Chicagotribune | Twenty-nine school districts, seven more than last year, are on the state's financial watch list.

The Illinois State Board of Education released its annual report on the financial health of school districts Wednesday, and as expected in the current economy, the picture is grim. State education officials also noted that deficit spending has grown.

In 2008, 282 out of 869 school districts — 32.5 percent — were spending more money than they were taking in. State officials say that number went up to 355 in 2009. Under 2010 budget projections, they believe that number will climb to 385, about 44 percent of all school districts.

Each year, the education board analyzes school districts' finances and designates them as financially sound, under review, under warning or — in the worst case — on a financial watch list. State education officials look at factors such as the ratio of expenditures to revenue, the number of days of cash a district has on hand to pay its bills, and its short- and long-term borrowing ability. This year's designation is based on 2009 financial records submitted by school districts.

Ten districts facing deficits because of delays in state aid payments were not placed on the watch list.

Deb Vespa, division administrator at the education board, said that while the announcement reflects last year's financial picture, things appear to be getting worse.

Board officials started tracking school districts' finances after 44.8 percent of districts were found to be deficit spending in 2004. The officials work closely with districts named to the watch list and plan to monitor deficit spending.

"It's one we'll continue to watch," she said. "We're concerned with how this will go forward in the future."

Officials said the state owes schools $894.2 million in unpaid bills so far this year. That number is expected to climb past $1 billion by the end of the school year.

"It will be very difficult going into the next year," said Michael Jacoby, executive director of the Illinois Association of School Business Officials. "Not only are districts facing pressures from the economy, but they're also looking at state payment delays and state budget reductions."

He said a study to be released this week by four statewide education associations will show that an estimated 20,000 jobs have been cut across the education spectrum, from teachers to administrators to teachers' aides.

"That's just endemic of the situation that school districts are finding themselves in," he said. "Their resources are drying up