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 (got dibs on) on the district’s tax money when it is received in full as it comes in.

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

· 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

What is the Debt Service Extension Base?

· 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.

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 (must have the words “operational debt”) of each district in the year prior to the election for reorganization. This debt is the balance in the four major operating funds (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. (Also figures for the three-year average are checked to avoid people from milking the system)

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.

What is a disincentive?

· It is a penalty a district pays for doing something that would be in the district’s best interest.

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.

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.

· 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 than build a new one of similar size (sq ft).

What do funding bonds pay?

· District obligations

List a funding situation that is entitled, “The Golden Triangle.”

· 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

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 (must have the word “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 (must have the word “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 (must have the word “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 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.

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.

What does the acronym IMRF 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 state's 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?

· Elementary K-8

· Secondary 9-12

· Unit K-12

· Secondary districts are the most expensive to operate 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.

· The General Assembly controls the state source of revenue

· The school board controls the local source of revenue.

What are the three largest federal funding sources?

· IDEA

· Child Nutrition Programs / National School Lunch Program

· Title I

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 buildings and additions to buildings.

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 education. 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 (must have the words “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.

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.

· Al-a-cart items sold

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”.

What does Adequacy mean?

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

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, whichever is less, increase in new funds from local property taxes.

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 promised 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.

While reading your district’s AFR, you notice that your superintendent has abolished the working cash fund. What does abolishing the fund indicate in most cases?

· 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.

Describe Risk Management.

· This document delineates authorized expenditures from the tort immunity fund.

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

· This is the only bond that cannot be sold w/o 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 a district 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.

· This is still limited by the two-pronged test.

What is the definition for reorganization?

· Reorganization is the official merging of school districts.

What are the three nickel levies?

· Lease Fund

· Working Cash Fund

· Life Safety Fund

· These are all disincentives to reorganize districts. This is because the unit district can only get a nickel, but if dual districts then both districts could get a nickel.

What is EAP?

· Employee Assisted Program

· Help that allows employers to provide services to employees

· Funded in risk management inside the tort fund

· Ex: alcohol/drug therapy

What is an extension?

· The amount of property tax 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.

· Memorize that sentence.

What is an aggregate levy?

· An aggregate levy is utilized in the truth and taxation laws, when over 5% of last year is asked for which is when black box and hearings are held.

What is the process for undertaking school district reorganization?

· Petition to ROE by school board or citizens

· ROE Publishes Hearing

· ROE 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