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Superintendents, S&P warn about lack of school funding deal

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Illinois

Several downstate school superintendents Wednesday said lawmakers still need to move quickly to enact a revised school aid formula to ensure state education money is soon distributed to schools.

The superintendents spoke at a Statehouse news conference after House Speaker Michael Madigan canceled a scheduled vote on overriding Gov. Bruce Rauner’s veto of a school funding reform bill.

“Currently we have $7 billion sitting in the budget that can’t be distributed until we have a (revised funding formula),” said Edwin Shoemate, superintendent of the Cobden school district in far southern Illinois. “We have missed two checks for general state aid and our third check is now in jeopardy. We have reached an urgent point where something has to be done and done quickly.”

“We have enough money to make it through September, but we will not make it through October without any state aid,” said Chuck Lane, superintendent of the Centralia High School district.

* S&P…

The state of Illinois’ failure to reach an agreement regarding a new state funding formula for school districts has caused the state to miss its first two general state-aid payments for the fiscal 2018 school year. S&P Global Ratings believes that the fiscal outlook for many Illinois school districts–which are already pressured due to years of state underfunding and late payments–will likely worsen significantly should the state fail to reach a new funding formula agreement, distribute the missed payments, and submit timely future payments to districts. Without the resolution of this impasse, significant downward pressure on certain Illinois school district ratings will likely remain, especially for districts with weak reserves, weak liquidity, and greater reliance on state aid.

For certain districts, continued disruption of these payments will likely lead to significant budgetary imbalances and a resulting use of reserves, which will likely further pressure districts with already thin reserves. To address the current payment disruptions, many districts will need to make significant expenditure reductions. School districts in Illinois have the ability to use their working cash fund to assist with liquidity and can issue working cash bonds to help offset delayed state-aid payments, if they have the capacity. While these methods may provide a temporary measure of fiscal relief for certain districts, the longer the funding formula stalemate, the greater the possibility for significant fiscal pressure and downgrades on affected ratings in this sector. Alternatively, should a funding formula agreement be reached that provides greater state-aid clarity, is commensurate with most districts’ financial needs, and is fully appropriated by the state, long-term stability could return to the sector. We will continue to monitor these developments, including the timely disbursement of state-aid payments (should an agreement be reached), due to potential future liquidity stresses at the state level. In addition, we will examine each district on a case-by-case basis to review the effect of these issues on credit quality. In the meantime, many Illinois school districts will need to continue to adjust to these mounting fiscal pressures in order to avoid falling deeper into a fiscal hole. Further, we believe the response from each district’s management will be critical in maintaining credit quality, although the options are somewhat limited for many districts.

posted by Rich Miller
Thursday, Aug 24, 17 @ 12:04 pm

Comments

This one is dedicated to Jim Durkin and the HGOP caucus:

https://www.youtube.com/watch?v=a01QQZyl-_I

Comment by 47th Ward Thursday, Aug 24, 17 @ 12:06 pm
Superintendents and S&P are enemies.

Comment by 360 Degree TurnAround Thursday, Aug 24, 17 @ 12:08 pm
Just remember what Jim Durkin said…”we have the votes locked up”.

Comment by 360 Degree TurnAround Thursday, Aug 24, 17 @ 12:08 pm
Anyone hear from Reps. Avery Bourne and Bob Pritchard?

Comment by Jocko Thursday, Aug 24, 17 @ 12:11 pm
I wonder if S&P is sending us a message? Are they planning to downgrade not only the State of Illinois but also many of the states hundreds of school districts? If they downgrade either the state (yet again) and/or the school districts it will be expensive for the taxpayers.

Comment by Small town taxpayer Thursday, Aug 24, 17 @ 12:15 pm
Our Reps and Senators and Gov do not care about our children. It’s time to vote them all out

Comment by Anonymous Thursday, Aug 24, 17 @ 12:34 pm
Rep Bourne is one of the worst.

Comment by Anonymous Thursday, Aug 24, 17 @ 12:35 pm
Our reps and Senators and unionized public employees don’t care about the rest of the taxpayers. Never have and never will. Where’s mine is their only concern.

Comment by Really Thursday, Aug 24, 17 @ 1:37 pm