Capitol Fax.com - Your Illinois News Radar » Moody’s warns on grants to CPS, General State Aid
SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Moody’s warns on grants to CPS, General State Aid

Thursday, Apr 27, 2017

* From Moody’s Investors Service…

On p. 4 of its new Weekly Credit Outlook for Public Finance released today (attached), Moody’s notes the ongoing budget impasse in the State of Illinois (rated Baa2/negative outlook) has delayed over $1 billion in payments to school districts, with a handful of districts facing increasing cash flow pressures and a growing potential for a material decline in reserves amid the continued delays. The most vulnerable districts are those that are highly dependent on state grant funding and those with limited operating reserves.

The most vulnerable rated school districts are Chicago Public Schools (B3/negative), Will County Community High School District 210 (Lincoln Way) (Ba1/negative) and Marion, et al Counties High School District 200 (Baa1). These three districts’ narrow cash reserves provide limited protection against continued delays

Illinois provides two types of cash distributions to schools: general state aid, which supports districts’ general operations, and categorical grants, which support specific programs such as transportation and special education. School officials report that general state aid has been received on time, but grant funding is increasingly delayed against a backdrop of continued state budget pressures. Reported lags in quarterly grant payments to districts have increased from approximately three to six months in prior years to nearly nine months in the current year.

We expect that delays in grants will not materially affect most rated districts because they have limited dependence on state grants and ample operating liquidity. Even districts with relatively high reliance on state grants, such as McHenry County Community Unit School District 200 (Woodstock) (Aa2) and Kankakee & Will Counties Community Unit School District 5 (Manteno) (Aa3), will not likely experience cash flow stress, though they may experience credit-negative declines in reserves.

Most rated Illinois school districts have limited dependence on state operating grants. In fiscal 2016, grants comprised less than 5% of revenues for 54% of rated districts, between 6% and 10% of revenues for 42% of rated districts, and more than 10% of revenues for just 4% of rated districts.

While general state aid revenues have continued to flow for Illinois school districts in the current fiscal year, a budget for schools will need to be passed for disbursements to continue in fiscal 2018. In the last two years, the state has passed its K-12 budget in May. Any event that results in delayed or reduced general state aid disbursements for Illinois schools could result in a much larger group of materially impacted credits.

Emphasis added.

- Posted by Rich Miller        

13 Comments
  1. - Rod - Thursday, Apr 27, 17 @ 4:23 pm:

    All true. Possibly tax increases on the State level are in order. Oh I forgot the Governor just said no to that.


  2. - City Zen - Thursday, Apr 27, 17 @ 4:31 pm:

    Lincoln Way is no surprise, considering the recent closure of Lincoln Way North.


  3. - RNUG - Thursday, Apr 27, 17 @ 4:37 pm:

    Wonder if the Governor was tipped this was coming … And that’s why they are floating a standalone k-12t bill.

    Kj


  4. - Decaf Coffee Party - Thursday, Apr 27, 17 @ 4:38 pm:

    School finance is complicated. What has happened this school year is General State Aid has been fully funded and mostly paid on time, but what is known as Mandated Categoricals — the biggest being Special Education and Transportation — are separate from GSA has fallen way behind.
    Only 1 of 4 payments has been made (and that was made just last week) as we are more than 3/4 of the way through the fiscal year. It is probable that only 1/2 of payment 2 or, best-case scenario, all of payment 2 is made this fiscal year. Meaning half of what was budgeted won’t be paid.
    That means that some districts — those with high Transportation and/or Special Ed costs — actually are worse off this year than a year ago even with full GSA funding.
    So beware of campaign messages that tout fully funding GSA for the first time in 8 years. It’s only half a story.


  5. - wordslinger - Thursday, Apr 27, 17 @ 5:23 pm:

    –On p. 4 of its new Weekly Credit Outlook for Public Finance released today (attached), Moody’s notes the ongoing budget impasse in the State of Illinois (rated Baa2/negative outlook) has delayed over $1 billion in payments to school districts, –

    Say what…. Gov. Grade A, did you not wake up this morning and think about the kids and such, first thing?

