Friday, January 20, 2017

State budget instability continues in wake of ‘lame-duck’ session

Andrew Johnson
By Heath Hendren

As the calendar rolled into 2017, Illinois’ backlog of bills continued to pile up. Unpaid bills multiplied to total nearly $11 billion and the state no longer had a temporary budget in place to pay for many services and programs.

While a full-year budget for Illinois schools was approved in June of 2016, districts throughout the state were still awaiting payments for those related expenses commonly called mandated “categoricals.”

Much education spending discussion for the current fiscal year centered on an increase in General State Aid to fully fund the per pupil foundation formula and provide an additional $250 million for high-poverty districts. Included in the FY 2017 spending plan was more than $1.7 billion for categorical payments. These funds are distributed in four quarterly payments per year, and are intended to reimburse districts for expenses such as free lunch and breakfast programs, special education personnel and services, and transportation expenses.

The amount of categorical funding varies from district to district, depending on a number of factors, including transportation needs, and the number of students enrolled in specific programs. The common thread among public school districts is that they have not received their allocated categorical payments for the current year. In fact, districts have only recently received the final quarterly payment from FY 2016.

Jasper CUSD 1 Superintendent Andrew Johnson said his district received $154,723 for the last installment of FY 16 at the start of January, with no indication about when the 2017 funding will arrive.

“We are showing a $221,000 projected deficit in our transportation budget for FY 17,” said Johnson, who added that CUSD 1 schools were owed about $252,000 for the first two FY 17 payments. “We have had to borrow from our working cash the last two years, and I am sure we will have to again this year.”

CUSD 1 is the largest geographic district in the state, making transportation funds vitally important for school operations. The district owns and maintains a 54-bus fleet that travels more than 600,000 miles per year.
Michael Lubelfeld

With the state more than six months behind in distributing categorical funds to schools, districts are forced to dip into reserves to cover normal costs.

“We borrowed $250,000 from the Operations and Maintenance Fund last year that will have to be paid back within three years or permanently transferred if we do not have enough money in the transportation fund to repay it,” said Johnson. “We are running over 20 buses with 150,000 miles on each one. Our repair bills cost about $8,500 per month. We currently cannot find the money to purchase new buses to replace our depleted fleet. According to our calculations, if we were provided 100 percent of the money promised to us rather than continual proration, our district would be in good shape with our budget.”

Other school districts that don’t rely on the state for a large percentage of their funding are faring better, but they, too, are feeling the concerns arising from the Springfield stalemate.

Deerfield SD 109 Superintendent Michael Lubelfeld said the delay in state payments has less impact on districts like his that receive most of their revenue from local sources. “We receive approximately three percent of our funding from state sources,” Lubelfeld said. “Most of our revenue is generated locally, and those dollars we can count on. But I do have a tremendous concern for other districts in our county and throughout the state that have a heavy reliance on state funds.”

Lubelfeld did caution that if the state falls behind in distributing education dollars to the Deerfield district it could impact future capital projects. “Our state aid goes into our capital construction fund. This allows us to have flexibility with projects and construction,” he said.

The Deerfield superintendent backs the Vision 20/20 initiative and the “Evidence-Based Funding Model” that is supported by the Illinois Statewide School Management Alliance as the best solution for resolving the state’s education funding problems.

Some legislators have recently proposed linking changes to the way education dollars are distributed to an overall budget agreement. An initial framework of the budget proposal emerged as the 99th General Assembly convened for two final days of session on Jan. 9 and 10, before new lawmakers were sworn in. The lame-duck session brought a glimmer of optimism that a comprehensive spending agreement could be progressing in the coming weeks as Illinois Senate Democrats and Republicans unveiled a package of bills that some believe may offer a blueprint for compromise.

The framework of the potential deal encompasses an array of topics, including new revenue, borrowing to pay old bills, pension reform, gambling expansion, term limits for legislative leaders, a temporary property tax freeze, a minimum wage increase, and changes to the school funding formula.

“Though no action was taken in the January lame duck session, having actual amendments filed for all to see was a significant step in this process,” said Ben Schwarm, IASB deputy executive director. “A package of new bills encompassing this spending agreement was filed by both Senate leaders after the beginning of the new General Assembly, clearly aiming for legislative action early in the session,” he added.

The 100th General Assembly was sworn in on Wednesday, Jan. 11. Legislators will return to the statehouse for regular session on Jan. 24, followed by Governor Bruce Rauner’s State of the State address on Jan. 25.

Updates on state legislative issues can be found in Alliance Legislative Reports, issued each week that the General Assembly is in session.