ISBE Set to Vote on District 113A Financial Plan Thursday

The Illinois State Board of Education will consider Thursday the approval of 's most recent financial plan, which is required to complete its next round of borrowing this week.

State board members had a brief discussion about the plan during a finance and audit meeting Wednesday afternoon. They were briefed by Deb Vespa, ISBE division administrator for school finances.

Also attending the meeting via conference call were District 113A Business Manager Barbara Germany and the .

During the meeting, Vespa said District 113A's financial plan needed to be updated to reflect the total amount of tax anticipation warrants it would be be issuing.

District 113A has been following a state-approved financial plan since being certified in financial difficulty in December 2009. The plan includes information on enrollment, staffing plans, borrowing, cash flow analysis, and budget expenditures and reductions.

The plan outlines four financial objectives for the district: maintain balanced budgets for fiscal years 2012, 2013, 2014 and beyond; implement and follow financial policies for fund balances cash-on-hand requirements; build fund balances over the next three years; and eliminate short-term borrowing for cash flow purposes.

Following a brief overview of the district's financial condition, including the progress made over the past two years, state board members expressed concerns about growing class sizes.

"That is one of the difficulties they're having right now as they get their fund balances and cash flow back in order," Vespa said. "They are realizing increasing class sizes. (They want to get to the point where) they don't have to rely on tax anticipation warrants for cash flow and (they want to) build their fund balances.

"That's one of the first things they would like to do is start to build the educational side so they can start to bring back some of the programs they had while still living within their means and reducing class sizes."

One board member, who did not identify himself for those listening to the live audiocast, asked Madonia what he thinks about the district's education quality, considering the large class sizes and dramatic cuts.

"Things are certainly looking very positive for the future," Madonia said. "There will be 12 retirements this year, and the board will make a decision based on cost-savings for replacing those individuals, how much of that funnels into support staff, reducing class size and also enhancing fund balances. So I do think there are positive notes on the horizon."

The state board's discussion on District 113A lasted only about nine minutes.

According to a report from Christopher Koch, state superintendent of education, and Linda Riley Mitchell, chief fiscal officer, the superintendent is recommending that the state and board approve the most recent version of the financial plan during its plenary session Thursday.

In the report, Koch and Mitchell acknowledge that District 113A has made improvements since 2009. However, the report states "ISBE staff remain concerned about the financial condition of the district, the number of revisions that have been made to District 113A's financial plan and underlying operational and financial issues that may have caused recent changes in District 113A management."

The report went on to state that ISBE staff remain concerned "that District 113A has an ambitious recovery planned in fiscal year 2012 and so many changes (both to the board and the administration) may make it difficult to effect a smooth management transition."

District 113A approved amended financial plans June 28, Aug. 30 and, most recently, Dec. 7. During each of the meetings, former District 113A Superintendent Tim Ricker indicated that the financial plan needed to be amended to include updated cash flow projections and information on tax anticipation warrants.

Each of the plans were approved by a 4-3 vote, with Aurelio and Board Members Karen Siston and Al Malley casting the dissenting votes. In , Aurelio and Malley raised concerns over the surplus amounts projected each year, claiming they are too large.

According to the ISBE report, the financial plan approved by District 113A board members Dec. 7 shows continued financial improvement and less reliance on TAWs, which the district continues to use to cover cash flow issues.

Last month, representatives from PMA Financial  that the district's issuance of $1.8 million in TAWs to District 113A—scheduled to occur Friday—could be its last, as long as Cook County property taxes come through.

Despite the improvements projected in 2012, ISBE staff is concerned that the actual improvement in 2011 was not as much as was projected in the district's original plan, the report states. Additionally, the district's overall operational fund balances continue to be negative.

These challenges could be further complicated by the fact that District 113A recently hired a new business manager (Barbara Germany), has four new board members and will soon be under the direction of a new superintendent, Koch and Mitchell stated.

"Controlling costs and managing operations to achieve the aggressive financial plan may prove to be a challenge given the transition underway in the district," the report states.

The report, however, states that ISBE staff will continue to work with district administration and the local school board to monitor the financial condition of the district and its adherence to the approved plan.

ISBE officials were not immediately available for comment.

Board President Mike Aurelio informed the board of the state board meeting Tuesday night. Approval of the financial plan is required to issue the district's next round of tax anticipation warrants Friday to , he said. 

Thursday's board meeting will begin at 9:45 a.m. All ISBE meetings are streamed live online at www.isbe.net.