What is the bonded debt limit?

· A districts bonded debt limit refers to the maximum amount of money in terms of bonds that a district can sell. The bonded debt limit of a unit district is equal to 13.8% of its equalized assessed valuation (EAV). The bonded debt limit of an elementary or high school district is 6.9% of its EAV.

What is a Tax Anticipation Warrant?

· A Tax Anticipation Warrant is a form of short-term borrowing for a school district. This is used when the property tax collected late by a county and the school district needs operating funds. The district can borrow by fund up to 85% of last year’s extension and the bank that issued the warrant has the first lien on the district’s tax money when it is received.

What is the formula for determining the poverty grant for a school district?

· The poverty grant provides funds for districts for each child they service below the poverty level. This money comes with the check from General State Aid. The poverty level in a district is determined by taking the 3-year average of the DHS count divided by the Average Daily Attendance (ADA) or simply using the DHS count from the previous year. The DHS count is determined by a child’s participation in any of the following programs: food stamps, Medicaid, TANF, and All Kids. This poverty grant has a hold harmless clause that guarantees that a district will not lose poverty money due to the switch from the federal census to the DHA count

What is the Debt Service Extension Base?

· The debt service extension base is the amount of money in principal and interest owed by a district in non-referendum or limited bonds at the time the district becomes tax capped. It is wise to have the largest amount of debt possible at this point because this DSEB is the highest debt a district can ever have. Once a district starts to pay down this debt, it can sell bonds to raise the debt back to this level under the old rules of non-referendum bonds. It is a way to create new money in a tax-capped district

What are four financial incentives for districts to reorganize?

· Teacher salary equalization – the newly reorganized district will get the difference between their salary in the original district and the new district for four years.

· GSA Equalization – the state will give the new district the better GSA payment of the following: each district’s calculated GSA payment separately or the newly combined district’s GSA payment for four years.

· Debt difference – the state will calculate the operational debt of each district in the year prior to the election for reorganization. This debt is the balance in the three major operating funds and the working cash fund. Each district’s debt is calculated separately. If there is a negative balance, the state will make a one-time payment to bring the new district to an even status.

· $4000 incentive – 1-3 payments, depending on the wealth per child of the district will be provided in the amount of $4000 for every full time certified staff member of the new district. This is all unrestricted money for the new district.

What is the tax levy?

· The tax levy is the dollar amounts the district wants the county clerk to use in determining the taxes for real estate in the district. The levy is due to the county clerk by the last Tuesday in December. If this is not given to the county clerk, the county clerk does not have to levy taxes for the school district. The problem with the process is that the tax levy is required by law before the school district knows the actual EAV of the district for the upcoming school year. This results in balloon levying where districts ask for more than they think they will actually get so they can be sure to maximize the most money for the district.

What is a disincentive?

· It is a penalty a district pays for doing something that would be in the district’s best interest. An example might be in terms of reorganization – a disincentive for districts to reorganize from dual districts to unit districts would be that they would lose levying power within the transportation fund. As dual districts, they can each levy twelve cents, but a unit district can only levy twenty cents.

What is the importance of Blase v. State of Illinois?

· The Blasé decision is in regards to Article X of the Illinois Constitution. While the constitution says that the state will have the primary responsibility for funding schools, this was not interpreted by the courts to mean that the state will fund 51% of the costs of education. This was a goal for the state, but there were no legal ramifications if it was less than 51%.

School debt is limited to 13.8% of a district’s EAV, but there are exceptions. What are they?

· In areas of super high growth (30% of student population or 200 students), the district may borrow up to 15% of its EAV.

· A referendum that passes by a 2/3’s majority may allow a district the ability to go up to 15% of its EAV. And

· Where there is a school construction grant, the debt limit may be exceeded by the amount the Capital Development Board certified as the district’s local share.

· Legislative exception

Can you build a freestanding building without a referendum?

· No, according to statute, but a new building may be built with life safety bonds if it costs more to bring the building into code compliance and build a new one of similar size.

What do funding bonds pay? List a funding situation that is entitled, “The Golden Triangle.”

