voted to approve the Annual Financial Profiles (AFP) for school districts statewide. ISBE created the 2017 AFP by analyzing school districts’ fiscal year 2016 Annual Financial Reports. View the 2017 Annual Financial Profiles at https://www.isbe.net/Pages/School-District-Financial-Profile.aspx.
Statewide in FY 2016, the increase in total operational revenues exceeded the increase in total operational expenditures, leading to a slight increase in school districts’ overall scores for financial strength. However, more than a fourth of all Illinois school districts issued short- or long-term debt to sustain normal operations. School districts pay interest on outstanding debt, which decreases the funds available for education services in the future. Many school districts also eliminated staff and programming to reduce operational costs.
“Illinois school districts’ financial health has improved over the last year, but at what cost to students?” said State Superintendent of Education Tony Smith, Ph.D. “Illinois must overhaul our school funding model, which is the most inadequate and the most inequitable in the country. Every school district in the state is having to make hard choices to cover the day-to-day costs of keeping their schools’ doors open. Forcing school districts to rely primarily on taxing local property wealth to fund education inherently means the students who need the most will receive the least. We expect dedication, innovation, and improvement from our administrators, educators, and students; we owe them the resources necessary to meet those expectations.”
Statute requires the AFP analysis to count mandated categorical program (MCAT) funds as revenue, though school districts received their final FY 2016 quarterly MCAT payment six months late. School districts have not received any MCAT payments for the first three quarters of FY 2017.
The profiles provide school districts and their stakeholders with information on school districts’ financial integrity. School districts receive a score from 1.00 (lowest financial strength) to 4.00 (highest financial strength) and a corresponding designation (4.00 through 3.54: Financial Recognition; 3.53 through 3.08: Financial Review; 3.07 through 2.62: Financial Warning; and 2.61 through 1.00: Financial Watch).
ISBE developed the AFP in 2003 in consultation with experts in finance and lending, credit agencies, and school district business officials in order to promote sound financial management. The profiles examine five key indicators of financial integrity: fund balance to revenue ratio, expenditure to revenue ratio, days cash on hand, percentage of short-term borrowing ability remaining, and percentage of long-term borrowing ability remaining.
ISBE provides tools and guidance on financial management to all school districts seeking assistance and to school districts designated in Financial Watch.