SCHOOL FINANCE ISSUE / FALL 2014 OPERATIONS ISSUE / SUMMER
update INDISPENSABLE TOOL for SCHOOL BUSINESS MANAGEMENT
Maximizing Your Interest Income | 24 To Fee or Not to Fee | 30 School District Refresh | 38
A BALANCING ACT | 1
GETTING THE MOST FROM LIMITED RESOURCES www.iasbo.org
A Growth Opportunity for Your Support Staff The Support Staff Designation Program allows your staff to learn about key school finance topics as they access all Illinois ASBO has to offer at a deeply discounted membership rate!
A starting place to better understand school finance. A chance to expand their knowledge of school operations. A network of support to guide their growth. “I had a business background when I started in a district payroll position. My business manager encouraged me to start with the basic seminars 12 years ago, putting me on the path to earn my Master’s and CSBO. Now, I’m the one encouraging others to get started in this program!” Cyndi Sidor, now a Manager of Fiscal Services at Comm. Unit Sch. Dist. 95
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Update Magazine / Winter 2013
INSIDE
Illinois Association of School Business Officials UPDATE Magazine / Fall 2014 / v.22 / i.01
SCHOOL FINANCE ISSUE
A Balancing Act
Maximizing Your Interest Income
24
THE NEXT ISSUE: NON-TRADITIONAL PROGRAMS
Providing the resources to meet the needs of all students
Exploring all their interest income possibilities can help districts make sure they don’t leave money on the table at a time when they can ill afford it. Cover Story by Jim Grammas
Point of View: Formula for Success?
Over the years, the Legislature has created numerous committees to evaluate the state’s education funding formula. Have they succeeded in developing an equitable solution? By Jessica L. Donato
20
www.iasbo.org
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Not to Fee As school districts deal with rising costs, administrators, staff and parents are going to have to work together to bridge the financial gap. By Paul A. O’Malley, Ed.D.
FROM-THE-FIELD Weighing in on the Federal Lunch Program. 11
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UPDATE Magazine / Fall 2014
34
By Dean M. Langdon, Ed.D. and Kristopher P. Monn, Ed.D.
TEACHING
SCHOOL BUSINESS 101 Affordable Care Act Response: Self-funded programs, look back period, monitoring hours and more. 19
Six keys to being an accountable and approachable asset to your board.
MUTUAL RESPECT
BUSINESS PARTNERS Investing in the Next Generation for 30 Years. 18
The Trusted Business Official
COMMUNICATION
FROM-THE-TABLE Refunding Bonds: A Debt Restructuring Tool. 14
30
INFORMATION SHARING
FROM-THE-OFFICE The Issues Driving School Funding Reform. 09
To Fee or
TRANSPARENCY
FROM-THE-PODIUM Moving Beyond the “Science” of School Business Management. 07
ARTICLES
SUPPORTING ROLE
PERSPECTIVE
RESOURCES
ON MY LIST
School District Refresh When the State Takes Over While having the Illinois State Board of Education take over a local school district may sound horrible, it can actually be in the best interest of both taxpayers and students. By Cheryl M. Crates and Michael J. Prombo
38
How a positive outlook can fuel performance and achievement.
43
THE FINAL WORD Great Ideas from Great Illinois ASBO Members
Ronald R. O’Connor
Dir./Finance North Chicago CUSD 187 Ron sees the role of the CSBO as blending the curricular piece with business. He believes that business officials have the opportunity to support education professionals and work together with them to improve students’ lives.
A Balancing Act: Good reads on refunding bonds, school funding legislation and board governance.
44
46 www.iasbo.org
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THE
MAGA ZINE Illinois Association of School Business Officials
UPCOMING FALL
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SEMINARS
UPDATE Editorial Advisory Board
Check out www.iasbo.org or the latest Calendar of Events included in the UPDATE mailing for full seminar listings including location and PDC sponsorship and register for professional development today.
September June 2014 2014
October 2014
November 2014
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S 29 5 12 19 26 2
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Date
Time
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T W T F S 31 1 2 3 4 7 8 9 10 11 14 15 16 17 18 21 22 23 24 25 28 29 30 31 1 4 5 6 7 8
M 27 3 10 17 24 1
T 28 4 11 18 25 2
December 2014
W 29 5 12 19 26 3
T 30 6 13 20 27 4
F S 31 1 7 8 14 15 21 22 28 29 5 6
Session
Environmental and Life Safety Program
S M T W T F S 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10
Location
9/9/14
7:30am
9/12/14
8:30am Advanced Excel for the Business Office
9/19/14
8:00am ASBO International Annual Meeting & Expo
9/30/14
8:30am ISDLAF+ School Finance Seminar
Naperville
10/1/14
8:30am ISDLAF+ School Finance Seminar
East Peoria
10/2/14
8:30am ISDLAF+ School Finance Seminar
O'Fallon
10/3/14
9:00am PDC Meeting of the Whole
10/7/14
7:30am
Budget and Financial Projections
10/10/14
7:30am
TechCon: Technology and Financial Issues for the 21st Century
10/15/14
9:00am Delegate Advisory Assembly Meeting
Naperville
10/16/14
8:00am Navigating Changes to E-Rate & Maximizing Your Discounts
Naperville
10/20/14
7:30am
CPMM Facilities Certification Training & Exam
Downers Grove Naperville Kissimmee, FL
Elk Grove Village Downers Grove Naperville
TBD
11/3/14
8:00am 2014 Midwest Facility Masters Conference
Wisconsin Dells, WI
11/10/14
8:00am CPS Facilities Certification Training & Exam
TBD
11/21/14
8:00am IASB/IASA/IASBO 81st Joint Annual Conference
Chicago
11/21/14
7:30am
The Administrator's Role in Collective Bargaining - AAC #809
Chicago
11/21/14
7:30am
Learning from Lincoln: Leadership Practices of School Success - AAC #1098
Chicago
11/21/14
7:30am
Seminar on School Finance - AAC #1062
Chicago
11/22/14
Illinois ASBO Hospitality in conjunction with the Joint 5:00pm Annual Conference
Chicago
12/5/14
7:30am
1/21/15
9:00am Delegate Advisory Assembly Meeting
Naperville
1/21/15
8:30am ISDLAF+ School Finance Seminar
East Peoria
1/22/15
8:30am ISDLAF+ School Finance Seminar
O’Fallon
1/27/15
8:30am ISDLAF+ School Finance Seminar
Naperville
1/29/15
8:30am 2015 Leadership Day
Rosemont
1/29/15
1:30pm PDC Meeting of the Whole
Rosemont
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SupportCon: Educational Support Professionals Conference
UPDATE Magazine / Fall 2014
Naperville
PDC MEMBERS Richard A. Lesniak Ancillary Services Kristopher P. Monn Educational Enterprise Yasmine Dada Financial Resource Management Robert J. Ciserella Information Management Kevin Dale Information Management Amy McPartlin Materials & Services Management Paul A. O'Malley Sustainability BOARD & EXTERNAL RELATIONS MEMBERS Hillarie Siena Past President Mike McTaggart SAAC Chair AT-LARGE MEMBERS Seth Chapman St. Charles SD 303 Anton Inglese Batavia USD 101 John A. Gibson Homewood SD 153 Dean Langdon Illinois Association of School Boards Eric Miller Skokie SD 69 STAFF MEMBERS Michael Jacoby Executive Director (815) 753-9366, mjacoby@iasbo.org Susan P. Bertrand Assistant Executive Director (815) 753-9368, sbertrand@iasbo.org Angie Byers Communications Coordinator (815) 753-9371, abyers@iasbo.org Rebekah L. Weidner Staff Writer/Editor (815) 753-9270, rweidner@iasbo.org Tammy Curry Graphic Designer (815) 753-9393, tcurry@iasbo.org John Curry Graphic Designer (815) 753-7654, jcurry@iasbo.org
Illinois ASBO Board of Directors Nelson W. Gray President Susan L. Harkin President-Elect Jennifer J. Hermes Treasurer Hillarie J. Siena Immediate Past President 2012–15 Board of Directors David H. Hill, Luann T. Kolstad, Ann C. Williams 2013–16 Board of Directors Dean L. Gerdes, Cathy L. Johnson, Lyndl A. Schuster 2014–17 Board of Directors Barry Bolek, Dean T. Romano, Paul Starck-King
Illinois ASBO Board Liaisons
Michael A. McTaggart Service Associate Advisory Committee Chair Audra Scharf Service Associate Advisory Committee Vice Chair Terrie S. Simmons ASBO International Liaison Debby I. Vespa ISBE Board Liaison Sherry Reynolds-Whitaker IASB Board Liaison Paul McMahon Regional Superintendent Liaison Calvin Jackson Legislative Liaison
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All materials contained within this publication are protected by United States copyright law and may not be reproduced, distributed, displayed or published without the prior written permission of the Illinois Association of School Business Officials. You may not alter or remove any trademark, copyright or other notice from copies of the content. References, authorship or information provided by parties other than that which is owned by the Illinois Association of School Business Officials are offered as a service to readers. The editorial staff of the Illinois Association of School Business Officials was not involved in their production and is not responsible for their content.
PERSPECTIVE / Board President
FROM–THE–PODIUM Moving Beyond the “Science” of School Business Management Leonardo da Vinci stated the following as Principles for the Development of a Complete Mind: “Study the science of art. Study the art of science… Realize that everything connects to everything else.” I believe this is also true for school business management – there is an art and science to it. As financial leaders, we understand the science, the everyday functions and tasks of the job. This has multiple dimensions – budget, levies, audit, risk, facilities, ancillary services, payroll, purchasing, human resources, negotiations, etc. (a seemingly ever-growing list!) It was the science I worked so hard to learn as I gained my CSBO endorsement and in my first years as a business manager. Now, I may be considered a seasoned practitioner.
