BORROWING OPTIONS FOR ILLINOIS SCHOOL DISTRICTS
Working Cash Fund Bonds
Life/Safety Bonds
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Issued to alter and repair existing school
buildings and equipment for fire prevention and safety purposes,
for the protection and safety of the environment pursuant to
the Environmental Protection Act, for energy conservation and
for school security purposes. These bonds may be issued to replace
all or a portion of an existing building, so long as the particular
requirements concerning such replacement are met.
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These bonds not subject to direct or backdoor
referendum, but the architect’s or engineer’s estimate
of cost of the construction must be approved by the Regional
and State Superintendents. In addition, the work must be done
pursuant to an order issued by the Regional Superintendent.
- Life/Safety funds may not be used for
buildings that do not house students.
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Building Bonds
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Issued to pay the cost of acquiring school
sited and building, equipping, altering, repairing and reconstructing
new and existing school buildings and additions.
- Must be approved by referendum held at a regularly
scheduled election.
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Bonds are secured
by the levy of a direct annual tax on all taxable property in
the school district without limitation as to rate or amount.
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Alternate Revenue Bonds
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Alternate bonds must be issued for a lawful
corporate purpose. They do not constitute debt for the purpose
of any statutory provision or limitation unless taxes, other
that a designated revenue source, are extended to pay them.
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May be issued whenever a school district
has a lawfully available revenue source sufficient to provide
in each year an amount not less than 1.25 times debt service
on any outstanding alternate bonds payable from such revenue
source.
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The bonds are also payable from a full faith
and credit tax levy. The intent is that the revenue source will
be sufficient to pay the bonds so that the taxes need not be
extended for their payment.
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The issuance of alternate bonds must be
approved by referendum if the requisite number of voters in
the district files a lawful petition with the secretary of the
school board within 30 days following publication of the district’s
intent to issue the bonds.
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Limited Bonds
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Limited bonds are issued in lieu of general
obligation bonds. Limited Bonds are payable from a separate
property tax levy that is unlimited as to rate, but the amount
of taxes that will be extended to pay the bonds is limited by
the Extension Limitation Law.
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Limited bonds are payable from a school
district's debt service extension base, which is an amount equal
to that portion of the district's extension for the applicable
levy year for the payment of non-referendum bonds.
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Numerous non-referendum financing alternatives
were not available to tax capped school districts under the
Property Tax Extension Limitation Law of the State of Illinois.
Those obligations now may be issued as limited bonds upon compliance
with applicable law.
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Certificates of Participation
Source: "Borrowing Alternatives for Illinois
School Districts", Chapman and Cutler, LLP., Chicago, IL.
