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The District 202 Board of Education held a budget hearing on Sept. 8 to discuss issues associated with the tentative budget for Evanston Township High School that was passed in May. While the numbers are currently in balance, Board members were told legislation pending in Springfield could force them to create a “Plan B” midyear should money from Springfield be reduced or costs shifted from the State to school districts.
The budget is $79.7 million in expenditures, up 2.6% over last year. Operating expenses are $70 million, up 2.6% over last year.
Springfield’s Impact on the Budget
Bill Stafford, ETHS Chief Financial Officer, and Deputy CFO Mary Rodino reviewed the tentative draft budget with the Board. While expenses and revenues are aligned for the eighth year in a row, categorical State aid continues to be reduced. Just this week, aid was reduced and prorated to an 89 percent level, Mr. Stafford said.
Three other pieces of legislation may impact State funding or school districts’ costs, said Mr. Stafford.
First, the State legislature is considering whether or not to extend the income tax increase implemented three years ago. Not extending the increase would result in even deeper cuts in education funding.
“If the State does not renew the (tax) increase, all bets are off,” said Mr. Stafford. Without that money, the District is looking at “massive decreases.” “We will survive, but we’re a creature of the state; we can’t add revenue streams,” added Mr. Stafford. An income tax freeze would also “be a major problem.”
Second, the legislature is considering changing the way it funds education. The Illinois Senate passed Senate Bill 16 last session, and the bill is now before the House. If enacted into law, SB 16 will make sweeping changes in how Illinois education is funded. The bill does not increase the level of education funding, but changes the way in which limited State funding is apportioned among school districts.
Generally, school districts with higher assessed property values will receive much less State funding. District 65 stands to lose 85% of its State funding or $6.5 million per year. School District 202 would lose 81% of its funding, or $2.2 million per year.
Third, the legislature is considering shifting the “normal cost” of teacher pensions from the State to school districts. This “seems inevitable,” said Mr. Stafford.
Last year the legislature adopted pension reforms that would reduce pension payments, but teachers have challenged the constitutionality of that legislation. If the Illinois Supreme Court rules the reforms are constitutional, the District will have to pay 2% of teacher salary payroll into pensions. If ruled unconstitutional, Mr. Stafford said the District will have to kick in 8% of its teacher payroll which is “well over $2 million per year in budget reductions.”
These pension costs could be phased in over time, but this also remains to be seen. The earliest the Supreme Court would rule is December, Mr. Stafford said, which is well into the District’s budget year.
Other Key Factors
Property taxes, which account for 85% of the District’s revenue, are also a concern. School Districts are limited by tax caps, which limit the increase of the annual property tax levy to the lesser of the consumer price index (CPR) or 5%. Currently, the increase in the levy is a “modest 1.5 percent,” said Mr. Stafford. In addition, he said, Cook County assessed values are currently down for the fourth year in a row. These issues will be discussed further at a levy hearing in November.
The District is already looking at strategies to reduce its costs.
“We continue to change our employees’ health care delivery system with a strong emphasis on wellness. We’d like to continue to increase that emphasis which helps with the costs. We also have a plan in place to reduce operation costs with planned capital improvements,” said Ms. Rodino.
“As always, instruction is a top priority,” said Ms. Rodino. “The District is committed to maintaining a reasonable student-teacher ratio. We always look to avoid personnel layoffs whenever possible.”
Personnel costs are the largest chunk of expenses, accounting for 67% of the overall budget. Salaries are budgeted to increase 4.32% this year, due to contract obligations and special education mandates dictated an increase in personnel.
Board member Bill Geiger suggested that for now, the Board needs to decide what the process of making budget cuts would look like.
“We need to prepare ourselves so that if we experience Doomsday, we at least know what foot to put in front of the other and how to move forward in making what will be some very, very difficult decisions,” Mr. Geiger said.
Dr. Eric Witherspoon, D202 Superintendent, told the Board that, during his first few years at ETHS, he, the finance department and the Board were forced to make millions of dollars in cuts to rectify previous years of deficit budgets and that the knowledge gained through those experiences would be helpful going forward if reductions become necessary.
There were no public comments during the hearing. The final budget will be adopted at the Sept. 22 Board meeting.