Nelson W. Gray
ASST. SUPT./BUSINESS SERVICES DES PLAINES CCSD 62
SIMPLY SAYING
I have become convinced that in order to help my district attain our goals, I must expand and adapt my thinking. Yet, there are opportunities to take it to the next level – an art. Certainly in the areas of finance and instructional leadership there are opportunities to be innovative and elevate what our positions can do for our districts. The Art of School Finance With the percentage of Illinois school districts in deficit spending projected to increase from around 49% in FY 2013 to nearly 62% in FY 2014,1 innovation in school finance is needed now more than ever. Many of our colleagues have become true “artists” of doing more with less. In this issue of the UPDATE you will find insights and new perspectives from many of our peer authors as you find innovative ways to get the most from your district dollars. The Art of Instructional Leadership In times of unknown financial situation, to become a “complete” business official, we can no longer just be the financial leaders of our organizations – we must be engaged in a shared leadership model and become instructional leaders. That is where the art of school business management comes into focus and moves beyond the “science”.
Currently, my district is working on very positive, innovative and challenging changes in the areas of professional development, instructional practice and student learning. I have become convinced that in order to help my district attain our goals, I must expand and adapt my thinking. I have begun exploring the art of my profession, to understand “that everything connects to everything else.” As business officials, we need to work to understand instruction, differentiation, technology integration, assessment, student growth and curriculum, in addition to school finance and operations. More than just talking about costs and efficacies, we must join a dialog about meaningful impact on next practices, student engagement, understanding where students learn and meeting their needs.
FOOTNOTES 1. ISBE, March 12, 2014. Review of Annual Financial Profile, p 171. http://www.isbe.state.il.us/board/ meetings/2014/mar/packet.pdf
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| 7
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Opportunities
Nominate Someone for a Career of Service
Help us recognize someone who has made an impact on the profession by nominating them for a Foundation award.
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Whether you are continuing your education or need help to attend Illinois ASBO programs – scholarships are available!
NEW SCHOLARSHIP AND AWARD DEADLINE!
OCTOBER 15
8 |
Find these opportunities at: www.iasbo.tools/ILFoundation
UPDATE Magazine / Fall 2014
PERSPECTIVE / Executive Director
FROM–THE–OFFICE The Issues Driving School Funding Reform This past year we have had more dialogue about school funding more at any other time over the last two decades. With the establishment of the Education Finance Advisory Committee (EFAC), there were hearings throughout the state and many weighed in on how state resources should be allocated to districts. Some of the underlying issues (in my opinion) that drove the legislature to establish EFAC were the same confusing and competing issues that make education funding in Illinois quite hard for most to understand:
Michael A. Jacoby EXECUTIVE DIRECTOR ILLINOIS ASBO
• Proration of current GSA allocations. • Frustration that the GSA formula is really three formulas – • Categorical funding burdened with block grants to CPS. poverty, tax cap adjustments and foundation funding (in • The method of proration – proportional vs. dollar per student. itself three formulas – foundation, alternate and flat grant). SIMPLY SAYING
This past year we have had more dialogue about school funding than at any other time over the last two decades. As EFAC finished the hearing phase and produced recommendations, we were all extremely interested in how these might appear in a bill. SB16 emerged; ISBE began to work toward modeling the legislation and in mid May produced a list of “winners” and “losers.” This model had many footnotes, as certain student demographic data points had not been collected from districts in the past and assumptions had to be made. I trust that most of you have reviewed your own data to see where you would stand under this new funding formula.
this type are most successful when additional resources are being added to the pool, not when current appropriations are simply redistributed. Mandate relief has not been included to give districts more choices in how to respond to the loss of revenue. Further, EFAC recommended moving toward the Education Funding Advisory Board (EFAB) recommendation over the next three to five years. The Foundation Level referenced in SB16 is the same as for the last five years ($6,119) with no reference to the future, leaving the concept of adequacy woefully lacking.
Where do we stand today? SB16 was approved in the Senate without a mandate relief amendment that we supported, but the House has yet to consider the measure. This summer and into the fall there will be meetings with House leaders and we will have the opportunity to be involved at the outset. My sense is that something will come forward during or after the veto session.
One additional concern is the student weightings. SB16 seems to be devoid of a methodology that we can study. When the drafters were asked where the weightings came from, they simply said they reflect weightings that other states use. We do not know if these weightings would reflect the actual cost differentials between students. It seems that a change of this magnitude should be verified by research, as it will impact so many students for decades to come.
What is Illinois ASBO’s position? The Statewide Management Alliance (which also includes IASA, IASB and IPA) has remained neutral in regard to the bill. While the change in allocation may drive more state funds toward poor districts creating better equity in Illinois, changes of
Stay Connected! To get the best links to updated information and new developments, follow me at twitter.com/mjacoby and tune in to my legislative audio webinars. www.iasbo.org
| 9
WHAT WILL YOU
NETWORK EXPOSURE COMMUNITY EXPERTISE FRIENDSHIPS SUCCESS NETWORK EXPOSURE COMMUNITY EXPERTISE FRIENDSHIPS SUCCESS OPPORTUNITY PARTNERS REWARDS NETWORK EXPOSURE COMMUNITY EXPERTISE FRIENDSHIPS SUCCESS OPPORTUNITY PARTNERS REWARDS NETWORK EXPOSURE COMMUNITY EXPERTISE FRIENDSHIPS SUCCESS OPPORTUNITY PARTNERS REWARDS NETWORK EXPOSURE COMMUNITY EXPERTISE FRIENDSHIPS SUCCESS OPPORTUNITY PARTNERS REWARDS NETWORK EXPOSURE COMMUNITY EXPERTISE FRIENDSHIPS SUCCESS OPPORTUNITY PARTNERS REWARDS NETWORK EXPOSURE COMMUNITY EXPERTISE FRIENDSHIPS SUCCESS Learn How Service Associates Can Get Involved and Get Rewarded: NETWORK EXPOSURE COMMUNITY www.iasbo.tools/GAINS2014 NETWORK EXPOSURE COMMUNITY
GAIN
THIS YEAR?
SERVICE ASSOCIATE ASSOCIATE PARTICIPATION PARTICIPATION REWARDS REWARDS PROGRAM PROGRAM SERVICE
10 |
UPDATE Magazine / Fall 2014
PERSPECTIVE / SAAC Chair
FROM–THE–FIELD Weighing in on the Federal Lunch Program Are we opting out of the National School Lunch Program (NSLP)? Some of us have heard this question ringing in our ears all year. Illinois is different from other states regarding the NSLP, with multiple districts remaining off or opting out of the federal lunch program. A Prohibitive Bid Process Previously, the main reason for this was the state’s strict rules governing the bidding process. The regulations force districts to choose the lowest per meal price rate, taking very little else into consideration. Illinois is different from most states in that our school code prevents districts from Michael A. McTaggart PRESIDENT contracting a vendor who uses a cost plus program. In this type of program, the district has a QUEST FOOD MANAGEMENT say in the month-to-month or year-to-year specifications for food service. Throughout the course SERVICES, INC. of a contract, modifications can be made to better serve the students’ needs. Setting a bid specification to serve the entire length of the contract at a fixed per meal price, which normally lasts for five years, basically allows for no modification. SIMPLY SAYING
Illinois is different from other states regarding the NSLP, with multiple districts remaining off or opting out of the federal lunch program. An Open Door for Change The new Healthy Hunger-Free Kids Act has opened the door to some much-needed change. These changes included things like more fruits and vegetables replacing bread as a staple. Most believe this is a positive move forward, but the law has its critics. The new rules that went into effect this July set rules on everything sold between the hours of midnight and one half hour after the school day ends. Additionally, even tighter restraints are being implemented on fat, sodium and calories. According to the School Nutrition Association, these restrictions have led to even lower overall participation as more districts peek out from under the NSLP umbrella. Districts like Twp. High Sch. Dist. 214, which is not managed by a contract food management company, looked carefully at all their options and felt it was in their students’ best interest to “be able to provide students with nutritious meals and snacks that are balanced and offer variety to keep them satisfied.” The district believes that students will be better
served by staying on campus versus going off campus. They brought up examples of desired items like hard-boiled eggs and hummus that would not have qualified under the new rules. The board felt that they could offer nutritious meals without limiting choices so dramatically and voted to go off the NSLP. Financial Implications The financial implications of this trend remain unseen. Students eligible for free and reduced meals must, by law, be offered those meals with or without reimbursement from the federal or state government. The belief is that by offering more choices with fewer restrictions, food programs can remain self-sufficient. This has been proven time and time again by districts that have been off the program for years where the free and reduced percentage was less than 20%.
www.iasbo.org
| 11
CONTRIBUTORS
Cheryl M. Crates
Jessica L. Donato
Jim Grammas
Adjunct Professor Northern Illinois University
Business Manager Lincolnwood SD 74
Vice President Government Team BMO Harris Bank
Appointed to serve on the Financial Oversight Panel at North Chicago CUSD 187, Cheryl has taught school finance for over 30 years, received the Monarch Award from Illinois ASBO, the Eagle Award from ASBO International and was “Outstanding School Business Administrator” for the state of Arizona.
Earned her Masters of Science in Education from NIU and has worked in school business management for over ten years. She has served on the Illinois ASBO Delegate Advisory Assembly and currently serves on the Principles of School Finance Professional Development Committee.
ccrates@comcast.net
jdonato@sd74.org
Specializes in providing financial advice and customized solutions to local governments to meet their objectives. Jim works with municipalities, K-12 public school districts and other government agencies. He markets the bank’s financial products and services to governments in metropolitan Chicago. jim.grammas@harrisbank.com
Elizabeth M. Hennessy
Dean M. Langdon , Ed.D.
Kristopher P. Monn , Ed.D.
