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At the Nov. 2 meeting of the School District 65 Finance Committee, Board members and administrators continued their process of preparing to engage the community in long-term budget planning in light of a likely triple financial threat from Springfield over the next few years.
Those threats include first, the State’s shifting to local school districts the “normal cost” – or yearly payment – of teacher pensions; second, a change in funding for public schools that, as it now stands, would cost Evanston public school districts about $6 million annually after a three-year phase-in; and third, a freeze in property taxes, the source of about 80% of District 65’s annual revenues.
Without taking into account the repercussions of any of those menaces, District 65 has projected an operating deficit of $731,866 in 2016-17 (FY’17), and then operating deficits of $3.6 million in FY’18, $6 million in FY’19, and $4.4 million in FY’20.
Projections incorporating the impact of potential State legislative action with the District’s mid-September financial projections show aggregate deficits of $2.4 million in 2016-17, $6.9 million in 2017-18, $13.6 million in 2018-19, and $15.7 million in 2019-20. These numbers, of course, assume that the State will enact all three pieces of legislation. See accompanying table.
Superintendent Paul Goren and Chief Strategy Officer Maria Allison presented a “budget benchmarking update” at the Nov. 2 Finance Committee meeting. The memo compared the District’s spending to six other school districts, which it termed “peer districts”: Evanston Township High School District 202; Skokie (District 68); Palatine (District 15); Oak Park (District 97); Wheeling (District 21); and Arlington Heights (District 59). District 65 spends $17,000 per pupil; ETHS, $26,000; Skokie, $15,000; Palatine, $13,000; Oak Park, $16,000; Wheeling, $17,000; and Arlington Heights, $18,000.
The memo compared District 65’s spending on several functions with that of the other districts, but designated the spending as on a “higher, neutral or lower” basis rather than providing exact figures. A chart in the memo, for example, showed that the District’s spending on instruction – 49% of its budget – is within 5% of the median of the peer districts. Administrative costs were lower in the “general administration” category, for the central office, but higher in the “building administration” category, which includes principals, secretaries, etc., for each of the District’s schools.
“There are two take-aways from this,” said Dr. Goren. “Our spending is mostly on par with [that of] our peers and in some cases is lower. Second, we will continue the conversation around uncertainties and, what we’re calling today ‘benchmark data.’”
Given the low consumer price index (CPI), which limits the rate at which the property-tax levy can be increased, Dr. Goren said, “We’re looking at the rate of spending. … In our [previous] conversation about structural deficit, we concluded that reductions or cuts alone aren’t going to solve the deficit. We’re going to have to look much more closely at our expenditures. … This is an attempt to take a broad look at the data available on our peer districts.”
Peer District Comparisons
All Board members attended the Finance Committee meeting. They teased out the different categories, as they tried to ascertain which information would be useful to them internally and what data needed to be refined or reworked in order to be presented to the community at large.
Board member Omar Brown asked administrators, “What surprised you about this information?”
Dr. Goren said the fact that District 65 is comparable to most of the peer districts in most of the expenditures was somewhat surprising. “Our administrative costs were at or below what comparable districts are doing,” he said, but added that the similarities underscored that it was not likely that District 65 would be able to find cost-saving examples in those districts.
Questions from the Board members elicited the response that the information included in the categories of spending may not be consistent across all districts. As an example, “bilingual education,” a category in which District 65 appears to spend less money than the peer districts, does not include the expenditures for the two-way immersion (TWI) program.
Board member Suni Kartha said she understood that there would be discrepancies in the peer-district comparisons “because of how things are reported to the State, but actually our spend is on things that might not be reflected here. … I think [the document] provides some useful information, but I do also have concerns because I feel like … it doesn’t necessarily give us accurate information.”
Board member Candance Chow, who chairs the Finance Committee, said she agreed that there might be discrepancies “and we’ll probably have to weigh that. And if the differences are hugely stark – as in the bilingual information – there might be something else going on.” She added she felt the document is “another input as to what will be our budget discussion” and is useful for the sake of comparison but not as a “driver” of change or proposed trade-offs.
Board member Claudia Garrison asked about the class sizes for middle school “I don’t feel that’s very accurate. What’s the basis? What’s the formula?”
Dr. Allison said the formula was “dividing the number of enrolled students by the certified staff, I think.” She added, “It’s not the most accurate, I think, but you can say that whatever error factor is in there is equal to everyone.”
“I understand the necessity of having a similar formula and an easily attainable one for all the comparisons,” said Ms. Garrison, “but … I don’t feel it’s very accurate.”
Tracy Quattrocki, Board president, and Board member Richard Rykhus focused on data about summer school.
“What jumps out at me is we’re ‘high’ [in comparison to peer districts] in summer school programs,” said Ms. Quattrocki. “If we’re in fact ‘high,’ we should evaluate … ‘Are we being effective?’ If we are not doing well, and we’re spending way above the other districts, that’s even greater cause for doubling down on our efforts. On instruction, if we’re going to make the claim that we’re spending higher than we really need to, [we should] look at how salaries factor into that and what that really means. That would be good to know if we’re spending more on instruction.
“If we look at summer school as a commitment to help kids who have great needs … on one side, the spend shows that we have that commitment, but the secondary question is, ‘To what effect?’” Dr. Goren said.
“Building on Tracy’s comments,” said Mr. Rykhus, “What are our goals in looking at this? … One of them is for us as a Board, administration, teachers and community to say, ‘Are we making the right levels of investment? Are we getting the right outcomes for these investments?’”
Mr. Rykhus also noted that summer-school support comes from Foundation 65, the McGaw Y, Youth & Opportunity United (Y.O.U.) and several PTA groups. He suggested that the administration identify that support, because “we might want to weigh in on their contributions to [the positive] impact [of summer school].”
While most Board members appeared to agree that the memo contained useful information, Mr. Rykhus and Ms. Kartha did not support sharing the information as presented with the public at large. They suggested that administrators tailor the information specifically to District 65.
“I would caution that we don’t present any of this information at community meetings until we have a little bit clearer idea of a narrative,” Ms. Kartha said.
Mr. Rykhus suggested that the administration “toss out those [peer-district] categories [such as the bilingual] and next time use categories that make sense for our purposes.”
Andrea Mainelli, a consultant and a member of the Financial Sustainability Committee for the Strategic Planning Process, said she felt the information in the document “is good, but it needs to be framed in context. I have three questions: How did you choose the peer groups? Are those districts in deficit, too? How are their students doing? Until I know that, I don’t know what this [document] really means.”
Ms. Mainelli also cautioned the committee that the financial data have a variance of plus or minus 5%, which could be as great as $5 million.
Board member Jennifer Phillips said, similarly, that information presented to the public at large “is going to be a package as we go forward – very thoughtfully laid out – and accessible.” She said the question to frame the context is “Can people actually understand what we’re talking about? And understand the story line?”
Dr. Goren said he felt it is premature “to send a survey out … but it is necessary to have a conversation that goes beyond this table. … We should convene the Budget Advisory Committee and have one or two community sessions and staff sessions.”
Ms. Kartha asked whether there would be “a complete picture of what we have and what we’re trying to do. … I think [the document] is confusing.” She suggested offering specific proposals, so the community would know where the Board is heading.
“I disagree slightly,” said Ms. Chow, suggesting that offering specific proposals was premature. “I think we have to educate the public [about the financial squeeze]. We have to have a shared understanding of what the situation is.”
The next meeting of the Finance Committee is scheduled for 7 p.m. on Dec. 7.