· District obligations. The Golden Triangle is where a district creates a debt and then sells funding bonds to pay for the debt and keeping the cash or merchandise originally creating the debt.

What is performance contracting?

· Performance contracting is using a company to renovate or repair current structures such as lights, that guarantees a saving due to their work to be realized in the future on such things as energy bills. Schools can now take up to 20 years to pay off such debt. This type of work does not have to be bid out.

What is the limit on working cash fund bonds?

· Working cash fund bond debt is limited to 85% of the district’s education fund extension last fiscal year plus 85% of the CPPRT allotment for last year.

Can dollars in working cash be moved and if so, how?

· Yes

· You may abolish the working cash fund with a resolution to move all money to the Ed. Fund at the end of June. You may then re-establish the fund in July.

· You may abate the fund that is to take out a portion of the money and transfer it to the Ed. Fund. You may move the cash on from there at any time of the year to OBM or Trans. on an unlimited basis.

· You can take out an interfund loan from the working cash fund, but you must pay it back to the working cash fund at the end of the fiscal year.

What are funding bonds?

· These bonds can be sold to pay outstanding claims against the district that cannot be paid due to insufficient funds.

· Originally used to pay for teachers orders when money was not available

· Recent uses include liabilities of early retirement payments to TRS insurance premiums, textbooks, and other ordinary operating expenditures for financially troubled districts. A district can “bundle” debt together and pay for it with funding bonds. They will be paid off from the bond and interest fund.

What is BINA?

· BINA stands for Bond Issue Notification Act. It passed in the legislature in 1996 and says that a public hearing, where people may ask questions, must be held when a district resolves to sell non-referendum type bonds.

At the end of World War II, approximately how many school districts existed in Illinois?

· 12, 000

Name seven of the eleven different types of school conversions.

· 11a Consolidation

· 11b Consolidation

· 11d Consolidation

· Annexation 18 Continued

· Unit district conversion

· Co-operative high school attendance center

· High school deactivation

· Dissolution

· Multiunit conversion (new)

· Combined HS unit district (new)

· Optional elementary unit district (new)

What is the “bond and interest” fund?

· This is a self-liquidating fund (it pays for itself). It pays the principal and interest on the bonds that you sell. The only limit is the “bonded debt fund” which is 13.8% of EAV

What does the acronym IMFR stand for and what is it?

· Illinois Municipal Retirement Fund

· This is for non-certified staff. One must work 600 hours per year to receive the benefits of this fund. Any amount of money you ask for in this fund you will get from local property taxes. You cannot move money or interest from this fund.

What are the three funds in which you cannot move the interest?

· IMRF, TORT, and Life-Safety

What is the “Rule of Thumb” when it comes to budgets?

· Over estimate what you think you are going to spend. Under-estimate what you think you are going to receive.

What is the objective of General State Aid (GSA)?

· The objective of GSA is to provide unrestricted grant-in-aid to Illinois School Districts in an equitable manner.

What is EFAB?

· This is the states Education Funding Advisory Board that is appointed by the governor. This board’s primary duty is to recommend to the legislature the foundation level and the amount for poverty annually.

What are the three “C’s” when a district is serious about cutting money?

· Cut Staff

· Cut programs

· Close buildings

Explain the three different GSA formulas for General State Aid.

· Foundation level – this is the level utilized by most school districts. Currently $5334 per student, districts qualifying for this formula have available local resources (ALR) per pupil.

· Alternative formula – Districts qualifying for this formula have ALR of at least 93% but less than 175% of the foundation level. They receive between 5-7% of the FLevel amount.

· Flat grant – This formula are for the elite school districts. These school districts generate more than 175% of the foundation level, and receive a flat amount of money of $218 per student.

What are the criteria for children to ride a bus and the school be reimbursed?

· Students must live over 1.5 miles from the school or a hazardous condition must exist (determined by IDOT) from the child’s home to school.

What is the foundation level?

· The minimum amount of money the state legislature will guarantee to be spent on each student in Illinois as a combination of local and state money. The current level is $5334.

