Illinois Gov. Pat Quinn last week signed legislation that gives school districts greater flexibility in borrowing for cash-flow purposes.
The law allows a district to establish a line of credit with a bank or other financial institution. It also allows a school board to pledge general revenues due in the current fiscal year or expected to be due in the next fiscal year for note or bond issues. The bill is effective immediately.
Districts previously were more limited in the revenue they could pledge for tax anticipation warrant issues or general state aid anticipation certificates. The legislation was prompted in part to give schools more flexibility to deal with late payments from the state as it grapples with a cash crunch.
“This new law is good news for Illinois’ school districts. It is especially important that our schools have a variety of borrowing options in order to keep up with their bills during these tough economic times,” Quinn said in a statement.