As school districts around Illinois remain in limbo due to the ongoing budget impasse between Governor Bruce Rauner and Democratic leaders in the legislature, Jacksonville Public Schools Superintendent Steve Ptacek says his district will open on time and as scheduled in August.
But, Ptacek says in a letter to parents on Tuesday afternoon, that could change.
Tuesday’s letter to District 117 families reminded parents that the District is tax-capped and can’t, by law, sell non-referendum “Life/Safety Bonds”, as many other Illinois school districts may be able to do to make ends meet during the upcoming school year. Under Illinois law, a tax-capped school district can only sell up to the amount of non-referendum bonds that were outstanding when tax caps were passed in their municipality.
For District 117, which is subject to tax caps passed in Morgan County in 1996, that amount of non-referendum bonds outstanding is… $0.
In other words, the fiscal responsibility of the school district in the late 1980s and into the 1990s means that it will not be able to borrow money now, at a time when that fiscal responsibility should have been able to be rewarded.
Ptacek told parents that District 117 receives approximately $8M in Guaranteed State Aid (GSA) each year, out of a total annual budget of about $34M. The school district does have enough of a reserve fund balance to operate for the entire 2016-2017 school year without GSA, in the event of delayed payments.
However, the district’s top administrator also told parents that if he feels the State of Illinois will not pay back the GSA, he would “reconsider my recommendation.”
The full text of Superintendent Ptacek’s letter to District 117 is below:
Recently, you might have heard of the rough economic future many school districts are facing if the State does not pass an educational budget. Some schools are talking about not starting school in August due to budget concerns. At the June meeting, I discussed this issue with the JSD117 Board of Education. I am writing this to let you know our district’s stance on this issue.
The fact that the district has a sizeable operating fund balance was the major factor in deciding if JSD117 will start the school year as planned. Before I discuss the decision, I want to, once again, explain why it is critical that JSD117 maintains a substantial operating fund balance.
This discussion is available in much more detail in the archives section of Vision117.com under “How did it get so bad?”.
It is routine for schools to collect additional local funds, beyond traditional property taxes, through the sale of bonds. The payment on many of these bonds is added to the local property tax bill. Many of these bonds, including Life Safety bonds, do not require a referendum.
In most school districts, Life Safety bonds are used to pay for building improvements listed as “health/life safety” needs. Once an improvement plan, developed with the district’s architect, has been approved by the Regional Superintendent of Schools, the district can sell Life Safety bonds to be paid with an additional tax levy. This process has even been used to pay for new facilities in some districts.
Basically, most school districts add additional money to the regular property tax bill to pay for needed improvements. This is how most districts help keep their facilities maintained.
However, tax capped districts are limited in their ability to sell non-referendum bonds. Tax capped districts are limited to the amount of non-referendum bonds the district had outstanding when the tax cap was passed. This new dollar amount is called the Debt Service Extension Base (DSEB).
In 1996 tax caps were passed in Morgan County. At that time Jacksonville Public School had no outstanding debt; therefore, the dollar amount the district can raise to address health/life safety needs was established as ZERO! Since 1996, JSD 117 has had to operate without the ability to raise any additional funds to take care of building needs, including emergency needs.
In technical terms: JSD117 is tax capped and has no DSEB. The district is in an extremely rare and unique position that has severely limited its ability to maintain the buildings.
In order to prepare for emergency situations, JSD117 has built up a respectable fund balance, a “savings account”. Imagine if you had to run your household without any ability to borrow money, no home loans, car loans, or even credit cards! You would have to have a substantial savings account to protect your family against emergencies.
While this lack of a DSEB has been a barricade against maintaining and improving our schools since 1996, it has resulted in the district having a large enough fund balance to continue normal operations during these uncertain economic times.
We receive approximately $8 million each year in Guaranteed State Aid (GSA). Our total annual budget is roughly $34 million. We have enough fund balance to operate as normal for the complete 2016-2017 school year if we use our fund balance, our “savings account”, to supplant delayed GSA payments.
I have discussed our options with the Board of Education. At this time, we plan on beginning the 2016-2017 school year on time and operating as normal for the year regardless of the State’s budget. However, if I feel that the State will not payback our GSA, I will reconsider my recommendation. Given our lack of a DSEB, we CANNOT have a small operating fund balance moving forward.
If you have any questions, please let me know. I did consider having a community engagement night to discuss this issue, but at this time we will be operating as normal.