Managing Director William Blair & Company, LLC
Assoc. Executive Dir./Board Development Illinois Association of School Boards
Asst. Supt./Finance Batavia USD 101
Is the head of the school district finance team at William Blair. She has played an active role in innovative financings for school districts, state and local governments, community colleges, counties, special education districts, park districts, higher education institutions and health care providers. ehennessy@williamblair.com
Prior to his current position at IASB, worked as Field Services Director serving the Blackhawk, Central Illinois Valley, Corn Belt and Western Divisions. Dean has held positions as district superintendent, dean of students, assistant principal and business administrator. dlangdon@iasb.com
Has been an educator for 15 years including his current position at Batavia. Kristopher previously served on the Illinois ASBO Board of Directors and has chaired the Legal Issues Professional Development Committee for the past five years.
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UPDATE Magazine / Fall 2014
kris.monn@bps101.net
Anne E. Noble
Paul A. O’Malley, Ed.D.
Michael J. Prombo
Managing Director Stifel, Nicolaus & Company
Associate Superintendent Oswego CUSD 308
Asst. Supt./Business Services North Chicago CUSD 187
Has worked with school districts on financing needs from tax anticipation warrants to voted building bonds to the County School Facilities Sales Tax for 25 years. She is an active member of Illinois ASBO and currently serves on the Service Associate Advisory Committee.
Prior to District 308, Paul served at Niles Township HSD, responsible for facilities, construction, an annual budget of $140 million and a staff of 120. Paul began his education career teaching high school sciences and earned his Doctorate in Educational Leadership from National Louis University. He has also played baseball for the Houston Astros.
After a 25-year corporate career, Mike moved into education administration after receiving his CSBO at NIU. At North Chicago, he has helped the district implement changes as directed by the state-appointed Independent Authority and Financial Oversight Panel. He is working towards his doctorate degree from Aurora University. mprombo@d187.org
noblea@stifel.com
associate_superintendent@oswego308.org
Would you like to be an UPDATE Contributor?
Contributions to the UPDATE are solicited to enhance the content of the Magazine. If you have an issue you feel needs to be brought to the forefront, present your ideas to Angie Byers at abyers@iasbo.org. Issues are themed so your contribution may not appear for some time, or may be distributed in some other format. The issue themes we will be soliciting articles for next year include: • Legal Issues • Technology
• Facilities • Budgeting
We look forward to seeing new faces on this page as we continue to make the UPDATE an indispensable resource for school business management.
www.iasbo.org
| 13
Refunding Bonds: a
Debt-Restructuring Tool
Refunding Bond Basics The current interest rate environment has allowed municipal bond issuers to reduce their interest expense by refinancing their debt. Municipal bonds, unlike home mortgages, typically have a call date eight to ten years from the time of issue. Bonds may be refinanced or refunded in advance of the call date or at the current call date. Tax-exempt municipal bonds may be refunded on a tax-exempt basis only once in advance of the call date. Therefore, when considering an advance refunding opportunity, it is important to make sure that the net present value savings (after paying costs of issuance) are worthwhile. In the public finance industry, the rule of thumb typically used to measure the value of the refunding is present value savings (net of costs) as a percentage of the bonds refunded in excess of three percent.
The proceeds of an advance refunding are invested in a refunding escrow account held at a separate bank institution and invested in U.S. Government securities. The bond proceeds plus interest earnings in the fund must be sufficient to pay the costs of the refunding as well as the refunded principal and interest up to the call date. In the current interest rate environment, the low earnings in an escrow account will often make an advance refunding uneconomical. This is known as negative arbitrage. A current refunding avoids the cost of a multiple-year escrow account and pays down the callable bonds on the call date.
Savings Structures
$1600 $1400
*
Level Savings
$1600
PV Savings = $1,245,268
$1400
$1200
$1200
$1000
$1000
$800
$800
$400
$400
$200
$200
$0
*
2015
2016
2017
2018
Amounts in Thousands 14 |
UPDATE Magazine / Fall 2014
2019
2020
2021
2022
2023
2024
$0
*
2015
Upfront Savings
2016
2017
2018
2019
By Elizabeth M. Hennessy
FROM–THE–TABLE
MANAGING DIRECTOR WILLIAM BLAIR & COMPANY, LLC
Anne E. Noble
MANAGING DIRECTOR STIFEL, NICOLAUS & COMPANY
Debt Restructuring Options
Usually refunding opportunities are looked at solely with an eye toward savings. However, refunding bonds provides a key tool to school districts when it comes to restructuring debt, which often is closely related to managing tax rates. The type of restructuring varies according to the district’s goals and financial plan:
Acceleration of a District’s Debt
Typically, the purpose of such a restructuring is to save interest cost or prevent a tax rate decrease, which is achieved by increasing amortization of the bonds and paying off principal at a faster rate. This is ideal for a district with excess cash flow, as it directs surplus funds towards the payment of principal. The faster principal is paid off, the lower the interest expense to the district.
Extending a District’s Debt
This option lowers the debt service payments of the district in the immediate future, yet typically costs more over time as amortization is delayed. This may be desirable to help a district better manage its bond and interest tax rate. Additionally, a district can restructure current bonds to make room for bonds to finance a new project, thereby reducing the upfront tax increase associated with the bonds for the new project.
Managing the Tax Rate
This is often an instrumental part of restructuring. A district’s EAV (Equalized Assessed Value) trends play an integral role in determining which type of restructuring makes sense. Declining EAVs are a challenge facing districts across Illinois. Many districts’ existing bonds are modeled with increasing annual payments based on annual EAV growth assumptions that are higher than the current reality. The bond and interest tax rate is set by the county clerk(s) to cover the annual principal and interest payments of a district. If the EAV fails to rise at the rate originally projected, then this tax rate must rise.
Savings on refunding bonds can be structured as level in each year of the remaining debt, taken upfront or deferred or any variation thereon. Here are three different options on a $20 million savings refunding. $1600
PV Savings = $1,238,434
$1400
*
Deferred Savings
PV Savings = $1,343,631
$1200 $1000 $800 $400 $200 2020
2021
2022
2023
2024
$0
2015
Debt Service (Principal and Interest Paid)
2016
2017
2018
2019
2020
2021
2022
2023
2024
Interest Savings www.iasbo.org
| 15
There are three potential solutions to mitigate rising bond and interest tax rates in an environment of falling EAV:
»»Defease bonds (set aside funds in an escrow
account to prepay bonds) with funds on hand.
»»Abate a portion of the bond and interest levy
with bond and interest fund balances or other funds on hand.
»»Refund bonds and move current payments into the future.
The last solution does not necessitate a cash contribution from a district and is often considered in situations where a district’s cash on hand is low. Bond restructuring can lower the bond and interest tax rate, despite the reduction in EAV growth. As you might expect, this solution is not without cost. Extending the repayment of principal increases the overall interest expense of the bonds. Similar to extending a home mortgage from 20 to 30 years, extending bonds can provide short-term relief in bond payments and tax rate but will increase the long-term cost of the bonds. See the chart below for an example restructuring that smooths the tax rate of a district.
Bond Levy After Restructuring Pre-Refunding Levy
Post-Refunding Levy
0.600 0.500 0.400 0.300 0.200 0.100 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 16 |
UPDATE Magazine / Fall 2014
FROM–THE–TABLE / Refunding Bonds
By Kenya Austin
BUSINESS MANAGER COUNTRY CLUB HILLS SD 160
Other Refunding Considerations Escrow Investments:
When bonds are refunded in advance of the call date, the proceeds are required to be invested in U.S. Government securities in order to achieve a legal defeasance of the refunded bonds. The low yields on shortterm U.S. Government securities, however, often result in the escrow account earning less interest than is needed to make the interest payments on the bonds being refunded. This is known as “negative arbitrage.” An escrow account with negative arbitrate will require additional bond funds (over the amount of the principal being refunded) in order to defease/pay off the outstanding bonds. Negative arbitrage reduces the savings in an advance refunding. Investing in other municipal securities with higher yields helps to reduce the negative arbitrage and increase savings but may carry more credit risk. The district must also make sure its investment policy allows for investment in municipal securities and the district must carefully consider any credit risk.
Bond Repurchase:
If the district’s outstanding bonds are noncallable, typically there is no way to refund the bonds for savings purposes. Non-callable bonds may be refunded to maturity for restructuring purposes, but this can be costly. Alternatively, a district can make a tender offer to repurchase their own bonds from investors or simply repurchase bonds in the secondary market. As in any market transaction, it is important to do a market analysis to make sure the district pays a fair price on the open market for its bonds. There is no guarantee that the owner of a non-callable municipal bond will sell bonds back to the district. The district can use either cash or proceeds from a refunding bond issue to pay off the tendered bonds.
Forward Refunding:
A forward refunding can be an attractive option when bonds are not advance refundable but will be callable in the future. Forward refundings can be useful if there is the expectation that interest rates will increase quickly in a short period of time. A forward refunding allows the district to lock in savings at a set price with a closing delayed for up to nine months. Investors typically require a premium of five to seven basis points (.05% – .07%) per month as an incentive for accepting a forward closing. A forward refunding may result in greater savings than waiting until the current call date in a rising interest rate environment.
Before You Pull the Trigger
Refunding bonds provides districts a wide range of opportunities to reduce their interest expense and/or restructure current debt for a variety of goals, including managing the bond and interest tax rate and minimizing the impact of new bonds. Opportunities to refinance on a tax-exempt basis, however, are limited and districts should carefully consider when to pull the trigger on a refunding. Some factors to consider include:
»»Interest rate trends. »»The savings of an advance refunding compared with a
current refunding and the break-even in interest rate volatility between the two. »»The possible use of taxable refunding for non-advance refundable bonds. »»Splitting bond issues into less than 10 million dollar pieces to be “bank-qualified” to capture lower interest rates.
When it comes to refunding, clearly there are many factors districts need to weigh to make sure they are getting the best “bang for their buck.” FOOTNOTES 1.
Government Finance Officers Association (GFOA) recommends net present value savings as a percentage of refunded bonds should be between 3% and 5% (Analyzing and Issuing Refunding Bonds, February 2011).
