SCHOOL FINANCE RESOURCES
Debt Limitations
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Unit School Districts have a statutory debt limit of 13.8% of the most recent Equalized Assessed Valuation of all Taxable Property Located within the District (Including Tax Increment Financing (TIF) Districts and Enterprize Zones (EZ.)
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Elementary only or High School only Districts have a statutory debt limit of half this amount (6.9%)
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To calculate the capacity of your school to borrow, take this statutory maximum, and subtract the par amount of any outstanding debt.
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*Alternate Revenue Bonds do not count against Statutory Debt Limits and may be excluded from this calculation.
Borrowing Options for Illinois K-12 School Districts
1
Building Bonds
As a general rule, to build a new freestanding school facility in Illinois for instructional purposes, requires a referendum regardless of the source of funding (Bonds, Cash on Hand, etc.) There are several exceptions to this general rule.
2
Working Cash Bonds
Working Cash Bonds are a good way for a school to secure funding that is very flexible and may be used for a variety of purposes (capital or operating.) Working Cash Bonds are subject to a 30-day petition requirement, as well as a public hearing requirement. Working Cash Bonds have a borrowing limit that is separate from the District’s overall debt limit.
3
Health, Life, Safety Bonds
Schools in Illinois are required to conduct a Health, Life, Safety Survey every 10 years in which the architect identifies potential issues within the District’s facilities that are in violation of the State’s building codes. Districts may then issue Bonds to fund these projects. Health, Life, Safety Bonds are not subject to the 30-day petition period. They do still require a public hearing.
4
Funding Bonds
Funding Bonds may be issued to pay any claim that exists against the School District. This may include legal judgements, unfunded debt, etc. They are subject to both the 30-day petition period as well as a public hearing.
5
Alternate Revenue Bonds
Alternate Revenue Bonds are used when a Levy is not needed for repayment. Schools will need a separate revenue source to pay for these Bonds. Common revenue streams include the following: 1% County School Facilities Sales Tax Proceeds, Energy Savings from Solar, Wind, or Geothermal projects, excess operating funds in O&M Budgets.
6
Debt/Lease Certificates
Debt and Lease Certificates also do not establish a Levy for repayment. Schools will need a separate revenue source to pay for this debt. Common repayment streams are similar to Alternate Revenue Bonds: 1% County School Facilities Sales Tax proceeds, energy savings from solar, wind, or geothermal projects, excess operating funds in O&M budgets. These certificates may be used for financing purchases of buses and other equipment rather than going through vendor financing from the equipment supplier.
7
Tax Anticipation Warrants
For School Districts that are in immediate short-term financial need of funding. Tax Anticipation Warrants are a way to get cash to plug holes in the budget over the short-term until the property tax levy distributions come in.
