A Federal Lifeline for Hard-Pressed School Districts

Veterans Memorial Middle School counselor Ken Andjulis (left) talks with Myskeshia Mitchell, a counselor at Nathan Hale Middle School in Crestwood, and Nick Boyle, a counselor at Kerr Middle School in Blue Island, during an assembly at Veterans Memorial Middle School in Blue Island on the last day of school before their holiday break Tuesday December 21, 2010. School District 130 in Blue Island used its federal stimulus money to hire three counselors.
John Konstantaras/Chicago News Cooperative

When Farmington Central School District 265 learned it was eligible for an infusion of $417,000 in federal aid to save jobs this school year, the district had the option to spend it on anything from new hires to raises for teachers, or even to meet benefits liabilities.

Since the money came after the school year started — too late to hire new teachers — the district went in another direction. Farmington officials decided to leave the money untouched. Unsure about whether the state will come through with what it owes the district, school officials decided to wait and watch the budget process take shape in Springfield over the next few weeks.

If the state falls even further behind on payments to schools, the federal money from the Education Jobs Fund will be used as a small safety net, said Mark Doan, Farmington schools superintendent. “If the state comes and says we don’t have the funds, at that point, I’d turn around and say we’ll use those Education Jobs funds,” Mr. Doan said.

After the Education Jobs Fund was announced in August, the federal government and Gov. Pat Quinn encouraged districts to quickly spend their portion of the $415 million. But, technically, districts do not have to use the money until Sept. 30, 2012.

By Dec. 1, only about 20 percent of school districts had spent all their federal jobs money, according to Illinois State Board of Education reports. In addition, as of Dec. 10, Illinois schools still had $300 million remaining of the $415 million assigned to them.

Many districts said they planned to use the money this fiscal year, but had not yet submitted the paperwork. Others said they might stretch the money into the next fiscal year.

The Education Jobs Fund program highlights just how difficult the fiscal situation is for Illinois schools. When the federal government sent Illinois the money to save teachers’ jobs in September, the tough choices had already been made and staffing plans had been put in place. But as the state did not pay school districts the money it owed them, some schools started to look at the federal money as a small lifeline.

In southwestern Illinois, Sparta District 140 used its $526,000 to cover the September and October payroll for teachers, Superintendent Larry Beattie said.

“We were running out of money,” Mr. Beattie said. “We’re all getting short on cash because of what happened last year” with the state falling significantly behind on reimbursing school districts.

Using the federal money for payroll expenses allowed the district to avoid other cuts, he said.

Earlier this month, Christopher Koch, the state schools superintendent, sent local school officials some good news: Districts would not have to sue the State of Illinois to get the money owed to individual districts for the 2010 fiscal year, which ended six months ago. In early December, Illinois used proceeds from the sale of tobacco revenue bonds to pay off an outstanding $368 million it owed to the schools.

Schools are now waiting for at least $706 million in late payments for the current fiscal year. When the state is late on payments, districts must sometimes borrow to pay their bills, adding to their own financial hardships. Next year may be difficult because no large federal spending packages are on the horizon, and Illinois is constrained by a projected budget deficit of $13 billion, according to the governor’s office.

Chicago Public Schools, which has $104 million of the state’s total allotment of Education Jobs Fund money, is using its money to pay teachers to keep high school classes the same size, restore bilingual education positions and create special-education jobs, said Frank Shuftan, a district spokesman.

In south-suburban Blue Island, the timing worked out better than it did for many other districts. There, Cook County District 130 will use its $877,000 in Education Jobs Fund dollars this fiscal year to pay the salaries for 10 teachers, as well as the costs for three new counselors for its middle schools, said Allan McDonald, the district administrator for business services.

“The money helped this year,” Mr. McDonald said, “but unfortunately I don’t know what is going to happen next year.” American Recovery and Reinvestment Act money has “been helping us through the last couple years,” he added, “and that ends.”

In addition to money from the Education Jobs Fund, Illinois districts are spending the last of the state’s $3.1 billion in federal stimulus dollars made available for prekindergarten through Grade 12 education through the American Recovery and Reinvestment Act of 2009. As of Dec. 24, just 17 percent of those stimulus dollars remained for Illinois school districts, according to the United States Department of Education.

In the fiscal years 2009 and 2010, the federal stimulus money propped up state spending for basic payments to schools by about $1 billion per year. Districts also received stimulus money for special-education initiatives and for programs to help students living in poverty. That money runs out this fiscal year.

School officials hope for timely answers about the state’s fiscal future when the legislature reconvenes next week. Illinois districts must inform staff members in March if they will be laid off for the following school year, so districts are already trying to determine staffing levels.

The legislature is expected to receive a report next week that suggests that the current level of education financing is inadequate. The Education Funding Advisory Board, which informs the governor’s and legislature’s decision on how much state and local governments should spend per child, will recommend increasing the amount spent per student to $8,360 from the current $6,119, according to a presentation to the Illinois State Board of Education. The advisory board, which is appointed by the governor, had last recommended in 2005 that schools spend $6,400 per student, but that level has not been reached.

The advisory board is also expected to recommend an increase in spending to provide extra resources for students living in poverty. All told, the cost to the state to bolster education spending to the recommended levels would cost an estimated $4 billion more a year, according to preliminary estimates. That would almost double the $4.6 billion Illinois will spend in those areas this fiscal year.

State education officials said they were mindful of the realities of the state’s fiscal condition as they weighed how much of a request to make to the legislature. Jesse H. Ruiz, chairman of the State Board of Education, said the board was developing alternative proposals.

“The amount we feel is necessary isn’t necessarily the amount we are in a position to provide at this point,” Mr. Ruiz said.

He said that if a proposed tax increase or other revenue plan was not in the works by the time the board had to get back to work on the state school budget in mid-January, the board might consider publicly endorsing a tax increase for the first time.

One way or another, Illinois schools need a more stable stream of cash, Mr. Ruiz said.

“None of us enjoys banging our head against brick walls that aren’t going to move,” he said, “but our job is advocating for the students of Illinois.”