DISCLAIMER The accompanying information was obtained from sources which William Blair & Company, l.L.C. And Stifel, Nicolaus & Company, Incorporated believe to be reliable but does not guarantee its accuracy or completeness. The material has been prepared solely for information purposes and is not a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. Historical data is not an indication of future results. The opinions expressed are our own unless otherwise stated. Additional information is available upon request.
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BUSINESS PARTNERS / ISDLAF+
BUSINESS PARTNERS INVESTING IN THE NEXT GENERATION FOR 30 YEARS (AND COUNTING!)
In 1983, changes in Illinois law brought about a new opportunity for school districts, giving township and school treasurers the flexibility to invest school funds. Recognizing the need for a fund uniquely suited to the needs of school districts, three statewide Associations – IASB, IASA and Illinois ASBO – convened the first official Illinois School District Liquid Asset Fund Plus (ISDLAF+) meeting in March of 1984. The fund was established with four of the nine trustees depositing a check for $100. The fund quickly grew, with 198 participants, a fund balance of over $58 million and over $138 million invested through the CD placement program after just two short years. Fast forward 30 years, the fund continues to grow rapidly. It now has 495 participants and counting, hitting a milestone of $8.1 billion under management in 2013 (compared to $3.9 billion in 2005). A HIGHER PURPOSE As the years have passed, ISDLAF+ has extended its mission to become more than just an investment opportunity for school districts. In 2002, a component of service and education was added, providing seminars on school finance hot topics. In 2007, four seminars were developed to run each year in the months of July, October, January and March. Although the seminars were originally intended to provide training for new and inexperienced school superintendents and business officials, they have also become popular with experienced administrators who come to share their expertise with the next generation. During the 2013 fiscal year, over 300 individuals from all over the state participated!
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UPDATE Magazine / Fall 2014
LOOKING TO THE FUTURE As the number of districts and assets continue to grow, the hope is to add more “value added” opportunities, the driving force for the continued growth and success of the fund. Whether it is money, time or expertise, district officials continue to invest in the next generation through participation in this Illinois ASBO sponsored program.
PLAN NOW TO ATTEND THIS YEAR’S ISDLAF+ SCHOOL FINANCE SEMINAR OFFERINGS OCTOBER 2014 Tax Levy: Truth-In-Taxation, Long Range Planning and Risk Management Issues. JANUARY 2015 Mid-Year Budget Review – A Case Study Approach, Salary & Contract Issues and Cash Flow Analysis & “Stress Testing” Your Cash Flow. MARCH 2015 Legislative Update, Symposium on Collective Bargaining and Current Hot Topics. For exact dates and event details, visit the Upcoming Events Calendar at www.iasbo.org.
PERSPECTIVE / On the Profession
SCHOOL BUSINESS 101 How has your district been affected and/or responded to the Affordable Care Act? Robert D. Beckwith
CHIEF FINANCIAL OFFICER, ROCK ISLAND-MILAN SD 41
A: We have a broker that handles everything with our insurance provider. We are using the broker to help with all the compliance. We actually are looking to go back to a self-funded program to avoid the taxes associated with the law.
Have a question or issue that needs to be addressed by School Business 101? Submit your ideas or questions to Rebekah Weidner at rweidner@iasbo.org
Joseph B. Daley
BUSINESS MANAGER, COMM. HIGH SCH. DIST. 218
A: We are going to utilize the look back period to check on all our part time staff. There is an increased cost from updating our time and attendance software to be able to run the correct reports. We are also looking to add a lower cost PPO plan as an additional option.
Terri L. Sharpp
DIR./BUSINESS & FINANCE, SPEED S.E.J.A. 802
Want to add to the discussion? Add your response in the Hot Topics Group within the peer2peer Network. Then, watch for the next School Business 101 discussion for a chance to be featured in the UPDATE Magazine.
A: I work for a special education coop so it’s a little different. We are making sure to monitor that employees are staying under the 500 hour limit and putting systems in place for that. Another issue is planning for the associated costs. In the past, employees opted out of our insurance program. Now, spouse plans are denying people, sending them back to us for coverage. The law has an impact on how we plan for the future with all the unknown changes that will be occurring.
Barbara Parse
HR/ PAYROLL, ITASCA SD 10
A: We work with our benefits provider to make sure that everything in our plan is in order. I do a file for every payroll for people utilizing time sheets to track when they are at or over 30 hours. I send the file to the director of operations and the superintendent.
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A Formula for Success?
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Over the years, the Legislature has created numerous committees, task forces and boards to evaluate the state’s education funding formula – the most recent being the Education Funding Advisory Committee (EFAC). This season’s legislative response, SB16 and SB589, are the latest attempt to develop an equitable solution, but still leave some major questions unanswered. UPDATE Magazine / Fall 2014
POINT OF VIEW
In Search of a Funding Formula
For years, the state of Illinois has struggled with providing adequate and equitable funding for public P-12 education. According to US Census Bureau Report “Public Education Finances: 2012”:
• Illinois ranks 4th among states when it comes to total revenue generated per pupil when adding up local, state and federal resources. • However, Illinois does not fare well regarding state and local funding, ranking 36th for state and 10th for local. It is clear that Illinois school districts rely too heavily on local funding. School quality is not the only deciding factor for families looking to integrate to a community; property taxes also weigh heavily on individuals’ housing choices. There is a long overdue need to overhaul the state’s educational funding formula, as the current method is inequitable for students and taxpayers. The legislature recognizes this need, as it continues to convene committees, boards and put forth education funding proposals. Two major bodies that have been created to aid in this effort are the Education Funding Advisory Board (EFAB) and the more recent Education Funding Advisory Committee (EFAC).
A Complicated Equation
The state currently funds P-12 education through a variety of different methods, the largest being the General State Aid formula. Other major funding line items include the mandated categorical grants, supplemental grants and the Chicago Block Grant. Each of these line items is further disaggregated into individual program funding, such as special education funding, transportation funding, bilingual grants, etc. Each of these program funds is then allocated using a variety of reporting methods from school districts to the state.
By Jessica L. Donato BUSINESS MANAGER LINCOLNWOOD SD 74
There is a long overdue need to overhaul the state’s educational funding formula, as the current method is inequitable for students and taxpayers. EFAB: Setting a Baseline
In December of 1997, the Illinois Education Funding Advisory Board was created for the purpose of making foundation level recommendations to the General Assembly. The foundation level represents the minimum level of per pupil financial support necessary to provide a basic public education while meeting the Illinois State standards. This funding is provided for in the General State Aid formula. Outcome: In 2002 the General Assembly fully funded the first EFAB recommendation of $4,560 per pupil. Despite its recommendations, the state can choose not to heed EFAB’s advice. The current EFAB recommendation is $8,672, however the foundation level is set at $6,119 and has been at that level since 2010. In addition to the foundation level being underfunded for years, the last several years the allocation has been prorated due to the state’s budget constraints.
EFAC: Rewriting the Equation
In the past year, the Illinois Legislature put together a special committee charged with examining the funding formula and creating a more equitable model for the disbursement of state resources. In July of 2013 Senate Resolution 431 (SR431) established the Education Funding Advisory Committee. Rather than setting a minimum amount of money per pupil necessary to fund a basic public education (EFAB’s charge), EFAC was charged with thoroughly reviewing the current system of education funding and making a recommendation to address deficiencies, specifically though the state aid formula.
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SR431 states that any proposal should ensure that school funding is adequate, equitable, prepares students for success after high school and supports teachers and school leaders. The resolution further states that the following criteria be included in the new formula: student populations, student needs, local wealth, transparency and accountability, with an outcome of predictable results. Potential Outcomes: The committee made several recommendations in answer to their charge. The major recommendation is to simplify the dozens of individual funding mechanisms into a single, weighted funding formula based on student population and then equalized by local wealth. All of the current state funding would be distributed through this single formula, except for early childhood grants, funding for capital projects and extraordinary special education. Their recommendations also: • Provide additional funding for special student populations. Groups identified for additional funding include at-risk, english-language learners and the majority of special education students. Each of these populations would be assigned a weight within the formula. If a student fits into multiple categories, the funding would be based on the sum of both weights. • Keep the current funding method for high-cost special education students. Also, an additional flat amount per pupil is recommended for gifted and talented students. • Guarantee a minimum amount of state money per pupil ($218). This reflects the current flat grant funding amount provided in the General State Aid formula. Other recommendations include higher expectations of school districts and greater accountability of how the dollars are expended. • Include a hold harmless proposal within the report that would allow districts to adjust for the new funding levels.
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UPDATE Magazine / Fall 2014 UPDATE
See the resources on pg. 44 for how to access a full version of both EFAB and EFAC’s reports. Proposed Legislative Action
Every year the General Assembly creates legislation that has an impact on school districts. In 2013 there were approximately 100 bills enacted that affected school districts. There are several more pieces of legislative action proposed each year that have potential future impact on school districts. This year was no exception – two bills were proposed that would have had major ramifications for school funding – Senate Bill 589 and Senate Bill 16.
Senate Bill 589
Over the last several years the General State Aid formula has been prorated by a flat percentage across all school districts’ allocation. This proposal amends the school code to move from this flat proration to a per pupil model. As the state continues to struggle with school funding, this method suggests a more equitable system of spreading the decrease in state school funding among school districts.
Senate Bill 16
Senate Bill 16 (SB16) was the legislative answer to the EFAC report. Although the bill did not become legislation this year, it contains several important factors that will continue to be included in future discussions on school funding. As recommended in the EFAC report, SB16 proposed a single school funding formula. The idea is to clarify how state funds are disbursed to schools. State resources would be distributed through a weighted formula, based on student need and local property wealth. The new funding method proposed a phase-in period to allow districts the ability to adjust to the new funding levels. This bill included a continuing and irrevocable appropriation from the Common School Fund.
