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News

For immediate release
January 22, 2004

State Board of Education Approves Continuation
of Hazel Crest School District for FY05

Board cites district’s dramatic turnaround under School Finance Authority

(CHICAGO) – The Illinois State Board of Education (ISBE) today approved a recommendation for the continued operation of Hazel Crest School District 152.5. The action, made during the board’s January meeting, comes more than one year after the nearly-bankrupt district petitioned the Board to be placed under a Financial Oversight Panel and 13 months after it came under more stringent review by a School Finance Authority.

“This is a major achievement for a district that by all accounts was on the verge of closing its doors before the end of the 2002-03 school year,” said State Superintendent of Education Robert E. Schiller. “This is a tribute to the district’s determination to seek and accept ISBE’s assistance and to the hard work of the School Finance Authority.”

The 1100-student school district reached a financial crisis in the fall of 2002 when it was unable to pay bills or meet payroll. It had accumulated accounts payable for more than $1.4 million dating back to May 2002 Additionally, no financial institution was willing to lend the district additional funds.

Through the state School Code (105 ILCS 5/1B) the district petitioned ISBE in 2002 for a voluntary Financial Oversight Panel (FOP) to provide technical assistance and a comprehensive financial assessment. The panel eased the district’s situation when it determined the district qualified for an emergency grant of $250 per pupil. The panel was also able to help the district borrow $1.7 million through the issuance of Tax Anticipation Warrants.

The FOP eventually determined that more was needed and petitioned ISBE to seek legislative approval for the establishment of a School Finance Authority (SFA). With the help of the SFA, the district received $1.5 million through a Member Initiative grant from the General Assembly, and $4.5 million as a loan. The SFA cut 100 positions, closed two school buildings and made other cuts in expenses to keep the budget balanced and the district in operation for at least one more year.

Within the past six months, the Hazel Crest SFA convened a committee of citizens, teachers and administrators to review the district’s future and consider consolidation with surrounding districts. The input and activity led the SFA to vote January 5 to recommend that ISBE approve the continuation of the district based on a balanced budget.

“There’s no doubt that without ISBE Hazel Crest would not be solvent today,” said Rob Grossi, SFA CEO and Financial Administrator.

“Without this assistance from the panel, authority and the legislature, the district would have been forced to close half way through the 2002-03 school year,” said Schiller. “Instead, we are seeing what ISBE, the General Assembly and local efforts can achieve with determination, hard work and collaboration.”

Hazel Crest is the fourth district to come under a FOP since the law was created in 1989. Three districts have come under a FOP or SFA within the past year. According to the Board’s Condition of Education 74% of Illinois’ school districts are currently in deficit spending.

FACT SHEET

Financial Oversight Panel (FOP) definition/responsibility:

A three member panel appointed by the State Superintendent to oversee the finances of a school district which has been certified to be in financial difficulty under Section 1A-8. A Financial Oversight Panel once appointed will remain in existence for a minimum of 3 years up to a maximum of 10 years. If after 3 years the school district has repaid all of its obligations resulting from emergency State financial assistance and has improved its financial situation, a the Board of Education may, not more frequently than once in any 12 month period, petition the State Board to dissolve the Financial Oversight Panel.

The purpose of the Financial Oversight Panel shall be to exercise financial control over the board of education, and when approved by the State Board and the State Superintendent of Education, to furnish financial assistance so that the board can provide public education within the board’s jurisdiction while permitting the board to meet its obligations to its creditors and the holders of its notes and bonds.

A Financial Oversight Panel may petition the State Board for the establishment of a School Finance Authority for the district.

Downstate School Finance Authority (SFA) definition/responsibility

A five member panel appointed by the State Superintendent, of which two of the members are residents of the school district.

After a School Finance Authority is established the Financial Oversight Panel is abolished and all the rights of the, property, assets, contracts, and liabilities shall pass to and be vested in the Authority. The duties and obligations of the district under Article 1B (FOP) shall be transferred and become duties and obligations owed by the district to the School Finance Authority.

The purposes of the Authority shall be to exercise financial control over the district and to furnish financial assistance so that the district can provide public education within the district’s jurisdiction while permitting the district to meet its obligations to its creditors and the holders of is debt. Except as expressly limited by this Article, the Authority shall have all powers granted to a voluntary or involuntary Financial Oversight Panel and to a Financial Administrator and all other powers necessary to meet its responsibilities and to carry out its purposes.

The School Finance Authority has the ability to appoint officers, agents and employees of the Authority, including a chief executive officer, a chief fiscal officer, and a chief educational officer; to define their duties and qualifications and to fix their compensation and employee benefits. It has the power to negotiate collective bargaining agreements with the district’s employees and the same power to issue tax anticipation warrants as a school board.

The School Finance Authority may be in existence for a minimum of 3 years up to a maximum of 10 years.

About: Hazel Crest School District 152.5

  • School Finance Authority (12-23-02)
  • Voluntary Financial Oversight Panel (10-21-02)
  • Board of Education at Hazel Crest Petitioned ISBE on October 7, 2002 for a Financial Oversight Panel.
  • Members appointed by State Superintendent to FOP on October 21, 2002:
    • Mr. Larry Hupe, Chairman, Palos Heights, IL
    • Mr. Richard Lites, Homewood, IL
    • Mr. Edward O’Malley, Orland Park, IL
  • Downstate School Finance Authority for Elementary Districts (PA 92-855) was signed by the Governor on December 6, 2002.
  • December 9, 2002 - ISBE approves resolution to establish School Financial Authority for Hazel Crest SD 152.5 pursuant to Section 1F-15 of The School Code
  • Members appointed by State Superintendent to School Finance Authority on December 23, 2002
    • Mr. Larry Hupe, Chairman – 3 year term, Palos Heights, IL
    • Ms. Mary Grant – 3 year term, Hazel Crest, IL
    • Mr. Steven Wright – 2 year term, Markham, IL
    • Ms. Barb Toney – 3 year term, West Chicago, IL
    • Mr. Ed O’Malley – 2 year term, Orland Park, IL
  • Loan: $4,528,000
  • Grant: $ 283,000

Illinois State Board of Education
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Springfield, IL 62777