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For Immediate Release
April 20, 2005

State Board of Education to review 2005 School District Financial Profiles
Finance Committee prior to Board action

Springfield, Ill. –The Finance Committee of the Illinois State Board of Education (ISBE) will review the 2005 School District Financial Profiles at its meeting today. Approval of the profiles is anticipated at the State Board of Education meeting tomorrow, April 21, 2005.

The School District Financial Profile was designed to better illustrate information on school district finances and to establish financial designation lists for all school districts. Each district in the state receives a designation in one of the following four categories: Financial Recognition; Financial Review; Financial Early Warning; and Financial Watch. The FY 2004 Profiles show improvement statewide over the previous year, with:

  • 50.6 percent of districts in Financial Recognition, compared to 39.8 percent in FY 2003;
  • 28.0 percent of districts in Financial Review, compared to 27.0 percent in FY 2003;
  • 12.6 percent of districts in Financial Early Warning, compared to 15.7 percent in FY 2003; and
  • 8.8 percent of districts in Financial Watch, compared to 17.5 percent in FY 2003.

Three .pdf files are attached to this release:

In accordance with Section 1A-8 of the Illinois School Code, ISBE is required to monitor and certify districts in financial difficulty, based on a review of financial data from each district. Two systems are utilized, the School District Financial Profile and the system of Certifying School Districts in Financial Difficulty.

  • The School District Financial Profile identifies school districts moving toward financial difficulty. The system of determining profiles was developed with school superintendents, school business administrators, financial advisors, bond brokers and educational constituent groups throughout the state. Trend analysis data is incorporated in determine the profile score. There are five indicators used:
    1. Fund Balance to Revenue Ratio - Reflects the overall financial strength of the district
      • Calculated by dividing the total of the ending fund balance of the four operational funds (Educational, Operations and Maintenance, Transportation, Working Cash) plus the IMRF/FICA fund (if negative) by the revenue received for the same funds
      • Represents the percent of equivalent revenue a district is saving each year
      • Weighted 35 percent of the overall score
    2. Expenditure to Revenue Ratio – Identifies how much a district expends for each dollar received
      • Computed by dividing the total expenditures for the four operational funds by the receipts of the same funds
      • Reflects whether a district is realizing an operational surplus or is deficit spending
      • Identifies if a district’s checking account has a positive or negative balance
      • Is weighted 35 percent of the overall score
    3. Days Cash on Hand – Provides an estimate of the number of days a district could operate if additional revenues were not received.
      • Computed by dividing the total operational expenditures by 360 days to obtain an average expenditure per day
      • Total cash and investments for the four operational funds are divided by the average expenditure per day to determine the number of days cash on hand
      • Weighted ten percent of the overall score
    4. Percent of Short-Term Borrowing Ability Remaining – Reflects the percentage of short-term debt margin a district has remaining for tax anticipation warrants (TAWs) should the need arise
      • Computed by dividing the total outstanding TAWs by the product of 85 percent of the Equalized Assessed Valuation (EAV) multiplied by the operational funds tax rates
      • Weighted ten percent of the overall score
    5. Percent of Long-Term Borrowing Ability Remaining – Reflects the percentage of long-term debt margin a district has remaining for major expenditures like buildings and equipment
      • Computed by multiplying the district’s EAV by its maximum general obligation debt limitation minus outstanding long-term debt
      • Weighted ten percent of the overall score

Each indicator’s calculation is given a score of 4, 3, 2, or 1 which is weighted at the identified percentage. The indicator scores are totaled for an overall composite score. The composite score is categorized into School District Financial Profile designations:

  • 4.00 – 3.54 – Financial Recognition
  • 3.53 – 3.08 – Financial Review
  • 3.07 – 2.62 – Financial Early Warning
  • 2.61 – 1.00 – Financial Watch

Illinois State Board of Education
100 North First Street
Springfield, IL 62777