POINT OF VIEW / EFAC
Initial analysis by ISBE shows huge gains for some and unrealistic losses for others. CHICAGO PUBLIC SD 299
ELGIN SD U-46
$(28,393,250)
$25,317,713
SCHAUMBURG CCSD 54
WAUKEGAN CUSD 60
COMM CONS. SCH. DIST. 15
ROCKFORD SD 205
COMM. UNIT SCH. DIST. 200
AURORA EAST SD 131
$(13,432,811)
$18,719,801
$18,598,495
$(13,066,448)
$(9,821,409)
Districts with Largest Amount of State Funding Loss
Shortfalls of SB16 Recent legislative actions have definitely ignited the conversation on funding disparities. However, SB16 has many shortfalls:
1. It would cost more than the current state
funding formulas. If the state is struggling to pay current obligations, where would the funding come from for an increase in education funding? Since FY09, Illinois’ P-12 education funding has been reduced by $861 million.
2. The use of local wealth in the single funding
formula. Local wealth will need to be redefined, so that it is a true measure of what school districts can access, given the property tax cap. No other state uses local property wealth in the state funding formula.
$15,828,563
Districts with Largest Amount of State Funding Gain
No Unanimous Answer
Although there is a clear need to overhaul the state’s educational funding formula, it appears there is still no unanimous answer. The state legislative bodies continue to struggle with how to provide an adequate and equitable educational funding formula across the state. Part of the problem is that any solution will have its share of “winners” and “losers.” If some school districts are going to be sacrificing, what is the balance to the equation? Mandate relief? Local districts should be granted the opportunity to exercise more local control over instructional decisions. Tax cap relief? Most districts are already accessing the maximum amount allowable in their tax levies. Where will the shortfall from state funding be equalized in the budgets? Significant change to the school funding formula that is both adequate and equitable will require strong leadership from the state legislative bodies and fiscal sacrifice from many school districts. With this in mind, it is vital that boards of education and school administrators are aware of the significance that the actions in Springfield have on local school districts.
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Maximizing return on investments is important to any organization. For school districts dealing with higher expectations against the backdrop of tighter budgets, it is absolutely critical. 24 |
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COVER STORY
By Jim Grammas
VICE PRESIDENT GOVERNMENT TEAM BMO HARRIS BANK
A Balancing Act MAXIMIZING INTEREST INCOME
Generally speaking, school districts may not feel that they have the time, expertise or resources to explore all of their possibilities for maximizing interest income. For school districts the end result is money left on the table at a time when Illinois school districts can ill afford it: • Districts have to comply with dozens of unfunded mandates. • After the November elections, districts will likely find themselves facing significantly less funding from the state. Many districts choose to have a third party manage their investments, typically in fixed-rate products. While this is certainly a viable solution, districts cannot rely on a single third-party partner or investment strategy. To get the most out of cash, it is crucial to broaden investment strategies and that includes expanding the network of financial services providers.
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Expand Your Outlook
Explore New Opportunities
When it comes to investments, most districts focus on the short-term, timing investment maturities to actual cash needs. But in the continuing low interest rate environment, short-term instruments such as certificates of deposit and money market accounts don’t always provide the returns school districts demand.
Most districts focus on the short-term simply because that is the way they have always done it. A few years ago, when school districts had extra cash, they were earning higher yields on short-term instruments, so it was not a strategy they needed to reexamine. Districts always invested in bank products, such as one-year CDs.
Other short-term vehicles can provide higher interest returns, such as tax-anticipation warrants (TAWs). School districts not only receive interest on their investment, they help provide another school district with cash flow funding between tax revenue collection periods. Between 2010 and 2012, for example, Lemont HSD 210 purchased TAWs three times from neighboring Lemont-Bomberck SD 113A.
However, conditions have changed and that means districts need to find ways to adjust to the new realities of both their cash flow and the investment market. Amendments to the Illinois Public Funds Investment Act, which took effect on January 1, opened up additional investment opportunities. Illinois school districts can now purchase municipal bonds, for example, which deliver significantly higher yields than CDs.
Commercial paper, short-term debt issued by a corporation, is another attractive option. Because commercial paper is not usually backed by any form of collateral, it is typically only offered by firms with highquality debt ratings, which minimizes your risk. These higher-return options notwithstanding, too many districts focus on the short-term at the expense of the long-term outlook – an approach that can also end up leaving money on the table. By better understanding their cash flow, districts could take advantage of long-term investment tools as well.
Illinois law stipulates that at the time of purchase, the bonds must be rated “within the four highest general classifications” established by a nationally recognized bond rating agency. You will want to invest in governments with ratings that align with your risk tolerance in order to better to mitigate your risk.
Other investments school districts can take advantage of include: • Local government investment pools – instruments that allow public entities to invest in public funds. The Illinois School District Liquid Asset Fund Plus invests in money market instruments with a maximum remaining maturity of one year. It also offers a fixed income investment program that includes CDs and commercial paper. The fund is designed to provide safety, liquidity and a competitive yield. • Agency securities – low-risk debt obligations that are issued by U.S. government-sponsored entities (GSEs) and other federally related bodies.
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• Brokered CDs – CDs purchased through a brokerage firm. Because they are in a more competitive market, these types of CDs usually cost more than bank offerings. • Repurchase agreements – used to raise short-term capital, in which the dealer sells the government securities to investors, usually on an overnight basis and buys them back the following day.
COVER STORY / Maximizing Interest Income
Review Investment Policies The main reason districts do not look into new investment tactics is because they do not review their investment policies often enough. At a minimum, districts should review policies annually. Along with helping determine which investments are working and which are underperforming, a regular review can help determine if there are changes in regulations that provide districts with new investment opportunities. Additionally, those new vehicles can help expand the network of investment advisers, including commercial banks. Some practical examples of districts putting this into practice include:
Schaumburg CCSD 54 According to Ric King, Asst. Supt./Business Services, “The lack of decent short-term rates has shifted our policy of hitting target dates in the short-term to leaving lots of money liquid.” King says that instead of large-block collateralized CDs, District 54 has started using municipal bonds and higherrate money market accounts with withdrawal restrictions as short-term investment vehicles. He adds that in today’s short-term rate environment, districts need to be flexible with investment dates and manage their cash flow accordingly.
Comm. Unit Sch. Dist. 200 – Wheaton, IL CUSD 200 realized it needed a shift in its investment policy. Maureen Zyburt, Comptroller/Treasurer, says the district had been investing mainly in collateralized CDs. But with market conditions unfavorable to short-term CDs and U.S. Government Treasuries, the district began expanding its portfolio to include commercial paper and special deposit accounts. Zyburt recommends that other districts remain open to additional investment options and providers: “Continue to network, ask your investment providers if there are any special offerings and be as flexible as you can in your cash flow requirements.”
Too many districts focus on the shortterm at the expense of the long-term outlook – an approach that can end up leaving money on the table. www.iasbo.org
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Understand Your Collateralization Guidelines Reviewing the collateralization guidelines within your investment policy can put your district in a better position to generate interest income down the line. When a district allows municipal bonds as acceptable collateral, for example, your bank can be more flexible in pricing investments. That is because the bank is now able to hold and earn interest on an asset earning a higher yield compared with today’s agency and treasury returns. Although you want to maintain a policy that reflects your risk tolerance, expanding the list of approved collateral could benefit your district in the long run. Another factor to consider is where your district chooses to hold the collateralized securities for safekeeping. If you require that they be pledged through the Federal Reserve, your bank cannot use the higher yielding municipal bonds and may be less aggressive when pricing investments and services. A conversation with your bank regarding safekeeping alternatives is a small step, but one that could lead to better returns in the future. When reviewing your policy, it is also wise to examine what your peers are doing. Every district’s investment policy is public and knowing what your peers are investing in can help you develop ideas for your own district.
Getting the Right Balance By expanding your network and reviewing your policies, you open yourself to additional investment vehicles that you might not have been aware were at your disposal. You might also find that those options can help boost your return both in the short-term and long-term. In today’s challenging environment for Illinois school districts, these are opportunities you cannot afford to ignore.
A regular review can help you determine if there are changes in regulations that provide your district with new investment opportunities. BMO Harris does not provide tax or legal advice. You should consult your attorney or your tax consultant for tax or legal advice. Banking products and services are provided by BMO Harris Bank N. A. BMO Harris® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC.
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COVER STORY / Maximizing Interest Income
KEYS TO MAXIMIZING INTEREST INCOME When determining how to maximize your district’s interest income, school district treasurers should: • Discuss your investment policy with your financial adviser and your attorney. • Expand your network of financial advisers to include your commercial bank.
• Examine long-term investment opportunities. • Examine ways to improve your cash flow management. • Understand the impact of asset collateralization.
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T
here was a day when parents only had to shell out a few bucks for lunch and classroom supplies in order to get their children through a public school year. That day is long past. Declining tax revenues, reductions in state aid and rising personnel costs have forced school districts across the nation to begin charging fees for classes, services and programs that were once offered for free.
TO FEE
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UPDATE Magazine / Fall 2014
By Paul A. O’Malley, Ed.D.
ARTICLE
Or T
ASSOCIATE SUPERINTENDENT OSWEGO CUSD 308
TO FEE
he Ri sing Cost of Sending Kid s to School
It is not unusual for families to have to cough up a couple hundred dollars at the beginning of every school year before their child even walks through the front door of a school. To keep abreast of rising costs, school districts have also been forced to begin charging fees for textbooks, workbooks, iPads, driver’s ed., science kits, art supplies and materials and even student parking.
Regular Fee s
To simply register their child for school, a parent is charged a registration fee that can range upwards of $250. When you tag onto that fees for lockers, uniforms, technology, yearbooks and PTA, enrollment costs could reach $500 before even registering for a class.
Cla s s Fee s
While a Common Core English class may be offered without an extra charge, an honors course or an advanced placement course comes with a very steep price. In fact, one parent at a recent meeting told her district’s board of education “It doesn’t pay to be smart,” as she noted the extra fees she was taxed with as a “reward” for her child to take advanced classes. Advanced placement courses can cost upwards of $150, in addition to the cost of testing.
