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School District 65 Administrators presented a preliminary response to the Citizens Ad Hoc Budget Committee’s report which laid out potential ways to address the District’s projected operating deficits, which are projected to grow from $3.3 million in the 2012-13 school year to $8.7 million by 2015-16.
The Committee’s report, which was presented to the School Board on Dec. 5, lists 30 potential solutions to address a structural imbalance in the District’s budget, namely that salaries and benefits (which account for 80% of the District’s operating expenses) are growing at a faster rate than the District’s property tax revenues (which account for 80% of the District’s operating revenues).
Salaries and Benefits
Dr. Murphy said the lion’s share of the projected growth in operating expenses is due to the growth of salaries and benefits. The Citizens Budget Committee proposed that the District consider three possible ways to limit salary growth to the growth in property tax revenues, which are subject to tax caps.
Administrators said all of the proposals to reform salary structure and many of the proposals to address the rising costs of employee benefits would need to be negotiated with the employee unions. Negotiations for new collective bargaining agreements, which expire in August 2012, are expected to begin in February. Dr. Murphy said some of the most important ways to address the projected deficits will be the subject of those negotiations.
Administrators added that some of the proposed ways to address the rising costs of employee benefits are already being done, and that the District will explore the others, which include pooling the District’s health care plan with other local governments, considering self-insuring for short and long-term disability, and offering health savings accounts with higher deductible plans.
The Citizens Budget Committee said possible ways to reduce staffing levels are through attrition, increasing class sizes, and bringing the level of support staff into line with national standards.
Dr. Murphy said reducing staff by attrition has to be looked at on a “case by case” basis, and the District would be required to assess how a decision to not fill a position would impact the quality of the District’s programs and services. As examples, he said the District would need to assess the impact of not filling a teaching position on class size and the impact of not filling a custodial position on overtime.
While saying that the District is pretty enriched as far as staffing is concerned, he said national standards can be looked at, but, “We have to decide what’s right for us.”
He added, though, “We’re going to be looking at all of our positions with more rigor and more scrutiny.”
Board President Katie Bailey said the Board has been looking at class sizes and the class size guidelines. Finance Committee Chair Andy Pigozzi said class sizes would be looked at in developing a budget for 2012-13.
Other Possible Ways to Address the Deficits
Administrators said the Board will evaluate the financial and educational feasibility of merging District 65 and District 202. Ms. Bailey said this would be discussed at the Joint School Board meeting in January. Mr. Pigozzi asked if there is there any evidence that consolidating school districts improves student achievement, adding that the highest performing high school districts in the State are stand-alone districts.
Picking up on the Budget Committee’s proposal to leverage technological innovations, Richard Rykhus said the District should look at both instructional technology and operational technology as ways to improve efficiencies. Kim Weaver suggested the District explore cloud computing as a possible way to reduce expenses. Mr. Pigozzi said this issue would be on the table during the budget process.
One suggestion is that the District lease its assets. Mr. Rykhus said this may be an area in which there are some non-traditional ways to generate revenues. Mr. Pigozzi floated the idea of leasing space to generate advertising revenues.
Administrators said the District will continue to look for ways to optimize its investment opportunities, that it will solicit ideas from employees on how to reduce expenses or increase productivity during the budget building process, that it will explore doing a paperless registration process, that it is discussing an arrangement with the City to share TIF revenues and is supporting proposals to close TIF Districts early, that the proposal to seek a payment in lieu of taxes from Northwestern University “would need to be evaluated,” that the Board already approved early retirement incentives as a way to reduce salary expenses, and that the Board is currently exploring whether to approve a referendum to increase operating revenues over and above the property tax cap.
The Budget Process
Dr. Murphy said administrators will focus on the Budget Committee’s proposals as well as other ideas that might generate increased revenues or a reduction in expenses for the upcoming budget process. In addition, the Board will be conducting negotiations with the employee unions after the new year.