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For the next four years (FY 2010-14), School District 65 is projecting deficits of $377,000, $4 million, $5.7 million and $7.5 million, for a cumulative total for those years of about $17.5 million, said Kathy Zalewski, comptroller, at the Board’s Finance Committee meeting on Aug. 12. That is about $3 million less than projected in June.
A substantial portion of the projected deficits is attributable to a low CPI in the amount of 0.1 percent for 2008, which limits the amount the District may increase property taxes in its 2009 levy year to 0.1 percent. The low CPI has a carryover effect into subsequent years. For purposes of making the projections, Mary Brown, chief financial officer, said the District assumed the CPI would be 2.5 percent in 2009 and subsequent years.
Dr. Brown reported that the CPI in the first seven months of 2009 was 2.6 percent. If the CPI comes in higher than 2.5 percent, it will enable the District to increase property taxes higher than the amounts projected and reduce the amount of the projected deficits. Increasing taxes by one percent equates to an additional $700,000 in revenues.
Another factor impacting the projections is the that the District entered into a four-year contract with the District Educators Council (the teachers union) last year, which the District estimated will increase teacher salaries at an average of about 6 percent a year. DEC’s contract extends through June 30, 2012.
Finance Committee president Katie Bailey said the Committee would begin discussions in September on how to address the projected deficits, and perhaps make decisions in January after the 2009 CPI is determined.
Superintendent Hardy Murphy said if the deficits are in fact in the $3 million range, “it is going to require some pretty significant decisions on the expenditure side.” He said salaries and benefits account for 80 percent of the District’s expenses, and that purchased services, supplies and capital outlay account for 16 percent. He said the administration would present information to the Finance Committee concerning purchased services, supplies and capital outlay, including which items in those categories were funded by grants, which would help members of the Finance Committee determine how much latitude they had to manage expenses without getting into personnel cuts. “I think that’s the front line of discussion,” he said.
Dr. Murphy said if salary expenses need to be cut, “There’s really only two ways to do it: rate of compensation or size of workforce. If you can’t deal with the rate of compensation – if it has already been fixed, then that leaves you with the size of workforce,” he said. “Unless you renegotiate,” said Ms. Bailey.