A
D ilem ma for Parent s and D i st rict s
So parents face a dilemma. The more impressive your student’s academic transcript, the more likely your student is to receive college grants and scholarships. The pressure is on to academically excel, all while participating in as much as possible. No parent wants to deny their child the opportunities available to them because of financial burdens. But most families are already taxed to the breaking point and they turn to the schools with the expectation that a free and appropriate public education means just that – free. Districts also face a dilemma. What are their options when state funding is drastically cut and costs are drastically rising? They can raise the tax levy and spread the burden across the community. Yet, some would argue at what point is it the community’s responsibility to pay for a pottery class, chess club or water polo? What is the extent of the taxpayer’s obligation?
E xt ra Cu rricular Fee s
These price tags can carry the biggest sticker shock of all. In an effort not to cut athletic and band programs, schools have begun to pass the fees through to parents in the way of “pay to play” fees. It is not uncommon for participation in football, cheerleading, track or wrestling to cost over $500 per year. Want to join the chess club? That will be $200. Want to join the debate team? Cough up fifty bucks. www.iasbo.org
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W
ith all th i s in m i nd , it i s t ime for school di st rict s to get c reat ive to f ind ways to meet the expectat ion s of parent s , student s and the com mu n ity. Over the past few years alone, Oswego CUSD 308 (District 308), like many other districts, has experienced a loss of approximately $11 million in general state aid. With the downturn in the economy, new housing construction has slowed or stopped altogether, decreasing tax revenue. Schools are left with very few choices for recouping lost dollars. District 308 has chosen to help defray some of the costs of fees for its students and families. The district directly invests in its academically talented program by covering the test fees students in other districts have to pay. No longer is a student discouraged from taking an advanced placement course due to daunting fees. Although the district anticipates a $200,000 loss in revenue because of this pilot program, the investment in our students far outweighs the cost. District 308, like other districts, also picks up the tab for registration fees for students from low-income households. The state provides concessions for low income families and therefore the district feels it is important to mirror that model to provide for equity amongst its students. It is important that students, regardless of income, stay engaged and connected.
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The following are some solutions that have aided District 308, as well as many other districts in solving the fee issue for their programs:
Community Partnerships
District 308 has formed a partnership with the community park district. In building our schools, efforts were made to incorporate parks into our athletic fields and the park district maintains the upkeep of these fields. By doing this, the district is able to defray the cost of upkeep. One less dollar spent on the football program is one more dollar that can be spent on academic programs like advanced placement courses.
Corporate Sponsorships
A number of school districts have turned to corporate sponsorships to help cover the ever-increasing costs of their athletic programs. A school district in Tacoma, Washington, expects to reap $106,000 a year after adding paid advertisements to its video scoreboard, which cost $400,000 to build.
ARTICLE / Student Activity Fees
Booster Clubs
Districts have also turned to booster clubs in order to fill their coffers, not only for athletics but also for extracurricular programs and activities like band and foreign language clubs. Booster clubs across the nation are adept at raising funds via concession stand sales, craft shows, raffles, car washes, etc. A high school in Fraser, Michigan raised $45,000 to eliminate fees for its district’s student-athletes
Fundraising
Some districts have turned to the old standby of fundraising. Coaches, athletes, parents and students have joined together to raise millions of dollars for their districts. For instance, a school district in Mount Vernon, New York was able to raise nearly $1 million in community donations after school officials cut the district's athletics programs.
Foundations
District 308 has taken advantage of many opportunities to create program funding, forming partnerships with foundations like the Oswego Foundation for Educational Excellence and with local athletic boosters, as well as working closely with PTAs and other local parent groups to help raise additional funds for school programs and activities.
Parents want their children to have a rich and well-rounded high school experience and are usually willing to foot the bill for the added expense when they are presented with options. Payment plans are one way of easing a parent’s monetary burden. A $700 bill is not so daunting when spread out over a ten-month period.
Bridging the Gap With state funding decreasing and education costs increasing, this problem is not going away. Administrators, staff and parents are going to have to work together to bridge the financial gap without sacrificing programmatic opportunities and ensuring equality among our students. Will fees be assessed individually, will there be a flat fee payable by all or will the state come up with different revenue sources to help alleviate the burden on parents? Over the long run, it is going to be up to school districts to investigate how fees best fit within the expectations of parents and academic leaders.
When Choosing “To Fee” Districts should also consider that parents may not be opposed to paying fees, but simply want a more thorough explanation for what it is they are paying for and options on how to pay it. One of the biggest complaints from parents is the lack of clarity on mandatory registration fees. Many times districts lump fees into one generic category and pass it through with no explanation. Frustrations can be alleviated once a parent understands where their money goes and what it provides for their child. www.iasbo.org
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1. Com munic ation
6
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2. Mu tua lR esp e
y
THE TRUSTED O F S S F E I C N I I AL S U B
5.
n tio a orm Inf
ng ari h S
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Keys to Being an Accountable and Approachable Asset to Your Board 34 |
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ARTICLE
By Dean M. Langdon, Ed.D.
ASSOC. EXECUTIVE DIR./BOARD DEVELOPMENT ILLINOIS ASSOCIATION OF SCHOOL BOARDS (IASB)
Kristopher P. Monn, Ed.D. ASST. SUPT./FINANCE BATAVIA USD 101
Seven citizens are selected by popular vote with no particular experience or education related to public schools other than that they have an interest and a motivation to serve. Individually, they want great programs for their kids and reasonable taxes for their neighbors. As a group, their meetings are full of spirited debate and strong opinions, with the occasional dash of local drama – all in full view of the public. As a school business official, you may feel as though you are indeed the elephant on the cover of this edition of UPDATE. These challenges notwithstanding, local school governance is foundational to our democracy. The people in the best position to make critical decisions regarding the community and its children are local officials. What does this mean for the school business official? You report to the superintendent but you are also accountable to the board of education. As a teacher, an expert, a leader and a collaborator – it’s a balancing act. Let’s step back and consider governance and how you can improve your own practices to impact the leadership team.
As the one employee that is hired solely by the board, the superintendent must 1. Always keep your always have any and all information superintendent in the school business official needs to get to the board. Remember, part of the loop. being an effective member of a school district leadership team is making sure your team members have the information they need to be successful. Sending critical information directly to the board without keeping the superintendent in the loop leaves your team
member at a disadvantage and the whole team could suffer. Any expectations regarding communications with board members should be clarified by your superintendent. Some want to be involved in every detail and others prefer to delegate. His or her leadership style will most likely determine how the administrative staff interacts with the board during regular meetings, committee meetings and individual discussions.
Keeping your superintendent in the loop does not mean that you can’t have contact with the board members. IASB regularly teaches new board members 2. Get to know your that they should interact with other staff through the superintendent, not board members and around. In some cases, however, board members may not always follow that their interests. protocol or it may seem overly formal to do so. While some boards have formal communication agreements in place, others have never considered the issue. In any case, communication is key as you will want to be viewed as approachable and an important resource to your board members. When provided the opportunity, getting to know board members and their interests will help build a solid foundation of mutual respect and trust. When situations arise throughout the year, those relationships can prove invaluable in helping the school business official have difficult conversations with the board.
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As mentioned earlier, board members want great programs and responsible finances. 3. Remember job is to transform that vision into reality, especially when it comes to allocating that the board owns Our and protecting the resources of the district. As the chief financial officer, you will the vision and the be expected to make recommendations regarding the programs and projects of administration holds the district. Your job is to provide an honest assessment of the current finances, a projection of resources needed and an analysis of the consequences of such a the action plan. decision. You may have your own opinion regarding the necessity of that new field house, building addition or swimming pool (and you may be asked to express it) but it is the board who must decide what it wants for its community schools. Performing your supporting role in board decision making will make you an invaluable member of the governing team and lead to the best decision for the community.
Monitoring organizational performance is a key board responsibility – one that should be 4. Assist the encouraged by the school business official. After all, the community has placed its two board in their most important resources in the hands of the public schools, its money and its children. responsibility to hold We all know the board should ensure the district spends within the parameters of the budget, levy the taxes needed to operate its schools and programs and protect assets the organization through policy related to inventory, internal controls and risk management. Obviously, accountable. the business office should be front and center throughout these examinations – providing information and clarification. The board, however, has an often-overlooked obligation – to express its expectations up front so the administration and staff can meet them. This discussion of expectations is important to learning the board’s direction regarding fund balances, the need for borrowing, the use of credit cards and a wide array of financial policy issues. After all, the district staff can’t be held accountable to standards that have yet to be articulated. The school business official can be an important player in recommending these policies to the full board, the first step in organizational accountability.
The board is most effective when they act as a cohesive group that has a shared vision and a mutual 5. Information understanding of what steps the for one, means administration plans to take to information move the organization toward that vision. Communicating information for all. to individual board members may seem like a common, simple response to inquiries, but it can lead to frustration from the other members if they are asked to make a decision without as much background as their peers. On occasion, individual board members may request specific information or need a meeting to
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discuss an issue. In these cases, it is important for all board members to see the business official as a professional resource not a personal confidant or ally. Any opportunity to meet with you ought to be afforded to all members (be aware of the Open Meetings Act). School leaders should do their part to ensure the board acts as a cohesive group by treating them as such: information for one member means information for all. Additionally, any meeting with an individual board member should be for the purpose of board member learning – not decision making. The only decisions directing the staff are those that take place at a legally convened meeting of the full board of education.
ARTICLE / Board Governance
For many years, school boards were filled with long-time members that had seen the cycle of the 6. Always be school year so often that most teaching and issues needed little explanation or reviewing. discussion. Those days are mostly behind us. Whether your board is new or experienced, the constantly changing face of education and the local officials that lead it is requiring school business officials to slow down and teach board members about the gritty details of school finance. Every meeting is a teaching opportunity and every election grants you the opportunity to start anew.
This teaching does not stop at the board level either. More citizens are following the details of public finance than ever before, so when we teach the board, we are teaching the whole community. This shift means that communication and presentation skills are vital for a successful school business official. Take a fresh look at the reports you provide to the board. Are they understandable to the average citizen? Do they convey the message you intend to send? These board level presentations may provide you with a means to communicate school finance with the greater community.
