CAT Tracks for February 15, 2003 REFERENCE TO CSD #1

The Southern Illinoisan made reference to CSD #1 in an article last Saturday on the "Financial Crisis Hitting Illinois School Districts"...

VOICE OF THE SOUTHERN: FINANCIAL CRISIS HITTING ILLINOIS SCHOOL DISTRICTS HARD

[Sat Feb 08 2003]

An alarming number of Illinois school districts aren't making the grade financially. It's a crisis that must be addressed by the legislature this session or we can expect more schools to default in the coming months.

The State Board of Education estimates that as much as 85 percent of Illinois' 892 districts face deficits this year. It warns that at least 20 of those districts may be unable to pay its bills.

The dire figures come several months after the board adopted a new formula for assessing the financial wherewithal of school districts.

The board in the past measured a district's financial status by simply looking at a balance-to-revenues ratio. Criteria approved in November compare revenues with funds on hand, transportation and operation costs, and short-term and long-term debt.

The new system shows the financial turmoil Illinois school districts face. A new financial watch list will be out soon, and the number of districts on it is expected to far exceed the 11 listed last year. The board is also adding a financial warning list for districts that are against the wall.

Southern Illinois districts are expected to be well-represented on the dubious list. Already, Pinckneyville Community High School District 101 and Frankfort Community Unit School District 168 in West Frankfort anticipate being named to the watch list. They won't be alone.

The plight of districts was illustrated in December when Hazel Crest school district in Cook County sought and received from the state legislature a $4.4 million loan to remain solvent.

It's not the only one turning to the state for a bailout. Cairo school Superintendent Robert Islom asked for state relief to deal with an $800,000 deficit for the remainder of this school year. The board of education agreed Thursday to place the district under the review of a financial oversight panel. That makes the district eligible for a state grant. It also now qualifies for a loan, pending legislative approval. Expect more districts to follow this course unless the legislature acts.

Districts are taking financial hits on many fronts. The state has cut back on school aid. It is also late in making payments to districts. Many districts are borrowing money against reserves or future revenues just to pay bills.

The legislature last year cut $167 million from the approximately $6 billion it provides education from general revenues. Overall, the education budget in Illinois tops $18 billion, including state, local and federal sources.

Those cutbacks came at a time districts saw health insurance costs rise 18 percent and salaries increased by an average of 4 percent.

Reductions to state aid are hitting Southern Illinois districts particularly hard. Smaller, rural districts rely more on state aid than those in affluent areas, such as the collar counties of Chicago, where property tax revenues run much deeper.

Typical school districts in this region receive about 60 percent of funding from the state, 30 percent from local property taxes and the remainder from federal sources. The percentages vary depending on the district.

By comparison, the average Illinois school district receives about 53 percent of its funding from local revenues, 30 percent from the state and the remainder from the federal government.

Exasperating the problems for many districts are the aging and deteriorating facilities that must be maintained. The amount spent on upkeep and maintenance is draining tightening resources. The Cairo district alone has spent $1.7 million on renovations.

The School Construction Program, created in 1997 to help districts repair, improve or replace old buildings, is out of money. The State Board of Education estimates it needs $8 billion to meet the demands of districts that want improved facilities. Without it, infrastructures will continue to deteriorate.

The State Board of Education is asking the legislature for an additional $518 million this year. The legislature will be challenged to find the money given the $5 billion shortfall Illinois faces.

Some have proposed legislation to raise state and corporate income taxes for school district relief. However, Gov. Rod Blagojevich has vowed not to raise taxes. It is a campaign promise that helped win him the election.

Options at the local level are limited. Continuing to raise tax levies places an unfair burden on those who own property. It could result in a revolt by over-taxed and over-burdened property owners.

Districts can cut back on services, but that would come at the detriment of students.

Streamlining operations and cutting costs, though, should be a priority among districts. Another form of streamlining is through district consolidations. It is a long-term solution and should be considered by some of the smaller districts.

But districts also need help now, and the legislature must begin looking at alternative funding sources or formulas to remedy the problem.

Otherwise, the Cairo situation will become common place and education will be adversely affected. We cannot afford to let this happen.