In December 2011 the District 65 School Board considered whether to place an “operating referendum” on the March 20 ballot – a referendum that would ask the community to approve an increase in property taxes above the amount permitted under state tax caps. At that time the Board was working with the projections prepared on Sept. 14, 2011. The Board decided to defer an operating referendum.
The projections issued by District 65 administrators on Feb. 10, 2012, provide a much rosier picture than those prepared five months ago. The District is projecting surpluses for the next three years of $329,000, $1.1 million and $34,000, respectively, and then deficits for the following two years of $2.7 million and $3.9 million. The accompanying article summarizes the key assumptions made in preparing the projections.
At this point, it is unclear how the budgetary issues will play out. There are many unknowns, including what the salary increases will be under the new teachers’ contract, what the Consumer Price Index (which limits the increase in property tax revenues) will be in this and subsequent years, whether the Board will approve the staffing reductions proposed in the Feb. 10, 2012, projections, whether the Board will ask for additional teachers to provide co-teaching in inclusion classrooms, and whether the community will approve the new school in the March 20 referendum. The projections do not include the cost to operate the new school, which may be about $1.5 million per year.
Dr. Murphy told the RoundTable he was optimistic the District will be able to balance the operating budget for the next two to three years without a net reduction in the number of teachers. He said he was cautiously optimistic that the District can manage the projected deficits after that without a noticeable change in the District’s education model.
When asked if there was a possibility that the District would need to place an operating referendum on the ballot in the next three, four or five years, Dr. Murphy said, “I can’t say that we will need to have an operational referendum. A lot of that depends upon what happens in your economic environment and also what happens with your pay scale, what happens with your negotiations. If we come out with reasonable negotiated agreements this time, and we get a contract for two or three years, that gives us a chance of managing all of this as we go out.
“It’s always a possibility the District may come back with an operating referendum. It’s always a possibility … that’s not planned.”
We think the District may avoid an operating referendum if a number of things come together: first, if the teachers agree to a contract that provides for a salary rate increase below the 3.7% increase assumed in making the Feb. 10 projections; and second, if the CPI is higher for 2012 and subsequent years than the 2.5% assumed in the projections. If these occur, then the District’s financial position would turn out to be better than projected. Depending on how much of a favorable variance there is between the assumptions and the actual, and depending on how other budgetary issues play out, an operating referendum might be unnecessary.
If, however, the salary rate increase and the CPIs come in close to the amounts assumed in the Feb. 10 projections, then, we think, an operating referendum will be necessary at some point down the road to maintain the quality of the current educational program and to operate the new school.
We assume that administrators have proposed cutting non-personnel expenses as much as possible in making the Feb. 10 projections. In addition, the projections propose cuts that reduce the number of teacher assistants by 16, the number of coaches by 7.5, and the number of teachers by 2; they propose reducing funds available for professional development; they propose a new policy of replacing not only retiring teachers, but all exiting teachers, with less experienced teachers to reduce the cost of salaries. Even with these and other cuts, the District is projecting deficits of $2.7 million in the 2015-16 school year and $3.9 million in the 2016-17 school year.
These projected deficits do not take into account any additional teachers to staff the co-teaching model as it expands to upper grade levels or to staff the proposed new school.
Thus, we think if the salary rate increase and the CPI come in as assumed in the projections, the District will be required either to make substantial reductions that impact the classroom or to ask the voters to approve an operating referendum to maintain the level of instruction and support that we currently have. We think this will be required with or without the new school.
Given these choices, we would opt for and support an operating referendum. Other school districts in the State are taking this approach.
In a Feb. 14 editorial, the RoundTable supported the District’s “capital referendum” on the March 20 ballot. We continue to do so.