Central District 104 on state’s ‘financial early warning’ list

O’Fallon Central School District 104 is on the state’s “financial early warning” list, according to its annual financial profile, which was released Friday by the Illinois State Board of Education.

District 104 was on the state’s “Recognition” list last year, the highest spot awarded to school districts for their financial outlook, but fell two rungs this year.

“For the past few years, Central 104 has made every effort to maintain all current levels of programming without making significant budgetary reductions,” said Central Superintendent John Bute. “The board has been approving deficit spending budgets in hopes that the state of Illinois would fulfill its responsibility of making full, on-time payments of both GSA (general state aid) and MCAT (mandated categorical program) dollars. To this end, we have been using fund reserves to offset reduced state funding. Fund balances are one of the categories used to determine the financial profile. We are not surprised that Central 104 is not on the Financial Recognition list. Last month, the board did release several staff members in an effort to lower its spending budget for FY 2018.”

The annual financial profiles provide school districts and their stakeholders with information on school districts’ financial integrity. 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.

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.

The Illinois State Board of Education created the 2017 annual financial profiles by analyzing school districts’ fiscal year 2016 annual financial reports.

Statute requires the AFP analysis to count mandated categorical program funds as revenue, though school districts received their final fiscal year 2016 quarterly MCAT payment six months late. School districts have not received any MCAT payments for the first three quarters of fiscal year 2017.

O’Fallon District 90 moved up from the state’s “early warning” list last year to the “review” list this year. District 90’s score was 3.15.

“O’Fallon 90 is proud of our improvement in the ISBE Annual Financial Profile Score,” said District 90 Superintendent Carrie Hruby. “The district has been fiscally conservative for several years, but has maintained high quality programs as a result of outstanding staff and students. The district continues to monitor the impact of delayed payments from the state, as they have a significant impact on the ability for any district to maintain fiscal health.”

Shiloh District 85 also improved its status, moving up from the “early warning” list last year to the “review” list this year. District 85’s score was 3.25.

O’Fallon Township High School District 203 did not change positions, it remains on the “review” list, as it was last year. District 203’s score was 3.45.

Statewide in fiscal year 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 1/4 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.

The Illinois State Board of Education provides tools and guidance on financial management to all school districts seeking assistance and to school districts designated in Financial Watch. But State Superintendent of Education Tony Smith said what really needs to happen is Illinois has to fundamentally change how schools are funded.

“Illinois school districts’ financial health has improved over the last year, but at what cost to students?” said Smith. “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.”

This story was originally published April 20, 2017 at 7:28 AM with the headline "Central District 104 on state’s ‘financial early warning’ list."