CHICAGO - More Illinois school districts struggled financially in their last fiscal year, according to the Illinois Board of Education's latest financial profiles report.

One-third of the state's public school students attend schools in districts ranked in the two lowest categories, which denote poor financial health. The recently released review showed that 532 districts, nearly 62% overall, of the state's 862 districts have engaged in deficit spending, used their reserves, or borrowed for operations, compared to 32% in 2008.

The state board said the results underscore the need for additional state funding. The board is asking lawmakers to approve an additional $1 billion in spending in the next budget. The board believes the funds are needed to make up for the nearly $1 billion that was cut from education between 2009 and 2012.

"Tough choices have become par for the course for school district administrators and local boards as many have cut staff positions as well as arts and after-school programs, delayed construction projects and important repairs and are deficit-spending in order to pay the bills," Illinois Board of Education Chairman Gery Chico said in a statement March 12. "Less state funding directly contributes to these struggles and appears to correlate to the rising number of districts in the highest risk category on our annual financial profile."

A total of 560 districts achieved the strongest ranking of Financial Recognition. That's down two from last year and 110 from 2012. A total of 181 districts, down from 191 districts, received a ranking of Financial Review which means they will be monitored for potential downward trends.

A total of 72 districts fell into the category of Early Warning, up from 67 a year earlier. ISBE monitors those districts closely and offers proactive technical assistance. The remaining 49 districts were placed in the category of Financial Watch, up from 45 last year. In additional to financial advice, those districts are reviewed to determine whether they meet criteria qualifying for financial oversight.

Districts are reviewed based on their annual financial reports for fiscal 2013 which ended June 30. Their rankings are determined by fund balance to revenue ratio, expenditures to revenue ratio, days cash on hand, percent of short-term borrowing available, and percent of long-term debt remaining.

Economic conditions could result in further deterioration in the coming year based on information from districts, the report warned. The number of districts with deficits in their current budgets is projected at 532 or 61.8 %, compared to 420 or 48.7 % in fiscal 2013.

"When comparing Financial Profile data over the last decade, it's apparent that districts have been forced to reduce expenditures and incur additional long-term debt in order to balance their budgets. Cutting expenses even further is going to be near impossible for most districts to do without negatively affecting the quality of education they provide," state Superintendent of Education Christopher Koch said in a statement.

The report noted that results were adjusted to account for the state's chronically late aid payments.

The school code ensures that districts are not designated as being in financial difficulty solely due to delayed state payments.

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