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On March 31, the District 65 School Board continued discussions that began at the Finance Committee on ways to address projected deficits.
On Feb. 10, District 65 administrators presented projections that show a surplus of about $17,000 in 2014-15 and then deficits of $4.7 million, $6.9 million, $8.7 million and $11 million in the subsequent four years.
The vast bulk of the increase in the projected deficits is due to two factors: first, a reduction in projected property tax revenues; and second, a substantial increase in projected expenses for employee benefits, which include health insurance and pension costs. While the legislature has not yet passed legislation that shifts a portion of teacher pension costs from the State to school districts, District 65 has built an amount into its projections on the assumption that the State will do so.
At the Board’s March 31 meeting, Mary Brown, assistant superintendent for business services, presented some materials to members of the Board to help guide the discussion, including the report of the Citizens Ad Hoc Budget Committee of District 65 that identified possible ways to address deficits projected in December 2011; an analysis of four alternative options to increase class sizes as a way to reduce staff; a breakdown of purchased services, supplies and equipment; and a summary of deficit reduction measures implemented in the last three years.
Dr. Brown said many of the strategies proposed in the Budget Committee’s report were incorporated in the prior years. She said that the District cut 25.5 full-time-equivalent positions, many through attrition; that it offered early retirement incentives which enabled the District to replace many retiring teachers with teachers at lower salaries; and it substantially cut expenses on purchased services and supplies.
Finance Committee Chair Richard Rykhus said, “Because of some of these strategies, we’ve been able to avoid some of the challenges that other districts have found. The reality is we can see in the not too distant future, the 2015-16 school year, bigger challenges than we’ve had to deal with.”
Mr. Rykhus asked administrators to present at the April 21 Finance Committee meeting a memo “identifying some near term priorities that we could focus on for the coming school year and long-term priorities, things that we might need to put in motion this year that might not impact next year’s school budget.”
He also asked administrators to take a look at two other areas. First, he said School District 202’s recent financial projections assume that their health care costs would increase 5% per year during the next five years, compared to District 65’s assumption that health insurance costs would increase by 10% each year. He said he and Suni Karthahad a preliminary conversation with Bill Geiger, a member of the District 202 Board and executive director of the McGaw Y, about ways in which District 202 and McGaw Y attempt to control health care costs. Mr. Rykhus asked District 65 administrators to explore this.
Kathy Zelewski, comptroller for District 65, said they were continuing to have discussions with health insurance brokers and were anticipating they would obtain a more favorable quote for health insurance for next year than was assumed in the latest financial projections.
Dr. Brown added that District 202 has a self-funded health plan, which she said involves taking on more risk; and District 65 has a fully-insured plan. She added that District 65 was also obtaining a quote for medical and dental insurance from an insurer of a fairly large pool of large school districts.
Mr. Rykhus also requested administrators to validate that “students attending our schools are actually living in our school boundaries.”
Lora Taira said the District regularly check’s residency of students at certain grade levels. She said they also follow up and check residency when red flags arise, such as when there is returned mail. Ellen Fogelberg, assistant superintendent, said they also periodically verify residency of homeless students.
Administrators are also laying out what class sizes at the schools would look like if the District increased the minimum class sizes by one or two students. It appears the Board is interested in exhausting other options before resorting to increasing class sizes.
The Board’s Finance Committee will continue discussions on ways to address the projected deficits at its April 21 meeting.