Donation clouding grim reality facing District 26

There was so much excitement Monday over the announcement of a possible $4.3 million donation to Cary Elementary District 26, it was easy to overlook an even more crucial agenda item.

Deb Vespa, division administrator for the Illinois State Board of Education, gave a presentation to the school board on the circumstances that would lead to a "state takeover" - although she didn't like that term.

Whatever you call it, state oversight of the district could wrest a substantial amount of control from local officials (and ultimately, local taxpayers) and last anywhere from three to 10 years.

The donation - if it materializes - could tide the district over for just a year.

Meanwhile, none of the district's underlying financial issues - troubling levels of short-term borrowing, budget deficits, negative fund balances - would be addressed.

The good news is that if the district develops a state-approved plan to right its financial ship and sticks to that plan, state officials won't have to step in, according to Vespa.

If the district doesn't or cannot follow that plan, however, or if cash flow issues get worse, Vespa and her staff will probably certify the district is in financial distress, the first step to taking away local control.

Cash flow is a particular concern. T. Ferrier, director of finance and operations, anticipates the district will have to borrow $15 million in short-term loans next year just to make payroll.

The district has also explored the possibility of taking out second-year tax anticipation warrants - basically payday loans that would be backed by the tax receipts it gets during the next school year.

That, according to Vespa, would be a symptom that would prompt state education officials to consider certifying the district is in distress.

At that point, though, District 26 may not even have a choice. If the district is unable to find a lender that will issue the second-year loans, it may be unable to meet payroll and be forced to turn to state officials for help.

Voters will have to weigh these scenarios carefully when they head to the ballot in November. District 26 is asking voters to approve $15 million in working cash bonds.

What voters decide could determine - more than a $4.3 million donation - whether they maintain control over Cary schools or whether the state of Illinois, which isn't winning any awards for financial management, will have to clean house for them.