TRAITS OF A TRUSTED SCHOOL BUSINESS OFFICIAL
The trusted business official will have a long successful career regardless of the financial challenges faced by the district. What does this person look like from the board’s perspective? • • • • • •
DELIVERS A STRAIGHT-FORWARD MESSAGE to display truthfulness and honesty. SPEAKS UP EARLY AND OFTEN regarding the issues (especially when financial challenges loom). BEHAVES WITH TRANSPARENCY AND CONSISTENCY to demonstrate that public funds are in reliable hands. RESPECTS THE BOARD’S OVERSIGHT ROLE to indicate that accountability is valued. DEMONSTRATES STRONG COMMUNICATION SKILLS within the team. BUILDS SINCERE RELATIONSHIPS WITH THE BOARD so they are seen as dependable and approachable.
Just as the business official holds the staff accountable, the CFO should value the accountability function performed by the board of education.
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SCHOOL DISTRICT REFRESH When the State Takes Over
While having the Illinois State Board of Education (ISBE) take over a local school district may sound horrible, it can actually be in the best interest of both taxpayers and students. In the case of North Chicago CUSD 187, ISBE tried to help the board and administration see the failing of the district in both financial and student performance issues, but they simply would not listen. The district had been spending in the red from 2007 to present day (except for 2010 when they issued an alternate revenue bond thereby pledging future revenues). It has been in review, watch or warning on the state financial profile during the same period. Unfortunately, the student performance has remained low and a major concern to the State Superintendent and ISBE. There have been 15 superintendents since its formation and it has experienced rapid turnover in most administrative positions leading to dysfunction. All that being said, it was high time to hit the “refresh� button. 38 |
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ARTICLE
By Cheryl M. Crates
ADJUNCT PROFESSOR NORTHERN ILLINOIS UNIVERSITY AND FINANCIAL OVERSIGHT PANEL NORTH CHICAGO CUSD 187
Michael J. Prombo
ASST. SUPT./BUSINESS SERVICES NORTH CHICAGO CUSD 187
TIME FOR A REBOOT ISBE contracted with six highly respected educators in the state to conduct a needs assessment for District 187. The ten critical governance and administrative issues were: 1. Board of Education needed to establish a clear understanding of their roles and responsibilities and adhere to their fiduciary responsibilities. 2. Administrative Technology was terribly outdated and inefficient and the district needed a highly qualified director. 3. Facilities had no utilization plan to maximize use of facilities and no clear job descriptions for maintenance or custodial staff. 4. Transportation costs were double the state norm. 5. Finance and Operations had allowed a high-risk financial plan and taken on unstable personnel. They had failed to institutionalize a sense of budget with the administration or the board. Procurement and distribution to support teaching and learning was lacking. There was a lack of long term planning and major deficiencies in grants and claims management. 6. Administrative Leadership was perceived as dysfunctional and no support was evident for principals, central office administrators or the superintendent.
7. Teaching and Learning had no consistent curriculum across the content areas and best practices for the certified staff evaluations process were missing. Decision making was not data driven and there was no district-wide student discipline plan. 8. Food Service was not supplying appropriate breakfast and lunch options that met current nutritional standards. 9. Special Education and Bilingual Education had no standard operating procedures and communication systems were dysfunctional. The RTI was not clearly integrated to the Special Education program. The ELL personnel were not meeting NCLB Highly Qualified requirements and comprehensive programming did not exist. Both needed improved technology to support student informational systems. 10. Human Resources needed to hire a director and there was no plan to ensure appropriate levels of staffing across the district. General poor record keeping and lack of current job descriptions coupled with no process to monitor and supervise the evaluation process. There was a lack of contract policy and procedures and no plan to ensure highly qualified staff in every mandated position as outlined by NCLB.
NORTH CHICAGO CUSD 187 PROFILE • Formed in 1989 as a consolidation of elementary and high school districts. • Serves roughly 4,132 students from preschool to high school.
• In 2010 they had one preschool, seven elementary schools, one sixth grade school, one junior high school and one high school. • Located approximately 40 miles north of Chicago.
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COMPONENTS OF CHANGE
To meet the challenges of the needs assessment, the district embarked on a long and arduous journey to change an infrastructure that had been neglected for decades. They started to identify and implement sustainable and measurable systems, realizing that it would take years to correct problems that took years to create. The following changes addressed the ten major issues: 1. Board of Education • ISBE appointed five members to the Independent Authority (IA) to act as the elected school board, volunteering to serve a three-year term. Three members are residents of North Chicago. • ISBE appointed five members to the Financial Oversight Panel (FOP) to oversee district finances, voluntarily serving a three-year term. Three members are residents of North Chicago. • IA and FOP member training was conducted by the IASB to instruct members in education and labor law, financial oversight and accountability and fiduciary responsibilities. 2. Administrative Technology • The high school and the middle school have one-to-one Chromebooks. • Laptop carts will be in place for every grade level at the four elementary buildings. • Promethean Board, or similar technology, will be in every classroom in every building in FY15. • Installed VoIP at the high school and will complete the VoIP at the remaining six buildings through the use of e-Rate dollars. • Installed Follett Destiny software to track library books and textbooks. • Moved to Gmail that offered free backup archiving, which also fit with other Google Drive products that increased collaboration among teachers and students.
3. Facilities • Completed RFP for custodial, maintenance and grounds services to be under one vendor, at a cost savings of $300,000 annually (24% cost decrease). • Weekly meetings established with the custodial/ maintenance vendor along with other key vendors to ensure consistent communications and expectations. • The district closed three elementary buildings due to declining enrollment in the last two years and is going to grade centers. • Instituted buildings and grounds request agreement and consolidated building usage decisions under the business manager. • Partnered with North Chicago Community Partners and the American Heart Foundation, completely renovating the libraries at all four elementary schools. 4. Transportation • Completed an RFP for outsourcing all transportation in FY15, both Type I and Type II, allowing the district to operate efficiently and netting an annual savings of $340,000 (18% decrease). • Reduced the Hazardous Crossing list down to three, saving the district approximately $100,000.
TAKEOVER TIMELINE MAY 2010
NOVEMBER
NOVEMBER 2011
ISBE met with the North Chicago Board 2010 ISBE’s appointed liaison issued a letter of concern regarding and central office to discuss a Voluntary following the terms of the Cooperative Agreement, Voluntary Oversight Agreement. Oversight listing board member training, communication and Agreement became official. lack of administrative follow through.
2010
JUNE 2010
2011
Against the advice of ISBE, the district borrowed $41 million of Taxable General Obligation School Bonds (Alternative Revenue), pledging future Federal Impact Aid Revenue. The declining Federal Impact Aid revenue and the over $4 million annual repayment of the bonds from annual operating expense was added to the district’s annual deficit. 40 |
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ARTICLE / When the State Takes Over
5. Finance and Operations • Planned and implemented a new business office and HR system over a 1½ year period. The RFP required all bidders to complete a 3,500-item checklist, known as the TEC Checklist, to ensure the chosen software met or exceeded all requirements. The new software will better track costs, personnel, professional development, employee information and reporting and has resulted in a 33% decrease in audit service fees. • Revised entire registration process resulting in accurate student data for first day of class, which had not occurred in the past 15 years. • A district registrar position was created from a current position to handle all incoming students and the annual registration of current students. • A registrar assistant position was created to establish and maintain a centralized records storage system. 6. Administrative Leadership • ISBE appointed a Chief Education Officer, who keeps in constant contact with ISBE. • The administrative leadership was changed and the organization chart and responsibilities were reorganized to better meet the needs of the district. • Weekly cabinet meetings are held to discuss issues and corrective action. • Monthly meetings are held with principals and other school staff.
JUNE 2012
Financial Oversight Panel (five members) was appointed by ISBE.
7. Teaching and Learning • Changing the four elementary schools from grades K-5 to grade-level centers to two buildings servicing pre-kindergarten to 2nd grade and two buildings serving grades 3-5. • Obtained a three-year $6 million School Improvement Grant to change the culture, climate and curriculum at the high school. • Through generous donations from a community partner, implementing a new K-8 math curriculum in FY15. • Launched a unified elementary schedule and increased instructional time by 30 minutes at the elementary level, 45 minutes at the middle school level and 15 minutes at the high school level. • Established a partnership with Rosalind Franklin Medical School to provide a pre-medical curriculum at the high school. • Formed a partnership with College of Lake County to open up a dual enrollment program. • Implemented PBIS to address student discipline. 8. Food Service • Implemented a new food service Point of Sale system that would scan student IDs, track payments and students’ meal status and generate invoices and NSLP claim data. • Replaced existing food service company with an organicbased food service management company at an annual savings of $125,000.
JULY 2012
SEPTEMBER 2012
Independent Authority (also five members) was appointed.
PMA was hired to help with short and long range financial forecasting and gave their first report to the both the FOP and IA.
2012
MAY 2012
A letter was sent to the superintendent indicating that ISBE was terminating the Intergovernmental Cooperative Agreement and planned to have the Regional Superintendent of Schools terminate elected school board members effective July 1, 2012.
NOVEMBER 2012
Ben Martindale was appointed by both boards as Chief Education Officer and the current superintendent was released from his contract. Both boards went through a selfevaluation with the help of the Illinois School Board Association. www.iasbo.org
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ARTICLE / Special Education Transportation
9. Special Education and Bilingual Education • The new director of student services held a “Teacher Special Education 101” to formalize all paperwork related to IEP meetings, domains, annual reviews and evaluation meetings. • Constant meetings with ISBE to ensure compliance and plan monthly professional development. • Monthly meetings with the building administrators to plan the roll out of new and revised documentation and paperwork to staff. Met monthly with each service group to refine paperwork. • At the end of year one, ISBE reviewed student IEP files, many going back to 2008 and began closing student files, correcting various compliance issues. • In year two, implemented a new IEP software system to better track the special education data uploaded to the state. After almost two years, many findings have been closed. • For ELL services, a new director led a district team to assess the program, resulting in an ELL Working Plan to address the areas of concern by priority. • ELL programming was revamped at the middle school and program delivery and language allocation was reconfigured at the elementary level. • Targeted professional development was planned and included a one-week ELL Teacher Academy along with ongoing training. • Student identification and placement has been aligned to state guidelines and ELL services and procedures communicated throughout the district. • Partnerships have been established to serve students and parents through the creation of the Bilingual Parent Advisory Council (BPAC).