    Instead of posting goofy messages on their school sign boards this week, school districts should have been screaming their heads off in the media for weeks about this.

    For crying out loud, $1 billion short for the “fully funded” K-12 schools is kind of a big deal.


  6. - JS Mill - Thursday, Apr 27, 17 @ 6:14 pm:

    @Decaf- Yesterday, the ISBE told IASBO conference attendees that we just received the one and only FY17 MCAT payment we would get during FY 17.

    If that is the case Illinois will fail to meet Maintenance of Edfort (MOE). If that happens one of two things will happen-

    1) Illinois will lose billions in federal matching funds.

    Or…..

    2) the ISBE will direct schools to reclassify GSA money as Special Ed reimbursement so they can meet MOE. If that happens they cannot claim full GSA funding.

    Either way it is a crap sandwhich inside a dumpster fire.


  7. - winners and losers - Thursday, Apr 27, 17 @ 6:34 pm:

    =the ISBE will direct schools to reclassify GSA money as Special Ed reimbursement so they can meet MOE. If that happens they cannot claim full GSA funding==

    Illinois has to meet the requirement in the Federal special education law, IDEA, for MOE, Maintenance of Effort (spending at least as much in State and local funds this year as was spent last year to keep any increases in Federal special ed funds from just allowing States to reduce State funds for special ed).


  8. - JS Mill - Thursday, Apr 27, 17 @ 6:46 pm:

    =Illinois has to meet the requirement=

    The last two years they have done so by requiring districts to move GSA funds to SPED.

    That is a fact.


  9. - Anonymous - Thursday, Apr 27, 17 @ 7:42 pm:

    Why hasn’t the state ended pensions for teachers yet?


  10. - DuPage - Thursday, Apr 27, 17 @ 8:21 pm:

    So much for Rauner’s phony “full funding for k-12.”


  11. - illini - Thursday, Apr 27, 17 @ 8:35 pm:

    @JSMill - “Either way it is a crap sandwhich inside a dumpster fire.”

    What a way to describe this disaster.

    On matters and issues like this I always defer to those who are more expert on the details.

    Thanks for sharing.

    And @Anonymous@7:42 - get a name!


  12. - RNUG - Thursday, Apr 27, 17 @ 9:18 pm:

    ==Why hasn’t the state ended pensions for teachers yet? ==

    Little issue of the Illinois Constitution and the Illinois Supreme Court saying things can’t be changed for existing workers and retirees.


  13. - AnonymousOne - Thursday, Apr 27, 17 @ 9:34 pm:

    End pensions for teachers===

    Just think of the money problems we’d solve if we just did away with teachers period? Too much money to pay these people, right? Just keep the buildings open,buy the books and have the kids learn on their own. Or, why not have everyone homeschool? Taxpayers would save a ton, wouldn’t they? Why pay so much? Snark.


Sorry, comments for this post are now closed.


* Sam McCann jumps into House races against "Raunerite" Republicans
* Question of the day
* I've just never seen anything like this
* Pritzker then and now
* Oppo dump!
* Another former Pritzker campaign worker comes forward as the spin cranks up
* HB40 backstory: A preemptive strike and throwing Norwood under the bus
* Pritzker sets national campaign finance record
* New Cook County IG report raises more questions than it may answer
* Keep your fingers crossed
* *** UPDATED x1 - ILGOP responds *** Bombshell discrimination lawsuit called "offensive" and "baseless" by Pritzker campaign
* SUBSCRIBERS ONLY - Supplement to today's Capitol Fax
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* *** LIVE COVERAGE ***
* Erika Harold reports $1.5 million contribution from Ken Griffin, $100K from Jennifer Pritzker
* Yesterday's stories

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............
<


Loading


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018
January 2018
December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress




Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller