A major credit rating agency has boosted its view of Lincoln-Way High School District 210’s financial health as the district continues its recovery from a spending spree that got it on the state’s financial watch list and resulted in the federal indictment of its former superintendent.
The upgrade comes as the federal trial of Lawrence Wyllie, District 210’s former superintendent, has been pushed back yet again due to his ongoing health issues.
The next status date in his case is set for this summer, and there is no certainty as to when charges that he misspent millions in bond proceeds and spent district funds on personal projects might be heard in a trial, according to court filings.
Moody’s Investors Services had, in 2016, downgraded the district to its lowest rating of Ba1, meaning that Lincoln-Way was considered a substantial credit risk and not an investment grade institution.
The district’s precarious financial situation prompted Moody’s to assign a “negative” outlook to the district, noting “lingering financial uncertainty” and a reliance on short-term borrowing to cover operating costs. Moody’s changed the outlook to “stable” in March 2018.
In 2019, Moody’s twice upgraded the district’s creditworthiness and, in March of that year, the state board of education removed the district from the financial watch list.
The most recent upgrade this month gives the district an A1 rating up from A2, according to the district.
The case against Wyllie dates to September 2017, and while he awaits possible trial, the 86-year-old Wyllie, who lives in Naperville, continues to collect a taxpayer funded pension that, in 2020, was more than $351,000, according to state records.
That figure doesn’t account for annual cost-of-living increases.
In regular status reports filed by both sides, they have pointed out Wyllie, since August 2018, has experienced health issues described as “serious and ongoing.”
In a January 2023 report, prosecutors and defense lawyers said, for the first time, that Wyllie’s health status had taken a turn for the worse and that he was not able to “meaningfully participate in his own defense.”
The most recent status report filed by both sides this past January indicates Wyllie’s health condition hasn’t changed, and at a status hearing April 12, U.S. District Court Judge Elaine Bucklo agreed to a request by lawyers that the next hearing be set for June 28.
Attorneys have said in past reports to the judge that they are working to get a better idea of how the case will proceed given Wyllie’s health problems.
The federal indictment followed a yearlong investigation by the Daily Southtown that exposed questionable financial practices at Lincoln-Way, private uses of public resources and deals benefiting insiders, including Superdog, a dog-training center.
Wyllie became Lincoln-Way superintendent in 1989 and oversaw the district’s expansion from a single school in New Lenox to four campuses before retiring in 2013.
Lincoln-Way primarily serves students from New Lenox, Frankfort, Mokena, Manhattan and Tinley Park.
As Will County’s population grew during the 1990s, Wyllie pushed hard for a $225 million referendum in 2006 to build two new schools.
The district went on to issue $52 million in bonds in 2006, $123 million in 2007 and $29 million in 2009.
The district began eating up its cash reserves and, as Lincoln-Way’s finances atrophied, Wyllie fraudulently used bond funds to conceal the district’s true financial condition, prosecutors said in 2017.
The district’s problems did not become apparent to the public until 2015, when Lincoln-Way landed on the state’s financial watch list and the school board voted to close Lincoln-Way North High School in Frankfort to cut expenses. The district remained on the watch list until March 2019.
Between March 2010 and October 2012, Wyllie repeatedly reclassified millions of dollars and transferred bond funds from the U.S. Bank account, where the district maintained them, to Old Second Bank, which the district used to pay operating expenses, according to the indictment.
By doing that, Wyllie “concealed the scheme and the true financial health” of the district by fraudulently “appearing to lower the district’s net operating expenditures in its audited financial statements,” prosecutors said.
The understatement of operating expenditures and misuse of bond funds during that time was at least $7 million, prosecutors said.
The district, in a news release, said the improved outlook by Moody’s is due in part to action taken by the district in 2022 to restructure more than $130 million in bond debt, which helped level out principal and interest payments.
The prior debt structure called for balloon payments in the district’s debt while, under the restructuring, the district was able to secure a fixed interest rate of 1.76%, reducing the district’s outstanding debt by about $22 million.
Lincoln-Way North is now being used, temporarily, for classes by freshmen from Lockport Township High School while repair work is done at that district’s Central Campus.
mnolan@southtownstar.com