A FRESH START
10. Human Resources • Implemented a new human resources management system that will allow the district to manage position control, employee data, leave reporting, workflow, etc. • Created a contract template to ensure consistency with the employment contracts of the principals, assistant principals and deans. • A new teacher performance assessment tool was developed to meet the requirements under SB7 and PERA. The Danielson framework assessment tool is automated, assisting administration in rating teacher performance. • A new job posting process was developed so internal employees are not missed in the application review process. • A formalized staffing plan was developed and is reviewed each year to determine staffing. • A new employee handbook was developed. • The district is installing a new employee ID system will require all ID’s to be issued by human resources so titles are accurately displayed, ID numbers are noted and current photos are included. • New Absent Reason codes were created to link with AESOP and the payroll module. • Staff members are reviewed each year and assignments given based on staff’s license, endorsements and highly qualified status. • A new job description format was created.
The district has made tremendous progress from the point of the initial state takeover. By installing an infrastructure and systems that are sustainable and can function on their own, the district will better able to cope with the ups-and-downs that face every district in Illinois.
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RESOURCES A little happy goes a long way This message of The Happiness Advantage isn’t just for those who already have a positive, “happy” disposition. As author Shawn Achor asserts, there are actually ways to re-program our brains to gain a competitive edge. The work of brain change According to an array of research from cab drivers to caged monkeys, brains can actually change and even expand over time to increase our potential. However, this requires some work. Achor outlines seven principles anyone can put into practice. When it comes to happiness and success, we’ve got it backwards. Conventional wisdom tells us that hard work brings success and therefore happiness. Yet, each victory brings new goals that push that happiness further over the horizon. What if we turned this formula around? A new field known as positive psychology is doing exactly that, proving in study after study that a positive outlook actually fuels performance and achievement and not the other way around.
Think about your day-to-day work. Do you view it as a job, a career or a calling?
One principle, “The Fulcrum and the Lever” focuses on changing performance by training our minds to process our surroundings differently. What if, for example, we decided to view meetings as learning opportunities rather than time wasters? Think about your day-to-day work. Do you view it as a job, a career or a calling? A school janitor could enter workday begrudging the tasks they have to do, or inspired that they get to contribute to a better learning for students. This attitude difference will ultimately predict a difference in work performance. The power of positivity It is scientifically proven that positive emotions activate learning centers within our brains, making us “more thoughtful, creative and open to new
On My List The Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work By Shawn Achor
Overview: Happiness is more than a mood – it is a work ethic. When applied, this principle can change brains, workplaces and lives for the better, leading to less sick days, better evaluations and for some even higher pay. In The Happiness Advantage, Shawn Achor summarizes two decades of revolutionary research that began at Harvard University and has now reached everyone “from global financiers to gradeschoolers, surgeons to attorneys, accountants to UN ambassadors.”
ideas.” These boosts of happiness can come from anywhere – a short break to soak in the sun, YouTube video or word of encouragement. When organizational leaders embrace this, whether by investing in wellness programs, adding scooters to the hallways (like Google) or creating a culture of praise, the ROI is proven. And although it starts at the top, it doesn’t end there. With each person that embraces these principles, there will be a ripple effect that will trickle its way through your entire district or company.
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A Balancing Act:
Get the Most From Limited Resources
Break Down Your Refunding Options See the full article by Anne Noble and Elizabeth Hennessy on pg. 14.
GFOA Best Practice: Analyzing and Issuing Refunding Bonds Includes important definitions, key considerations and policy guidelines.
CDFA Spotlight: What are Advance Refundings and How Do They Work? Explains current and advance refundings and their differences in more detail.
Get the Full Reports: EFAB and EFAC After reading the education funding article by Jessica Donato on pg. 20, go deeper by finding these two reports.
Senate Education Funding Advisory Committee Report Submitted to the Governor and Illinois General Assembly in January 2014.
Illinois Education Funding Recommendations by the Education Funding Advisory Board Submitted to the Governor and Illinois General Assembly in January 2013.
Get the Inside Scoop on North Chicago’s “Refresh” As part of North Chicago CUSD 187’s “District Refresh” (see article, pg. 38), they bid out and replaced a number of services.
They have generously shared the following documents with Illinois ASBO Members: • Food Service Management Invitation for Bid
• Business Office Software RFP
• Transportation RFP
• Business Office Software Checklist/ Comparison
• Maintenance/Custodial RFP
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UPDATE Magazine / Fall 2014
• RFP Timeline for Major Bids
RESOURCES
Go Deeper in Your Board Governance Role
After learning from Kris Monn and Dean Langdon what it means to be a “trusted business official”on pg. 34, use these resources to help your board better understand their role in school finance.
RESOURCES
School Board Governance Basics The Illinois Association of School Boards’ primary document to explain the role of school boards in their district. Available on the IASB Web site at www.iasb.com.
Taking the Mystery out of Illinois School Finance by Tom Kersten
School finance in Illinois is a complex and tricky topic, but this book explains it in way that anyone can understand – including revenues, financial projections and emerging issues. Available for purchase at www.lulu.com.
Board Member UPDATE Subscriptions See an issue of the UPDATE that would be especially helpful to what your board is working on? You can now order extra copies of any issue or additional annual subscriptions for your board! This is a great way to show off all you do and deepen their understanding!
Find more details at www.iasbo.tools/UPDATEmagazine.
Illinois ASBO members can find all of these resources on the peer2peer Network online community under UPDATE Resources.
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THE FINAL WORD SPEAKING UP ABOUT SCHOOL FINANCE RONALD R. O’CONNOR Dir./Finance North Chicago CUSD 187 roconnor@d187.org
Our role is to blend the curricular piece with business.
This means providing for human capital and materials within the allotted district resources. We have the opportunity to support education professionals; the bottom line is for us to work together to improve students’ lives.
School business officials will face growing expenses in a state ridden with fiscal strain.
Since Fiscal Year 2009, Illinois has cut appropriation levels for K-12 by $861 million. State aid is falling behind the recommended dollar amount to create an ‘adequate’ education – the Education Funding Advisory Board (EFAB) calls for $8,672 per pupil, whereas the state funds based on a level of $6,119. According to the latest EFAB report, in order to reach the $8,672 threshold, Illinois would have to add an additional $4.7 billion dollars to its budget. Furthermore, Illinois’ pension debt exceeds $100 billion and $7 billion in unpaid bills. According to Moody’s, Illinois has the lowest credit rating of any U.S. state – A3. In 2010, Illinois was ranked 50th in the country for providing funding to its schools.
Districts are held hostage to unpredictable revenues… From some taxed out local properties, to unreliable state funding to federal politics. There should be constant revenue bases for all districts, with all afforded a minimal amount.
The state continues to create disparity due to heavy reliance on property taxes. Several bills currently exist to attempt to solve debt issues, but there is not an end in sight. On the other hand, others rely on general state aid. As of recent, appropriation levels have been cut significantly. Creating an equitable system needs to be addressed. The state must fully fund of all obligations while being able to fund programs and retirement obligations.
All levels should work together to find the best solutions.
Long term, education needs more informed, motivated and intelligent school business experts from the top of the government all the way down to schools. Communication solves most problems. The bottom line is that we are all supposed to be here for students’ needs. Let’s act like it. JIM WOMACK / NIU
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UPDATE Magazine UPDATE Magazine // Fall Fall 2014 2014
E! T A D E H T E S A V hip Day and
Leaders of the Whole ting e e M C PD AY,
015 T HURSD 2 , 9 2 NUARY
JA
T WO ESSEN T iA
L OPPORTUNiTiES
. One Day of Prof essional Development and N etworking.
AGENDA for 01/29/2015 MORNING:
Learn High Stakes Presentation Skills at
LEADERSHIP DAY
Every year, past and present Illinois ASBO leaders get a special invitation to learn about a leadership topic and hear updates from the Association. This year, we are extending that invitation to anyone else who would like to join at a small cost! Stay tuned for registration details! Featuring Emmy-Award Winning Journalist Candace Belair: Candace will teach you how to prepare and deliver dynamic presentations that capture your audience’s attention and lead to positive outcomes. AFTERNOON: Join the Conversation at the PDC MEETING OF THE WHOLE Professional Development Committees plan the learning opportunities and conference sessions that keep school business officials current! Whether you’d like to present, coordinate or simply learn about a new subject area – join one of 18 committees!
Making
at e c n e r e a diff
aP
ing t e e M DC
Learn more about this event at www.iasbo.tools/2015leadershipday www.iasbo.org
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Step into the School of the Future See first hand where education and technology are heading… and leave with a vision for your how district will adapt and evolve! Rethink Learning Environments – Join keynote speaker, David Jakes, for an engaging conversation that focuses on the opportunity and the possibilities for creating compelling locations for learning. Learn From an Innovative Educator – Hear from keynote speaker, Josh Stumpenhorst, an innovative educator and prolific blogger.
Walk into a Future Classroom – See and touch what the future could look like at the 21st Century Classroom Showcase!
REGISTER YOUR TEAM October 10, 2014
NIU Naperville Conference Center | 1120 E. Diehl Rd., Naperville, IL 60563
Learn more at illinoistechcon.com Illinois ASBOMagazine | 108 Carroll Ave. | DeKalb, IL 60115 | (815) 753-1276 | UPDATE 48 / Fall 2014
IL CTO
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