On June 8, the Finance Committee of the District 65 School Board reviewed a tentative budget for fiscal year ending June 30, 2016 (FY’16). Operating revenues are projected at $109.5 million, up 2.5% from the prior year. Operating expenses are projected at $108.4 million, up 1.6% from the prior year.
The operating budget for FY’16 has an operating surplus of $1,096,869, said Kathy Zalewski, business manager for the District. The District is able to report this surplus due to significant staff reductions and cuts in non-personnel expenses totaling about $2.3 million. The plan is to use most of the surplus to prepay expenses in FY’17 to reduce a projected deficit for that year.
On the revenue side, the District is projecting that the property tax revenues it collects for operations in FY’16 will be $84.4 million, up 1.7% over the prior year. The District is limited in raising property taxes by State tax caps which limit the increase to the lesser of 5% or the increase in the Consumer Price Index. For FY’16, which spans two calendar years, the applicable CPI rates are 1.5% and 0.8%. Property taxes make up about 77% of the District’s operating revenues.
State and federal grants, which account for 15% of the District’s operating revenues, are expected to be about $18.7 million, about 6.7% more than last year. The increase is primarily due to an assumption that the State will make four, rather than three, categorical payments in FY’16. Other local revenues are expected to decrease by about $105,000.
On the expense side, salaries are pegged at $77.8 million, up 2.6% over last year; and employee benefits are projected to be $14.8 million. Health insurance premiums, which make up a major part of the benefits, are projected to increase by 5.1%. Salaries and benefits, together, account for 85% of the District’s operating expenses.
The budget builds in savings of approximately $1.4 million due to the reduction of 29 full-time equivalent positions. The District’s student enrollment is assumed to increase by 117 students; and the budget builds in the cost of 2.5 additional teaching positons to accommodate the increased enrollment.
On a combined basis, the District has been able to cut non-personnel expenses by $891,098 as part of its budget reduction strategies, said Ms. Zalewski. Non-personnel expenses total about $15.7 million.
Use of the Surplus
The District plans to use most of the operating surplus in FY’16 to prepay expenses for FY’17. This will enable the District to reduce the deficit projected for FY’17 to approximately $1.8 million. The District is projecting deficits of $3.9 million in FY’18, $6.4 million in FY’19, and $5.5 million in FY’20.
Superintendent Paul Goren said he is in the process of putting together a citizens’ budget committee to provide input on possible ways to address the deficits. The Board is expected to consider later this year whether to ask the community to increase property tax revenues in a referendum, and if so when to schedule the referendum.
For more information on the staff cuts, financial uncertainties due to potential changes in State law, and a potential referendum, see articles in the online version of the RoundTable at evanstonroundtable.com