Illinois State Board of Education

100 North Firststreet Springfield, Illinois 62777-0001

www.isbe.net
James T. Meeks
Chairman

Tony Smith, Ph.D.

State Superintendent of Education

February 18,2016
CERTIFIED MAIL
Forrest Claypool
Chief Executive Officer
Chicago Public Schools
42 W. Madison St.
Chicago, IL 60602
Frank Clark
President
Chicago Board of Education
1 N. Dearborn St., Suite 950
Chicago, IL 60602
Dear Mr. Claypool and Mr. Clark,
As you are aware, Chicago Public Schools was designated as on "financial watch status" in March 2015
under the Illinois State Board of Education's District Financial Profile System. As a result of this
designation, we are exercising our authority under Section 1A-8 of the School Code to initiate a proper
investigation of the financial integrity of Chicago Public Schools. We are writing this letter in regards to
the concerning financial situation in Chicago Public Schools. Pursuant to Section 1A-8 of the School
Code, the State Superintendent may legally require a school district that has been designated as on
"financial watch status" to "share financial information relevant to a proper investigation of the district's
financial condition and the delivery of appropriate State financial, technical, and consulting services to the
district."
The purpose of this correspondence is to initiate a request for specific financial information relevant to
our investigation as well as the identification of a designee who will function as the central point of
contact for my staff in responding to these requests. No later than the close of business on March 4,
2016, please email the below outlined financial information and identity and contact information of a
designee to the State Superintendent's assistant, Ms. Kimberly Clarke, at kclarke@,isbe.net.
Initial request for financial information includes the following:
Annual bound audits (current year plus the past three years)
Monthly bank reconciliations by fund (current year)
Annual cash flow by fund (with actual amounts for each month that has been closed for current
year plus the past three years)
Projected cash flow for next year FY by fund
Current trial balance, financial position
Three year financial projections and assumptions (current year plus three projected FYs)
Three year financial plan to obtain balanced budget plus budget reduction assumptions
Monthly payroll amounts (current year plus past three years plus three years projected)

Major contracts such as food services, transportation, etc. to obtain annual increases (current
contracts)
Negotiated labor contracts (current year contracts)
Health insurance assumptions (current year plus past three years plus three years projected)
Alternate Revenue Bond Amortization schedules to determine increases of GSA or other revenue
that need to go to debt services instead of operations (amortization schedule for each bond
issuance)
Additional information may be requested as the investigation determines.
As you may be aware, an investigation into a district's financial condition is the first step in a process of
determining if conditions exist for "certification of financial difficulty" as detailed in Section 1A-8 of the
School Code. Our sincere hope is that the forthcoming investigation will identi@ opportunities for
actions to be taken that will improve the financial condition of Chicago Public Schools, avoid
"certification of financial difficulty," and, most importantly, result in fiscal stability.
We are available at your convenience to discuss any questions or concerns you may have.
Sincerely,

Tony mit , P . .
state Superintendent of Education
cc:

Beth Purvis, Secretary of Education

h m e s T. Meeks
Chairman