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The juice is running on Illinois’ debts to schools

by Ryan Craggs
Feb 25, 2010

Illinois schools could learn a thing or two from Al Capone—no, not about bootlegging or prostitution—but how to get delinquent borrowers to pay up. You know, bringing in the muscle.

The state currently owes school districts $800 million.  Back in Scarface’s day, that would have amounted to a lot of broken thumbs and busted kneecaps.

“Lawmakers determined they would use $922 million from federal stimulus money to make payments on early childhood block grants and general state aid,” said Matt Vanover, spokesman for the Illinois Board of Education.  “However all other bills are being delayed because of a lack of funding.”

Those bills include payments for special education, transportation, meal reimbursement and any type of grant program or funding other than general aid.  General aid provides money to help meet basic needs, such as food, clothing, housing and limited medical assistance.  Payments for general aid come twice monthly and are mandatory.

One north suburban school district provides an example of the reliance on the aid.

Barrington has an annual budget of $150 million, of which $11 million comes from the state.  At present, Illinois owes Barrington schools $2.5 million of the $5.5 million it should already have paid.

“It’s likely the state will meet its obligation, but it may not be this fiscal year,” said Jeff Arnett, spokesman at Barrington. “It may come the following fiscal year. But the bigger conversation is how much of the 2010-11 obligation they might be able to fulfill.”

For Illinois schools, that’s where having some guys named Bubba or Bruno would come in handy.

School districts prepare budgets based on funding they anticipate to receive from state and local revenue sources, such as property taxes. But this year, they must get creative to pay bills.   

 A limited number of options exist for balancing a school’s budget. Districts can reach into savings or reserves, issue a tax anticipation warrant, a form of short-term loan used against next year’s property tax revenue, or cut staff and programs.  In the case of dipping into reserves, districts can pay from savings now and reimburse accounts when the state makes good on its debts. 

In the case of cutting, nearly everything is on the chopping block.

“Maybe we won’t have boys and girls track,” Vanover said as an example.  “We won’t open the school’s gym on weekends.  Cut the school play and offer fewer classes.  We’ll increase class sizes, and maybe lay off teachers next year.”

The dire situation of Illinois’ schools serves as a microcosm for the state as a whole.  While stimulus dollars might be able to plug some of the holes in the ship this year, how it plans to stay afloat next year remains something of a mystery.

 “We’re already projecting to make cuts of $2.4 million for next year,” Arnett said. “There are a number of districts in the Chicago region that have been traditionally financially responsible and conservative in expenditures.  But every school district is in this situation.”