From former Cary Grade School District School Board President Scott Coffey:
Pritzker has dramatically expanded borrowing limits and powers for school districts in the last 2 years
It’s almost as if he wanted all Guardrails and taxpayer protections removed from impeding school districts from doing anything they want.
Here is a summary of the changes from ChatGPT:
Illinois has made some of the most significant changes to school district borrowing authority in decades. While the statutory debt limits themselves did not change for most districts until 2024, the General Assembly substantially expanded what districts can borrow and how that debt is structured. The practical effect is that many districts now have significantly greater borrowing capacity than they did just a few years ago.
1. Statutory debt limit was doubled for K-8 and high school districts (2024)
The biggest change came with legislation effective July 1, 2024.
Prior to the change:
- Unit districts (K-12): 13.8% of EAV
- Elementary districts: 6.9% of EAV
- High school districts: 6.9% of EAV
The 2024 legislation increased the debt limit for elementary and high school districts to match unit districts:
- Unit districts: 13.8% (unchanged)
- Elementary districts: increased from 6.9% to 13.8%
- High school districts: increased from 6.9% to 13.8%
This effectively doubled the legal debt capacity for hundreds of Illinois school districts.
2. Working Cash borrowing became much larger
The same legislation also increased the amount of Working Cash bonds districts may issue.
Previously, Working Cash bond authority was tied primarily to property tax capacity.
Now the calculation also includes:
- Evidence-Based Funding (EBF)
- Replacement taxes
- Other qualifying state revenues
Because EBF has grown substantially since 2018, districts receiving large EBF allocations can now issue considerably larger Working Cash bonds than under prior law.
3. EBF can now support Working Cash debt calculations
This is one of the most consequential changes.
Before:
Working Cash borrowing was based largely on local property tax resources.
Now:
Districts may include their most recent EBF allocation when determining borrowing authority.
For districts with rapidly growing EBF payments, borrowing capacity increased dramatically.
4. Increased flexibility to transfer Working Cash proceeds
Illinois has long allowed districts to transfer Working Cash funds into operational funds (Education, O&M, Transportation) subject to reimbursement rules.
In recent years, many districts have increasingly used Working Cash bonds to:
- generate operating liquidity,
- address cash-flow challenges, and
- temporarily support operating funds.
ISBE data show a sharp increase in Working Cash borrowing in FY2024, with most operational long-term debt issued for Working Cash purposes.
5. Practical borrowing capacity increased beyond the statutory limit
Even before 2024, Illinois law already excluded certain obligations from the statutory debt limit, including some:
- Alternate Revenue Bonds (ARBs),
- debt supported by alternate revenue sources, and
- certain specialized obligations.
As a result, a district’s total outstanding debt can exceed its statutory debt limit because not every type of obligation counts toward that limit.
Why these changes matter
For taxpayers and investors, these changes mean districts now have substantially more financing flexibility. They can:
- issue larger Working Cash bond offerings,
- leverage increasing EBF revenues,
- finance projects without immediate tax-rate increases in some cases, and
- carry higher overall debt levels than would have been possible several years ago.
Relevance to Prairie Grove District 46
Given your previous work reviewing Prairie Grove Community Consolidated School District 46’s bond documents, these changes are particularly relevant because the district has:
- pledged EBF revenues for debt repayment,
- used Working Cash financing, and
- issued Alternate Revenue Bonds.
The newer legislation expands the district’s legal borrowing authority and broadens the revenue sources that may support debt issuance. That does not automatically mean any particular financing is appropriate or compliant with existing bond covenants, but it does change the legal framework under which those borrowings can occur
The bottom line is he doubled the amount of debt a district can incur and makes it easier to issue debt and easier to spend debt proceeds
