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On June 13, the Finance Committee of the District 65 School Board reviewed a tentative budget for its fiscal year ending June 30, 2012 (FY ’12) that pegs operating expenses at $102.2 million and total expenses (including capital expenditures) at $131.3 million.

On a big-picture basis, the operating budget is balanced, said Kathy Zalewski, comptroller for the District. She said key assumptions include that the District’s student enrollment will increase by 164 students to 6,737 students (not including Park, Rice and pre-k students), and that the District will add 13 new teaching positions due to higher enrollment, and also add academic support staff and coaches.

Approving a tentative budget, which will likely take place in August, is the first step toward approving a final budget which must be approved by the end of September.

The Operating Budget

Operating revenues are projected at $102.8 million, up $1.9 million, or 1.9 percent over the prior year. Operating expenses are projected at $102.2 million, up $1.9 million or 1.9 percent over the prior year. The tentative budget shows a surplus of about $635,826.

Revenues: On the revenue side, the District is projecting that the property tax revenues it collects for operations in FY ’12 will be $81.2 million, up $5.3 million, or 7.4 percent, over the prior year. Property taxes make up about 79 percent of the District’s operating expenses.

Mary Brown, chief financial officer, said the increase in property taxes is primarily due to: a) a higher increase in the Consumer Price Index (which sets a cap on the increase in property taxes); b) a higher allocation of the property taxes to debt service in FY’11; and c) a higher proportion of the total 2012 taxes being paid in the first installment which falls in FY’12.

State and federal grants, which account for 16 percent of the District’s operating revenues, are expected to be about $16.5 million, about $3.6 million less than last year. About $2 million of the decrease will be due to the expiration of funding under the American Reinvestment and Recovery Act. The balance is due to a decrease in State categorical grants, or to an anticipated delay in the payments, said Ms. Zalewski. She said there is still uncertainty concerning State categorical payments.

Expenses: On the expense side, salaries are pegged at $71.7 million, up 5.5 percent over last year. Employee benefits are projected to increase to $13.9 million, a 7.9 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, said Ms. Zalewski.  Salaries and benefits, together, account for 82 percent of the District’s operating expenses.

Cash Balances: The District is reporting on an unaudited basis that it will finish the 2010-11 school year with an operating surplus of about $570,000.  Ms. Zalewski said the surplus is less than it might otherwise have been because the District is prepaying Workers Compensation and Property Liability insurance premiums for FY’12.

Projected Deficits

Ms. Zalewski also presented revised projections, which show deficits of $5.2 million, $6.1 million, $8.2 million and $9.8 million for FY’13 through FY’16. The Finance Committee decided last month to form a Citizens’ Task Force to make recommendations on ways to address the deficits, and has set a timeline to address the projected deficits. If cuts are made for FY’13, they will reduce the deficits for ensuing years if they eliminate ongoing expenses.