Update on 2017-2018 Fiscal Year State Funding
The State of Illinois currently owes District 7 over $1.9 million for the 2017-2018 fiscal year (see below).
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Amounts due from the Illinois State Board of Education include:
Special Education – Private Facility Tuition - $184,436.89
Special Education – Orphanage - $28,372.90
Special Education – Orphanage Summer - $2,189.00
State Free Lunch and Breakfast - 2,121.12
Driver Education - $ 28,631.81
Regular Transportation - $767,009.39
Special Education Transportation - $586,799.52
Early Childhood Block Grant - $269,010
Orphanage Tuition - $67,134.00
TOTAL: $1,935,704.63
Last week, District 7 was notified that the Illinois State Board of Education finished its bi-annual review of districts on the State’s Financial Watch List. District 7 remains on the list and continues to be required to share financial information, including quarterly cash flow statements and showing progress towards a balanced budget as a result of this status.
The ISBE indicated that it was hopeful that the successful passage of the Education Fund referendum in April 2017 will eventually remove the District from the Financial Watch List. However, as of today, the District will be required to continue submission of quarterly cash flow statements and other financial information through this fiscal year and the 2019 fiscal year until a balanced budget is implemented and cash flow improves.
Update on Governor Rauner’s Veto of New School Funding Formula Legislation
While the ISBE was working to implement the new school funding formula legislation, it found a shortfall of $37.8 million, preventing many school districts from meeting their adequacy targets without including local resources that those districts are not able to access. This was not the intent of the legislation.
As of January 18, 2018, the total backlog of all State of Illinois bills is over $9.2 billion.
Update on District 7’s Status on the State’s Financial Watch List January 26, 2018
Governor Bruce Rauner signed into law Public Act 100-0465 or the Evidence-Based Funding for Student Success Act on August 31, 2017. This law enacted evidence-based funding (EBF) and comprehensively changed the way that school districts receive the bulk of state funds. EBF sends more resources to Illinois’ most under-resourced students.
To correct this error, the ISBE requested that changes be made to SB 444 to make up this shortfall. That trailer bill was approved by the General Assembly, and the ISBE requested that the Governor sign it as soon as possible. Instead, the Governor issued an amendatory veto to SB 444 last week.
The reason the governor vetoed the legislation was not related to the changes made to correct the shortfall. Instead, the veto was in response to approximately three dozen private schools failing to meet the IBSE requirements to participate in the new scholarship programs in exchange for tax credits supported by the Governor.
Governor Rauner’s veto sends SB 444 back to the legislature, leaving the school funding formula unchanged from last year. So, as of today, all public schools in Illinois, including District 7, will continue to receive the same state funding as last year.
If the changes included in SB 444 are not enacted, a number of school districts will see a reduction in funding and an even longer wait for schools waiting for new state money. It is highly unlikely that any new funds will be distributed to schools this fiscal year. Previous estimates from the ISBE indicated that District 7 could receive over $200,000 in additional funding as a result of the new formula.
The Governor has also hinted at additional budget reductions for the 2018-2019 fiscal year. Despite the passage of a budget and new school funding formula this year, the State’s budget still remains unbalanced, and the only payments made to public schools this year have been for Evidence-Based Funding; no payments have been made for the 2017-2018 school year in Transportation, Early Childhood, and Out-of-District Tuition Reimbursement.
Financial Update on the District’s Education Fund
The 2016-2017 fiscal year ended with a negative fund balance of $5.1 million in the Education Fund. The 2017-2018 budget adopted by the District 7 Board of Education in September showed a shortfall of approximately $1.5 million after the transfer of over $650,000 in tax levy revenues from the Working Cash Fund to the Education Fund. This resulted in a projected negative fund balance of more than $6.5 million at the end of the 2017-2018 school year.
As a result of revenue shortfalls now expected in Corporate Personal Property Replacement Tax (CPPRT) and Food Service, the projected negative year-end fund balance in the Education Fund is expected to exceed $6.7 million. The administration continues to monitor all expenditures throughout the District and is hopeful that it will be able to offset the impact of the lower revenues.
Currently, the Board of Education expects to borrow at least $2 million for cash flow purposes in the Education Fund by the month of May.
The final amount of Tax Anticipation Warrants expected to be requested for the Education Fund will be dependent upon whether or not expected payments from the State are delayed further, as well as the timing and amount of early tax collections the District receives in June for the 2018-2019 school year.
Financial Update on the District’s Operations and Maintenance Fund
The District ended the 2016-2017 school year with a surplus of $600,000 in the Operations and Maintenance Fund. The 2017-2018 budget adopted by the Board in September showed a surplus in the Operations and Maintenance Fund of approximately $100,000 at the end of the current school year, leaving a $700,000 surplus.
Due to significant repairs to heating systems/boilers so far this winter (particularly at Lincoln Middle School), the District expects to utilize some of the reserves that have been built up in the Operations and Maintenance Fund over the last two years. In addition, the extremely cold weather this winter has resulted in the District’s 2017-2018 utility costs now trending over budget.
Financial Update on the District’s Transportation Fund
The 2017-2018 budget adopted by the District 7 Board of Education in September showed the Transportation Fund moving closer to a zero fund balance (approximately $50,000) at the end of the current school year.
The final proration numbers from the State for Transportation funding showed an increase in reimbursement for Regular Transportation from 71% to 84%, resulting in an additional $342,000.
However, due to continued delays in State funding of transportation reimbursement, the District is currently owed approximately $1.4 million. The District expects to receive only one of the four quarterly mandated transportation payments by June 30, 2018, and could end the current year with the State owing the District approximately $2.1 million in transportation funding.
If the District does not receive any transportation funding by the end of February, the Board will be asked to authorize the issuance of up to $2 million in Tax Anticipation Warrants to provide the needed cash flow to pay for student transportation services for the months of January, February, March and April.
If the State makes all of its obligated payments for the remainder of the year, the 2017-2018 year-end fund balance in the Transportation Fund could exceed $350,000. However, the outlook for the 2018-2019 Transportation Fund remains bleak with an expected contractual increase of between 10 and 15 percent or approximately $500,000 to $700,000.
