SPRINGFIELD – The number of school districts earning the Illinois State Board of Education’s (ISBE) top financial rating grew this year, despite the fact that many districts operated with less funding.
ISBE’s annual review of district financial data also found more districts are expected to deficit spend this year unless the General Assembly fully funds General State Aid (GSA), which would end proration and provide districts much-needed financial relief.
“The 2016 Financial Profile data shows a positive trend in Illinois’ average score; however, this data point does not reflect the missed opportunities for our students resulting from the General Assembly cutting state education funding for many years,” State Superintendent of Education Tony Smith said. “By fully funding GSA, school districts will have more flexibility to fund vital services and programs to sustain daily operations. We believe fully funding GSA will provide a lifeline to these districts by providing the necessary supports their children deserve.”
Gov. Bruce Rauner and ISBE have a shared priority to rebuild and invigorate Illinois’ K-12 educational system by combatting inequality in school funding. The first step to achieve this goal is to fully fund GSA and end proration. GSA has not been fully funded at the statutory foundation level of $6,119 per student since fiscal year 2012, meaning the state has been forced to prorate GSA payments for several years. Fully funding 100 percent of general state aid at the foundation level with no proration is historic and highlights the joint commitment to ensure all students in Illinois receive access to a high-quality education.
The 2016 Financial Profile is based upon FY 2015 data received from school districts and provides a snapshot in time that helps ISBE gauge school districts’ financial health.
The 2016 profile shows 15 more districts earned Financial Recognition than in 2015, despite the General Assembly prorating GSA to 87.1 percent in FY 2015 compared to 88.7 percent in FY 2014. Overall, there are fewer districts in the three lowest categories: Financial Review, Financial Early Warning, and Financial Watch.
Of the 32 districts on Financial Watch status, 18 districts received this designation last year. Six of these Financial Watch districts saw a decrease in their financial score, including the City of Chicago School District 299. After first moving to the Financial Watch designation in 2015, Chicago’s financial score continued to decline this year to 2.10 from 2.45.
The School Code specifies the criteria to determine if a school is in financial difficulty. If any one of the criteria is met, ISBE can require the district to submit a financial plan. If a district fails to comply with its financial plan, the State Board has the ability to implement a financial oversight panel.
Earlier this year, ISBE requested financial information from six Financial Watch districts – Chicago, Streator Elementary School District 44, South Wilmington CCSD 74, Edwardsville Community Unit School District 7, Johnsburg Community School District 12 and Lincoln Way Community High School District 210 – to investigate if the districts qualify for certification of financial difficulty.
“The board’s sincere hope is that this investigation will identify opportunities for steps that will improve financial conditions, avoid certification of financial difficulty, and most important, result in financial stability for each of these districts,” Smith said.
A district is categorized for the Financial Profile based on its Annual Financial Report from FY 2015, which ended June 30. The rating is created by using five indicators of performance:
- Fund Balance to Revenue Ratio
- Expenditure to Revenue Ratio
- Days’ Cash on Hand
- Percentage of Short-Term Borrowing Ability Remaining
- Percentage of Long-Term Borrowing Ability Remaining
The Financial Profile alone does not provide a complete picture of a district’s financial condition, but it provides a valuable tool for ISBE staff to use with other data and information to assess an individual district’s financial status.
The 2016 Financial Profile for all districts in Illinois will be available in alphabetical order or via Financial Profile designation through ISBE’s School Business Services page at www.isbe.net/sfms/P/profile.htm.