What are top two sources of revenue for the State of Illinois?

· Income and Sales tax

What is EAV?

· Equalized assessed Valuation of all residential and commercial property in a district

What is IDEA?

· Individual Disabilities Education Act

· A federally funded program for special education

The amount of life safety bonds that can be issued is limited to the districts statutory debt limit as well as a two-pronged test. What is the two-pronged test?

· Current Project Test- Bonds cannot be issued in excess if the approved estimates for work.

· Cumulative test – going back to 1967 amounts of money received and spent in the Life Safety fund are analyzed. A district cannot spend or bond in excess of what they have accumulated since 1967.

What is CPPRT?

· CPPRT refers to Corporate Personal Property Replacement Tax. This is the tax on the net income of corporations that is collected by the Department of revenue. A percentage is given to school districts based on the same tax that was instituted in 1979. The problem with this is that corporations are leaving Illinois and the money received is not distributed in an equitable manner. The good new about CPPRT is that this money is unrestricted.

What are the three types of school districts? Which one is the most expensive to operate per pupil and why is this true?

· A. Elementary K-8

· B. High School 9-12

· C. Unit K-12

· High school districts are the most expensive to operate and this is true because they generate more money per pupil.

What are three main sources of revenue for schools and who controls it?

· Congress controls the federal revenue, which is approximately +/- 10% (based on the census).

· The General Assembly controls the state source of revenue which accounts for 37-38% of funding

· The school board controls the local source of revenue, which accounts for 50-51% of funding.

What are the three largest federal funding sources?

· IDEA

· Child Nutrition Programs

· Title I

What two state programs apply to both private and public schools?

· Text book loan program

· Transportation Reimbursement to Parents

What are the three types of transportation?

· Regular

· Special Education

· Vocational

What is the Capital Development Board?

· The Capital Development Board (CDB) is a source of money school districts can draw from to build additions to buildings. This money is no longer available.

List four of the Special Ed. Items listed on the budget.

· Orphanage tuition

· Special Ed.-Extraordinary Services (Hard of Hearing)

· Special Ed. - Personal Reimbursement: The State gives school districts money to hire special education teachers. It costs $8, 000

· Special Ed.; Private tuition – send kids to another school for kids with special ed. The school district is reimbursed.

· Special Ed. Summer School

What is the Downstate Scenario?

· This is a problem for school districts downstate due to the lowering of ADA and a slight rise in EAV. Schools are hurt in regards to the allocation of GSA funds based upon this situation.

What is a “Backdoor referendum”?

· When a non-referendum bond is sold, except for Life Safety Bonds, a public notice must be given and 10% of the voters have 30 days of the public notice to submit a petition to the board requesting that this be on the next ballot.

Explain the three hold harmless situations.

· The original hold harmless began in 1997 when the state changed the GSA formula to get rid of the weighted attendance for high school students. The state decided that districts would not receive less GSA than the 1997-1998 school years.

· The poverty hold harmless started when the state switched from the census poverty count to the DHS poverty formula. Under this HH, districts that would have lost money were allowed to keep their original poverty funds prior to the change.

· The transitional assistance hold harmless states that no district will receive less GSA than last year. School can now depend on a certain amount each year unless it is prorated.

Explain Charter Schools.

· A company or group of people write a charter and present it to the public school board to operate their own school. If a charter school is developed, it is a contract to the public school board that can be renewed or terminated every five years. The charter school is held accountable by the school district, not the state. The charter school has its own school board, salaries, and contracts and receives the GSA for the students in attendance. It must come up with its own funding outside of the GSA, but the state budgets some “seed money” to help charter schools start up operations.

What is THIS? Explain.

· Teacher Health Insurance Security – money deducted from active teachers’ salaries as well as charged to school districts to pay for retired teachers health benefits.

What does equity mean? Why was this financial concept generally discarded in the US?

· Means that the same amount of money is dedicated to every student

· True equity would require a 100% state level of taxing and funding with no local control.

Describe the two programs through which private and public schools can both receive state money.

