District 86 Issues Statement re ISBE “Financial Review” List Placement
Hinsdale, Ill. – November 1, 2016 – 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.
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