Hinsdale District 86 Responds to ISBE's Negative "Financial Review" Ranking

Last week, the Illinois State Board of Education released financial rankings of school districts across the state, and Hinsdale Township High School District 86 was placed on a “Financial Review” list.

District 86 stands in the “Financial Review” category with 23 percent of all Illinois school districts, or 196 out of the 857 total districts in the state.

The majority of schools — 66 percent, or 568 districts — were deemed fiscally comfortable and placed into a “Financial Recognition” category.

District 86 responded to ISBE’s rankings Tuesday, claiming the organization penalized the district for being transparent about its financial position in 2015 and that ISBE’s list didn’t take several key factors into account when calculating the district’s place on the “Financial Review” list.

District 86’s full statement is as follows:

In April 2015, the Hinsdale Township High School District 86 Board of Education adopted a resolution, based on the recommendation of Administration, mandating that tax revenues be recognized in the financial year they are intended to be used. As a result of more accurately reporting the District’s finances for fiscal year 2015, our year-over-year fund balances appeared to drop because the fiscal year 2014 financial position included early taxes. Our 2015 Annual Financial Report made this adjustment for 2014 (see pages 30-31). Had the resolution not been adopted, cash reserves reported for fiscal year 2015 would have been overstated by $42.3 million, about 40 percent of the District’s overall annual budget. When audited financial statements show that level of decrease in fund balances, no matter the cause, an indicator in the formula the Illinois State Board of Education (ISBE) uses for its financial rating system drops, resulting in a lower rating for a school district. In effect, the ISBE rating penalized us for fiscal year 2015 for being more transparent about our financial position.

District 86 stands behind the principle that just because monies are received earlier than any year for which they are budgeted to be spent does not mean that the District can count these funds as financial reserves or should spend them in the year received. Reporting revenue in this way more accurately represents the District’s true financial position. If District 86 were to account for tax revenues for any year other than the one for which they were budgeted, the fund balance of the previous year would be overstated, a practice that runs counter to transparent reporting to the Board and to the taxpayer.

What do you think? Was ISBE right to put District 86 under financial review? Let us know in the comments.

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