Study shows half of school districts have a year’s worth of cash
BY DAVE MCKINNEY Springfield Bureau Chief email@example.com June 18, 2012 6:52PM
Updated: July 20, 2012 6:27AM
SPRINGFIELD — More than half of Illinois’ 800-plus school districts have more than one year’s worth of operating cash on hand, suggesting some downstate and suburban school systems might be able to shoulder part of the funding burden for educators’ pensions.
Those numbers from the State Board of Education were released Monday as Gov. Pat Quinn and the four legislative leaders prepare for a round of late-week negotiations on a package to help solve Illinois’ $83 billion pension crisis.
A Quinn aide Monday night said the results demonstrate that shifting some pension costs away from the state to school systems won’t pose a catastrophic financial hit to them.
“The bottom line is school districts can certainly afford to have a stake in the contracts they negotiate, and overall the numbers make it clear there is no excuse not to do pension reform and do it quickly,” Quinn spokeswoman Brooke Anderson said.
The data also was released the same day that a new study by the non-partisan Pew Center on the States showed Illinois, once again, with the worst-funded pension systems in the country.
Earlier this month, after a pension package stalled in the Legislature, the governor and legislative leaders sought an analysis of cash reserves Illinois school districts maintain to determine whether they could foot some of the pension bill that until now the state footed entirely for suburban and downstate school systems.
The new data showed that 478 out of 864 school districts across the state carried cash reserves as of June 30, 2011, that would fund at least 180 days of operating expenses — the equivalent of a full school year.
House Majority Leader Barbara Flynn Currie (D-Chicago), who believes suburban and downstate school systems should pay for educator pensions as Chicago now does, said the figures support the idea that many schools could survive without a massive financial hit if pension costs were phased in over a more than dozen-year period.
The numbers show “they can step up to the plate a little sooner,” Currie told the Sun-Times. “What we’re talking about is phasing in the passing of responsibility to the local school districts that make the contracts, over time, not like the day after tomorrow.”
In its analysis, the State Board of Education cautioned that its figures are dated and don’t account for continued delays in state payments, a cut in the state education budget of $258 million and a possible diversion in corporate personal property replacement tax revenues to fund pension obligations, as some in the Legislature have advocated.
Taking those all into account would leave 128 of the state’s school systems in the red with no cash reserves by next June, the agency reported.
“A point-in-time measure from one year ago can’t be used as a measure of any district’s wherewithal or ability to sustain an ongoing liability,” said Mary Fergus, a spokeswoman for the State Board of Education. “These figures do not account for rising expenses, declining local revenue or a district’s long-term plans for these funds.”
Quinn and the leaders are scheduled to resume their pension talks on Thursday.
Patty Schuh, a spokeswoman for Senate Minority Leader Christine Radogno (R-Lemont), said the results only give a partial glimpse of the financial health of the state’s schools and can’t be used to make a judgment on the pension cost-shift argument. Radogno and other Republicans worry moving those costs to school districts could lead to widespread property tax increases.
“This could only be one piece of this puzzle,” Schuh said.
A school district in the Chicago area with one of the biggest funding cushions is Oak Park-River Forest High School District 200. With $96.5 million in reserves as of last June, it had the capability to cover 705 days of operating expenses, fifth highest in the state, the state board reported.
But Steven T. Isoye, superintendent of that school system, cautioned that permanently having to fund educator pensions would eat into those reserves that have built up as a result of careful spending decisions and a property-tax referendum that passed about a decade ago.
“We might be able to absorb it for a short time period,” he said of a pension cost shift. “But it’ll push up the time when we’d have to go to taxpayers for a referendum.”