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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
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