District 95 Looks to Improve Credit Score

District 95 needs to save $11 million dollars to improve its credit rating and financial profile score.

Currently Illinois State Board of Education (ISBE) has rated District 95 with a 3.8 financial profile score out of 4.0 and bonding agencies, Moody’s or Standard & Poors have given District 95 AA+ out of a possible AAA+ rating.

The score is determined by fund balance to expenditures. In order for District 95 to get the highest score, it has to have three months fund balance to expenditures.

“It’s basically a three-month cushion we have to carry at all times,” explained Michael Engel, interim assistant superintendent of business and operations.

Engel presented the board with an informational Fund Balance White Paper, written by Dr. Michael J. Jacoby, executive director, Illinois Association of School Business Officials.

“I just wanted the board to be aware of the standards,” Engel said.

 A credit rating and financial profile score are important to the District because it affects the type of interest rate the district will get if it borrows money again.

District 95 has around $9 million in reserve and needs another $11 million to secure that three-month cushion.

Since the majority of the funding provided to the district comes from property taxes, the district only gets paid twice a year.

“Imagine your own checking account. At the beginning of the month your account balance is high, but by the end of the month it has dwindled down due to paying bills, buying groceries, etc.,” Engel said. “The same for the district, by April and May, our account is very low because we’ve been paying salaries and expenses since our payment from fall.”

The percentage of fund balance to expenditure fluctuates throughout the year. When the district first gets paid, it has the three-month cushion, but as the months go by and expenses are paid out, the three-month cushion dissipates.

According to Engel, over two years ago District 95 was in the red, borrowing money to make payroll.

He credits former assistant superintendents of business and operations Mary Kalou and Jeff King as the reason’s why the district was able to get out of the red, “Mary re-appropriated teaching staff at the schools and cut things that needed to be cut. Jeff was very fiscally responsible and the needs of the district were met, not the wants.”

“I think we need to start saving at least $2-3 million each year,” said Mike Finn, board member.

 Engel thinks a conservative approach is more realistic, “We are still trying to play catch up, addressing building needs, and providing the best education for students in a safe environment. I think the district can save $1-1.5 million a year for the next six to eight years.”