A growing number of school districts were financially solvent in fiscal year 2018 thanks to increased EAVs, growth in state revenue, stable district expenditures, and less borrowing than in previous years. Those are the key findings from the Illinois State Board of Education’s annual financial profile report.The ISBE analysis also shows a jump in the number of school districts earning the best state designation, “financial recognition,” with fewer districts falling into the poorest designation, “financial watch list” status.
As mentioned, higher EAVs, meaning rising property values, helped boost levy and debt capacity, even as state revenue increased $1.2 billion (19.3 percent) from the previous fiscal year.
ISBE places school districts into four categories of financial health based on a scoring system that evaluates several key metrics: the district fund balance-to-revenue ratio, expenditure-to-revenue ratio, days’ cash on hand, and the percentage of remaining short-term and long-term borrowing capacity.
In all, 695 districts earned “financial recognition,” the highest total in the 16-year history of the financial profiles, up from 640 in fiscal 2017. Meanwhile 111 districts were in the “financial review” category, a decrease from 147 the previous year. Thirty-three districts were designated in the “financial early warning” category, down from 43, while 12 districts landed in the “financial watch” category that can sometimes lead to state intervention, down from 22 districts.The number of districts that relied on deficit spending to get through the school year dropped to 116 from 344 in last year’s profile. But that number is projected to rise in the current fiscal year – and be reflected in next year’s report – to 310, based on estimates submitted by districts.
That projection could change however, if additional tier funding to districts is provided under Evidence Based Funding (EBF). That is, if lawmaker fund EBF as planned, and if continued increases in property tax revenue from rising EAVs continues to improve the financial outlook for some school districts.
For more information, see the 2018 School District Financial Profiles.