At the March 17 meeting of the District 65 School Board, Chief Financial Officer William Stafford told the Board and administrators that the District will be in good financial shape for the next several years. The high school’s fiscal year, which begins July 1, coincides with the school year.
The projections, prepared by Mr. Stafford and deputy financial officer Mary Rodino, show a surplus of $680,000 in fiscal year 2015 (which ends on June 30, 2015), a deficit of $124,000 in FY 2016, and a surplus of $10,000 in FY 2017, followed by deficits of $717,000 and $1.1 million in the fiscal years 2018 and 2019, respectively.
Mr. Stafford said their projections are based on “conservative” assumptions and are mindful of uncertainties from the State of Illinois. The projections assume an increased enrollment of 20 students and 1.5 full-time-equivalent certified staff members each year.
Projected Revenues
While the District receives the bulk of revenues locally, from property tax revenues, it also receives funding from state and federal sources.
Property tax revenues comprise about 85% of the District’s revenue, but its levy potential is limited by State-imposed tax caps. With some exceptions, the annual increase of a school district’s levy must be the lesser of 5% or the consumer price index for the previous calendar year. For its projections, the District assumed the CPI would be 2.1% for fiscal years 2015-19, so that the projected property tax levy in those years would increase 2.1% successively.
“The average CPI was about 2.4% in the last 20 years,” Mr. Stafford said, “but we dialed it down to 2.1% [for the projections].”
The projections assume 2.5% annual increases in federal funds – more than 1% higher than the 1.4% projected increase in the current budget.
Funding from the State comes from General State Aid and grants for special education and transportation.
General State Aid, which comprises about 2% of the school’s annual budget, has been reduced during the past few years, and the projections assume further reductions.
For other State revenues, the projections assume no increase in special education funding and a decrease in transportation funding in fiscal year 2015, followed by slight annual increases thereafter.
Projected Expenditures
Salaries and benefits are the largest expenditures, with salaries taking up 63% of the budget and benefits about 13%.
The teachers’ contract continues through 2016, Mr. Stafford said. The projections assume increases between 1.5% and 3% for all other salaries. This is “consistent” with previous increases, according to information from Mr. Stafford and Ms. Rodino. The increase in salary expenses in the present budget, however, was 5.2% more than in the previous year.
The projections peg increases in health insurance costs at 5% each year, a number that is consistent with projections in the present budget. Purchased services – mainly social service support – are expected to increase by 5% annually. Capital outlays will be “held flat,” Mr. Stafford said, while most other expenditures are projected to increase by 2.5% each year.
Pension Shift
Perhaps the biggest unknown in these projections is whether the State will shift to local school districts a portion of the cost to fund teacher pensions, and, if so, how much. Some bills in Springfield propose to phase in the shift over a period of 18 years.
While there are many uncertainties about what the State will do, Mr. Stafford said they are including an amount into the projections on the assumption of the cost will be shifted to the school districts on a phased-in basis.
Mr. Stafford said, “We’re very comfortable with where we are. We are in very good shape. … We can manage for the next three years; we can balance the budget. … If we do have an issue [down the road], we have cash. It’s important if you run into challenges to have cash. Cash is always key.”
The projected fund balances are around $33 million for each year through 2019.