· The textbook Loan program provides entitlement money based on enrollment to help districts loan educational materials to students. It is divided into 3 groups: grades k-4, 5-8, and 9-12. Each year two of the three groups receive the funding on a revolving basis.

· The Transportation Reimbursement to Parents program gives money directly to parents that do not have access to free public transportation for their children. The money is allocated based on the total amount of money in the fund and how many people apply.

How do school fund child nutrition (lunch) programs?

· Students & Staff buy their lunches at prices the school establishes. Adult lunch costs must be at least $0.25 higher than student prices.

· Federal assistance gives some money for every student that eats, with more money for every free/reduce lunch served.

· The Department of Agriculture buys food products and gives the commodities away to schools for only a shipping charge based on eligibility.

What is the Truth in Taxation Act?

· The act states that if a district levies for 5%or more in their AGGREGATE LEVY than received last year (except for bond and interest), they must hold a public hearing to approve the levy and put a public notice in the paper, commonly called the “black box”.

How can a district move up on the Capital Development Boards list?

· A district will move up over time. It could also move up according to increased numbers of “unhoused students” as deemed by a licensed architect. Unhoused students include those in excess of students allowed per square foot of space, those in unsafe environments, and temporary classrooms.

What is the double whammy?

· The double whammy in regards to PTELL is two big hits on tax-capped districts. The first is that the district is tax capped meaning that it is not receiving its true amount of EAV. The second is that the state calculates a tax-capped districts GSA on its true EAV, not its tax capped amount.

What does Adequacy mean?

· Minimum amount of money or services guaranteed to every student.

Describe the Doctrine of Neutrality.

· Based on the Serrano Case

· Refers to how much wealth the state has as a whole, not how much money different parts of the state has at any given time

What is the National School Lunch Program?

· This is a federally funded program with voluntary enrollment designed to assist students with free and reduced meals. Districts get funds for each lunch, reduced lunch, or free lunch served. The program supplies schools with farm commodities at desirable pricing.

What is PTELL and how does it affect school districts?

· PTELL is the acronym for Property Tax Extension Limitation Law also known as tax caps. Tax caps limits how much a district can receive from property taxes. The cap is that a district cannot receive in property more than 5% in new money or the CPI percentage increase in new funds from local property taxes.

Name the three most important funds a school district that is found its Annual Financial Report. What are they used for and how are they related?

· Educational fund

· Building Operations and Maintenance fund

· Transportation fund

· The Ed. Fund is used mainly to pay salaries, the Building and operations and maintenance fund is used pay for building supplies and maintenance workers salaries, and the transportation fund is used to pay for the cost of transportation within the district. The relationship between these funds is that the money can be moved between on an unlimited bases them without reimbursement.

What is a classic example of the classic combination of politics and school finance?

· The Lottery Scam in which the State of Illinois gave a percentage of money brought in from the lottery to the common school fund. Lawmakers advertised that all the money would go to schools, but it was not. When a decision was made to give them what was promised, funding was limited from other sources for education.

What is proration?

· Proration occurs when a school district is promised an amount of money, but due to the state running out of money, the school district will receive a smaller(prorated) percentage of the money they were promised. A common example is in the transportation fund. The state is to provide 80% of your previous years costs for transportation. If the state runs out of money, they will give you a percentage of the 80%. You might get 90% of your 80%.

While reading your district’s AFR, you notice that your superintendent has abolished the working cash fund. When can a superintendent abolish this fund and what does abolishing the fund indicate in most cases?

· A superintendent will abolish the fund in June. Usually, when a superintendent abolishes the working cash fund, it is an indicator of fiscal stress within the district.

What are the nine funds that school districts have access to?

· Education

· IMRF

· Operations and Building Maintenance

· Fire and Safety

· Rent

· Working Cash

· Transportation

· Site and Construction

· Bond and Interest

What is refunding bonds?

