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School District 202’s mid-year budget report is “good news” said Mary Rodino, deputy chief financial officer, who, along with Bill Stafford, chief financial officer, provided the School Board with the status of the District’s finances at its Feb. 8 meeting.
Looking at data from July 1, 2015 through Dec. 31, 2015, the report states that revenue collections are “on pace with last year’s property tax collections.” Expenditures are “in line with budgeted projections.” The eight funds that comprise the budget are reported overall to be “on schedule” and at similar revenue and expenditure levels as previous years.
The report points out, however, that the State of Illinois “continues to be slightly behind in its revenue disbursements and has reduced the District’s General State Aid to a prorated amount of 89% of the appropriated allocation.” Special education costs in the Education Fund “continue to be problematic due to the need for more one-on-one aides as time goes by that are not anticipated in the tentative budget. The need here is hard to anticipate.”
Bonds will be issued to finance capital projects and to refinance existing bonds at lower rates during the coming weeks, but not the interest-free ones the District had hoped for. District 202 was one of nearly 200 Illinois school districts that applied to the State for the opportunity to issue interest-free School Qualified Bonds. Ultimately, ETHS was not selected but instead, the District will go with its “Plan B” and issue Series 2016 General Obligation Bonds in the amount of $16 million. There are two parts to the $16 million bond issuance: $10 million will go to refinance Series 2008 bonds, saving the District nearly $500,000 through lower interest costs, and $6 million will go toward capital improvements. “It’s a great time to issue bonds,” Mr. Stafford told the RoundTable due to historically low interest rates. The new general obligation bond will likely be issued at between a 2.5% and 4% interest rate, he estimates.
“We’re in a very defensive position,” said Mr. Stafford, who elaborated on several financial concerns that continue to hang over the head of the District.
The State budget impasse is a “major concern,” said Mr. Stafford, as is the loaming pension cost shift which could result in $2-$2.5 million in additional expenditures. Senate Bill 1, which proposes a new formula for redistributing State aid to schools, could reduce District 202’s annual state funding by $2.2 million. Adding insult to injury, the Consumer Price Index was 0.8% in 2014 and was 0.7% in 2015. These limit the amount by which the District may increase property tax revenues, and the impact carries through to subsequent years. For the two-year period on a combined basis, they are the lowest in the 25-year history of tax caps said Mr. Stafford.
Moving forward, the District is currently looking at contingency plans, “refining our projections” and running scenarios, according to Mr. Stafford. Board Member Jonathan Baum questioned whether the Board was entering a “new era” of budgeting. “For years, we’ve had the luxury to punt to the administration to figure it all out. We need to be better educated as Board members about how these decisions are made.”
“Now is the time to lean on creativity,” said Board President Pat Savage-Williams. “We will have more discussions like this.”
The public needs to know that “our legislators are doing their best in a situation that is unconscionable” said Anne Sills, Board member. “This dysfunction in the State of Illinois is not favorable to public education.”