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Operating expenses budgeted in School District 202’s proposed budget for fiscal year 2009-10 match anticipated revenues. The public hearing on the budget was held on Sept. 14, and the District 202 School Board is expected to approve it at the Sept. 28 meeting.

A flat economy in the state, a decrease in interest income and decreases in previously expected state and federal funds called for a trimming of expenses for 2009-10. Still, said Dr. Eric Witherspoon in his June introductory memo to the budget document, “This budget is balanced, with operating revenues matching operating expenditures for the third straight year.”

The budget pegs operating expenses – which includes expenses for education, operations and maintenance, and transportation – at $64.3 million, up $2.9 million, or 4.6 percent, over the expenses incurred last year.

The budget also includes $8.4 million in expenditures for bond and interest payments, capital expenditures, and IMRF (retirement) and social security payments, which is about $4.1 million less than last year. On an overall basis the budget is $72.6 million, a decrease of about 1.7 percent from last year’s total expenses.

Revenues

The District estimates it will receive a total of $56 million in property tax revenues in the 2009-10 school year. Property taxes for operating funds are estimated to be about $52.1 million, a 3.7 percent increase over last year. Property taxes represent 83 percent of the District’s operating revenues.

The District is projecting a decrease in revenues from the corporate personal property and replacement tax and other local revenues due to the economic downturn. Although the District may receive funds from the federal stimulus package, those funds are not included in the present budget.

Expenses

Salaries and benefits combined are budgeted at $46.1 million, which is about 72 percent of total operating expenses. Expenditures for retirement and Social Security are projected at $2.3 million – about a 14 percent increase, due to a 20 percent increase in the IMRF (retirement fund) contribution rates that stem from investment losses in the pension fund’s assets during the ongoing recession. Transportation costs are projected to be just slightly more than $1 million.

Dr. Witherspoon said in his memo to the Board that the budget builds in reductions “in administrative costs as well as reductions in numerous 12-month positions to 10-month positions. The administration will continue working with the Board to identify additional cost savings through attrition and efficiencies in service delivery.”

Strategies for 2010

The District lists three “financial strategies” for fiscal year 2010: position control and vacancy analysis, energy and water conservation, and capital improvements. A policy instituted in 2007 mandates that “as positions become vacant, an analysis must be done to evaluate the need for the position and how it fits into the strategic budget plan for the year.” The District said it will continue to follow this policy for both certified and non-certified positions.

A building-use study will “assist in the long-range planning for the reduction of energy use,” according to the budget document. Finally, the District will make some capital purchases to “assist in reducing operating costs” in both transportation and water irrigation. Because of the relatively mild summer and a new water-saving outdoor irrigation system, the District was able to garner about $200,000 in energy and water savings, according to Mr. Stafford’s Sept. 10 memo.

Results for FY 2009

The District operated at a deficit in the amount of about $1.2 million for fiscal year ending June 30, 2009, according to the Sept. 10 memo. A delay in receiving property taxes and other funds accounted for a substantial portion of the deficit.

The District had a cash balance of about $25 million in its operating funds (on an unaudited basis) as of June 30, 2009,

Long-Term Planning

Evanston Township High School officials project that the long-term effects of the continuing economic downturn will be felt through at least 2014.

One factor affecting the District’s future revenues is a low Consumer Price Index of 0.1% for 2008. Because state tax caps limit the amount school districts may raise property taxes to the lesser of the CPI or 5 percent, the District may increase its 2009 property tax levy by only 0.1 percent, with exceptions for new property added to the tax roll. Because each levy becomes the base for the succeeding year, the low levy for 2009 will have a continuing impact.

Dr. Witherspoon said in his memo to the Board that the miniscule increase in the 2009 levy will present a major problem for fiscal year 2011. “Since it is clear that more budget reductions will have to be made for FY 2011, we will have Board Finance Committee meetings over the next year to plan further reductions,” he said.

According to the budget documents, the District, working with PMA Financial Network Inc., has developed a long-range financial plan – a five-year projection of revenues and expenditures for its education, operations and maintenance, transportation, IMRF and Social Security, working cash and tort funds, for each fiscal year between 2010 and 2014

On an aggregate basis, the plan projects a surplus of $1.4 million in these funds for fiscal year ending 2011, and then deficits of about $468,000, $1.9 million, and $3.5 million over the next three years. The projected cash balance in the funds at June 30, 2014, is $22.5 million, on an aggregate basis.

The District says the plan will be reviewed twice yearly and the assumptions updated at that time.