PLEASE ACT NOW!
IMPORTANT ISSUES BEING ACTED ON TODAY
LIMITS ON SCHOOL DEBT OPTIONS, ADMINISTRATIVE COST
There are three initiatives pending before the Illinois House and Senate that need input from school management. Please take a few minutes to respond and share the possible impact on local school
HB 5572 (Ives, R-Wheaton) is designed to prohibit a school district from refinancing
debt past the repayment period of the original issue, issuing bonds beyond the
time period established when the debt was issued, and incurring any kind of
debt in excess of 13.8% (units) or 6.9% (duals) of the district's 2017
equalized assessed valuation (EAV) or the district's maximum amount of debt on
the effective date of this Act, whichever is greater.
The effects of this bill on local schools will be
significant! Please share the impact of this limitation on your schools with
your lawmaker. The bill:
- Includes interest (which is not "borrowed money") and alternate revenue bonds in a school district's debt limit, both of which are currently exempted from the debt limit. No other state in the country considers interest to be part of debt.
- Includes interest in a school district's debt limit calculation which would automatically push many districts over their debt limit.
- Severely restricts a school district's ability to restructure debt to respond to current economic climates and provide debt relief to taxpayers at times when tax rates are too high for communities to sustain.
Remind your representative that safeguards are already
provided for in Illinois Statute:
- The annual debt service levied is for referendum bonds, approved by the voters in referendum; andfor non-referendum bonds, limited to the debt service extension base, a fixed annual amount which can only be adjusted by referendum. Therefore the district's debt burden is already limited by law and voter approval
- The Illinois State Board of Education (ISBE) currently monitors long-term and short-term debt limitations via the Financial Profile Score reporting
- Debt issues are currently limited to a 20-year repayment period unless the district secures a legislative exemption due to extenuating circumstances. In these cases, an additional 5 or 10 years added to the repayment period is still significantly less than the useful life of a new building
- PA 100-503 just passed in 2017 and effective January 2018 provides for additional statutory requirements
HB 4789 (Breen,
R-Lombard) would be virtually impossible
for school districts to comply with. The bill:
- Reduces the current 5 percent administrator cap to the lesser of 5 percent or CPI
- Establishes three separate cost limits and broadens the current definition of "administration" to now include support costs and those for principals, deans, and even teacher leaders
- Changes the limit from one based on actual costs of administration to one based on the per pupil costs of administration
- Establishes 2018-19 baselines for the two new administrative categories based on 2001 census increased by CPI and the 2015 census increased by CPI, respectively.
SB 3418 (Rezin, R-Peru) sets limitations for school districts entering into joint
agreements to share the services of a superintendent. The bill also creates a
referendum process to attempt to force school districts into joint agreements
to share administrative services.
- SB 3418 is presented as
a cost-saving measure, but it takes away local control and the end result
could actually cost school districts more
- Locally elected school
boards already have the power to enter into a joint agreement to share
administrative services and costs
- Unnecessarily forcing
administrators to spread their duties across multiple school districts
will likely result in requiring additional compensation, or the hiring of
additional administrative staff
- With legislation pending
to limit school administrative costs (HB 4789), this measure could place
school districts in the dangerous position of being required to share
administrative services, but limited in their ability to adequately
compensate staff for additional duties.
Please contact
your State Senator and urge a NO VOTE on SB 3418.
Consider using these links
to register your positions. Be sure to make your response reflect facts about
your school district. Click on the link, enter your zip code or address and
follow the prompts. Our Illinois Principals Association partner provided these
links for our use.