· It is refinancing your current schedule of principal and interest on outstanding bonds. These bonds are issued to prepay the outstanding bonds of a district often done for economic reasons (savings generated from a better interest rate environment than when the bonds were issued). They are often issued to restructure the districts current debt burden. This allows the district to issue more bonds for current needs while minimizing the impact on the district’s bond and interest tax rate.

What are Tort Judgment Funding Bonds?

· Tort is a legal remedy. These bonds can be issued without referendum for the payment of any tort judgment or settlements entered against the district. It is limited to the amount necessary to discharge the districts obligation; subject to the districts statutory debt limit; not used very often.

Give a brief definition for the following acronyms. * May be included in a different question, but be prepared to define or explain what the acronyms represent.

GSA

· General State Aid

· Unrestricted grant-in-state-aid to Illinois schools in an equitable manner.

ADA

· Average Daily Attendance

· Calculated by the three best months or 3 years of the school year

ALR

· Available Local resources

EAV

· Equalized assessed Valuation

· The value of commercial and residential property a school district has

CPI

· Consumer Price Index

· Washington DC generates a number on how much items cost

PTELL

· Property Tax Extension Limitation Law also known as tax caps

· It affects a school district by restricting the amount of local funding a district can receive from year to year.

OBM

· Operation Building Maintenance fund utilized to pay for operational costs of capital facilities.

CPPRT

· Corporate Personal Property Replacement Tax

· Tax on corporate net income collected by Dept. of Revenue and distributed on a percentage basis from the late 1970’s.

IAQ

· Indoor Air Quality

· Program in which districts may identify and monitor all environmental issues

EAP

· Employment Assistance Program

· An anonymous way to refer self for medical psychological, financial support and counseling for district employees

Describe Risk Management.

· This document delineates authorized expenditures from the tort immunity fund. A risk management plan also allows you to take money from the fund and spend it on creative things such as EAP or IAQ. The tort immunity fund is an unrestricted fund.

Where do some of your CPPRT funds have to go?

· Some of your CPPRT has to go into municipal retirement/Social security usually about 4-5%.

What are the criteria for selling a Fire prevention & Safety (Life safety) Bond?

· This is the only bond that cannot be sold w/ referendum unless tax caps apply.

· Otherwise, it is issued with out a referendum

· Something is identified by an architect as being not in code compliance.

· Step 1 involves having an architect or engineer assess the situation.

· Step 2 involves having an approval from the Regional Superintendent

· Step 3 requires approval from ISBE whereupon authorization for expenditures from this fund is issued.

What are the four exceptions to the general indebtedness limit?

· May go to 15% of EAV if referendum passes by 2/3

· Super high growth districts may go to 15% (35% or 200 students)

· May be exceeded by the amount the Capital Development Board certifies as the district's local share

· Legislative exception

What is the maximum fund balance for Working Cash Fund Bonds?

· 85% of the maximum Ed Fund tax extension, plus 85% of the Districts CPPRT allotment

What is the definition for reorganization?

· Reorganization is the official merging of school districts.

What are the 3 nickel levies?

· Lease Fund

· Working Cash Fund

· Life Safety Fund

· These are all disincentives to reorganize districts.

What is EAP?

· Employee Assisted Program- help that allows employers to provide services to employees

· Ex: alcohol/drug therapy

What is an extension?

· The amount of money you actually get.

What is balloon levying?

· Balloon levying is asking for more than your think you are going to get in order to get all that you are entitled to.

What is an aggregate levy?

·  An aggregate levy is everything (all funds) except bond and interest

How many hours a non-certified employee needs to work to get IMRF?

·  600 / year

What is the max amount of educational monies that a district can levy for?

· Every Elementary and Secondary Districts - can ask for 0.92 (max 3.50 with referendum) without referendum - Unit Districts can levy 1.84  (4.00 with referendum)

What is the process for undertaking school district reorganization?

· Feasibility Study Conducted

· Petition to ROE

· ROE Publishes Hearing

· Hearing Held

· Regional Superintendent Approves or Denies Petition

· State Superintendent Reviews Information from Hearing and Approves or Denies Petition

· If Approved Regional Superintendent Certifies Public Question for Ballot

· Citizens vote