The District 65 School Board approved a tentative budget for its fiscal year ending June 30, 2010 (FY ’10), at its Aug. 17 meeting that pegs operating expenses at $94.9 million and total expenses (including capital expenditures) at $120.6 million.
On a big-picture basis, the operating budget is balanced; no cuts are projected. Kathy Zalewski, comptroller, said key assumptions include that the District’s student enrollment will increase by 65 students to 6,234 students, that the District will add 10.8 new teaching positions and an additional assistant principal at Haven Middle School, and that the District’s program offering will remain stable.
Katie Bailey, chair of the Board’s Finance Committee, said the budget was realistic and that it addressed the Committee’s concerns that revenues be budgeted on a conservative basis. Among other things, property tax revenues are projected to be collected at a 97% rate, the same as last year, rather than a traditional rate of 98%. The 1% difference equates to about $700,000.
The Board will hold a public hearing on the tentative budget on Sept. 21, and it is scheduled to adopt a final budget that same evening.
The Operating Budget
Operating revenues are projected at $95 million, up $6.9 million, or 7.8 percent over the prior year. Operating expenses are projected at $94.9 million, up $4.9 million or 5.4 percent over the prior year. The tentative budget shows a surplus of about $140,000.
Property Taxes: On the revenue side, the District is projecting that the property tax revenues it collects for operations in FY ’10 will be $71.4 million, up $4.9 million, or 7.4 percent, over the prior year.
In December 2008, the District increased its property tax levy by 4.1 percent, the maximum permitted under tax caps. Mary Brown, chief financial officer, said the projected 7.4 percent increase is caused by the way property tax installment payments are calculated by Cook County and how the installments match up in the District’s fiscal years. Dr. Brown said the first installment tax payments made in the spring of 2009 (which falls in the District’s fiscal year ending June 30, 2009) were unusually low and will result in a higher amount being paid in the second installment, which falls in FY ’10.
Property taxes make up about 75 percent of the District’s operating revenues. State and federal grants, which account for 19 percent of the District’s operating revenues, are expected to be about $19 million, about 16 percent more than last year. Last year the State failed to make two payments due as categorical state aid totaling $2.6 million. Even though the State has said it will make the payments this year, Dr. Brown said the District, like many other school districts, was conservatively budgeting receipt of only one payment in the amount of $1.3 million this year.
Salaries: On the expense side, salaries are pegged at $65.6 million, up 5.7 percent over last year. Employee benefits are projected to increase to $11.7 million, a 6.2 percent increase. The salaries reflect the contractual increases provided for in the labor contracts that expire on June 30, 2012, and the cost of adding additional personnel. Salaries and benefits, together, account for 80 percent of the District’s operating expenses, said Ms. Zalewski.
Cash Balances: The District is reporting on an unaudited basis that it finished the 2008-09 school year with an operating deficit of $1.9 million, or about $2.1 million below the budgeted surplus of about $210,000. Ms. Zalewski said the deficit is the result of the recession, which affected all sources of the District’s operating income.
At fiscal year ending June 30, 2009, the District had a cash balance of about $18.7 million in its operating funds (which includes $12.2 million in the working cash fund). The cash reserves in the District’s operating funds are equivalent to about 72 days operating expenses.
Capital Expenditures
The tentative budget projects capital expenditures of about $13.5 million. About $11.5 million of the capital expenditures will be paid out of the proceeds of bonds issued last year to fund capital improvements and technology. The capital expenditures are as follows:
$9.3 million is allocated to make capital improvements to the District’s school buildings. These expenditures are being funded with the proceeds of bonds issued last year.
$2.2 million is allocated to replace aging computer equipment and purchase additional enhancements. These purchases are being funded with the proceeds of bonds issued last year.
$1 million is allocated to projects that will improve energy efficiency. This is being funded by a state grant.
$1 million will be spent on life/safety projects, incurred to keep school buildings safe and in compliance with safety and accessibility codes. This is being funded by about $523,000 in property taxes, an inter-fund transfer of about $120,000, and the cash balance in the fund.
The budget also projects the District will pay about $11.2 million in debt service, which will be funded through property taxes. As of June 30, 2009, the District had outstanding debt of about $46 million.