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A tentative budget for the 2016-2017 school year (FY’2017) was approved by the District 202 Board of Education at its June 6 meeting. While the tentative budget is balanced, actions at the State level may significantly impact the District’s financial situation, said Bill Stafford, Chief Financial Officer, and Mary Rodino, Deputy CFO. The meeting marked Mr. Stafford’s last with the District, as he announced his retirement last year. Ms. Rodino will take over as CFO.

The operating budget proposed for District 202 is $72.4 million. This is a 1.4% increase from FY’2016. The total budget, including capital expenditures, is $83.2 million, an increase of 0.1% more than last year.

Operating Revenues

Property taxes make up 85% of the District’s operating revenues. Like many other school districts in the State, District 202 is subject to property tax caps which limit the amount property taxes may be increased to the lessor of 5% or the Consumer Price Index. The relevant CPIs that impact FY’2016 are 0.8% and 0.7%, both of which are historically low, and which have a major impact of the District’s operating revenues going forward. The District is budgeting $61.5 million in property taxes for its operating funds.

The District is budgeting to receive $1.4 million in General State Aid, the same as last year. It is budgeting to receive about $2.6 million in State Categorical Aid, which is a 5.98% increase over last year. The categorical payments are amounts “received from the state that are aimed at specific needs and programs,” such as special education personnel, transportation and bilingual programs. 

Federal funding is expected to be about $2.6 million, a decrease of 0.72% “mainly due to slightly lower food revenues.”

The budget estimates “other local revenues” at about $3 million, a 2.5% decline “due to lower anticipated investment income and nutrition revenues.

The District received some bad news that the amount it receives from the State as a corporate property replacement (CPRT) tax will be reduced to $1.3 million because the State says it discovered it made overpayments to school districts and that it intends to take back $243,000 from District 202. The CPRT is part of the State income taxes that are collected and generally reflects the State of the Illinois economy, according to the budget document submitted to the Board.

Operating Expenses

Personnel-related expenses continue to dominate costs, with salaries and benefits representing 76% of the operating budget. Salaries are mainly determined by labor contracts in place at the District. Total salaries are estimated to be $49 million. This represents an increase of 1.86% over the amount budgeted for last year.

Total employee benefits are estimated to be about $6 million, an increase of 0.43% over last year. The benefits include health insurance, life insurance, optional dental insurance, social security, medicare, and pension expenses. The District says health insurance, the largest benefit expense, is expected to increase only slightly due to self-insuring and new wellness initiatives.

Purchased services, supplies, outside tuition and other miscellaneous costs represent 24% of the District’s remaining operating expenses.

Balancing the budget required the reduction of more than $900,000 in expenditures, said Ms. Rodino. In order to balance the budget, additional cuts to supplies and contractual services (consultants, staff travel, professional development) were made. Several staff positions were also reduced from 12 month assignments to 10 month assignments.

State Legislative and Other Concerns

“What continues to be of concern with this Tentative Budget is not what is known but what is not known,” said Eric Witherspoon, Superintendent. “We do not know what the legislature will finally decide about the budget. We do not know what the Legislature will finally decide about teacher pensions and what District costs might be. We do not know if interest rates will increase. Because of these significant unknowns, close monitoring of economic and political events over the next year will be critical. 

Dr. Witherspoon said the State Legislature is proposing a new school funding formula, which, if enacted, would reduce District 202’s funding by more than $2 million. Another “lingering financial threat from the State is the pension reform measures.” He said it is not clear if the State Legislature will follow-up on its intention to shift the normal cost of funding teacher pensions from the State to school districts. If that happens, it would “amount to over $2 million a year in new expenses” for District 202, said Dr. Witherspoon.

Another measure being considered by the State Legislature is a property tax freeze.

Board Comments

Jonathan Baum called the tentative budget, “good news relative to what we could see, what others are seeing, what we may see some day.”

He then asked about one of the strategies listed by Dr. Witherspoon in a memo to the Board, which is: “Improve the sophomore learning experience by raising the academic expectations and honors challenges.”

Dr. Witherspoon said it is something being examined currently, “doing something similar to what we’ve done with freshman year,” aligning the curriculum more to AP and SAT. “We’ve been getting feedback saying sophomore year is a bit of a letdown, missing the rigor. We don’t hear that with juniors or seniors with AP.”

Mr. Baum then talked about the need for more education on how budget decisions are made. “We’ve had the luxury of only having to basically approve incremental increases each year. We need, as a Board, to be better educated on how decisions are made because coming down the road could be some difficult ones and we want to be sure we’re using best practices.” He said that “big choices have to be transparently made” like when evaluating programs. “There needs to be a process in which the Board and the community are informed about choices.”

Mr. Stafford agreed and pointed to how the capital budget process had been separated to allow more Board involvement. Mr. Stafford told the Board what they “need to worry about is what is our capacity. How able are we to take a financial hit?” He then warned the Board about the kind of input that could be received from stakeholders, some of whom will judge the District’s capacity by what they get paid. He commented that “we’d like to have citizens at the budget hearings.”

Board Member Gretchen Livingston asked about checklists and “what we excel on; where we have challenges. I would love to know more about how we line up.” Ms. Livingston added that she would also like to see “a bigger conversation, two-way communication” around the budget, especially in light of some likely challenges in the future.

 “We do recognize our role as financial people,” said Ms. Rodino. “We give you the options. You are the policy setters, the academic people. Our job is to make recommendations but not to assume we know best (what to cut).” Ms. Rodino also mentioned the GFOA (Government Financial Officers Association) award the District has received and how a best-practices checklist must be followed when applying.

Process

By approving the Tentative Budget, the Board gave authorization to start the new fiscal year – July 1st – with at least the basics of a new budget in place. The Board and staff will continue to review and revise the budget over the course of the summer.

“This makes even more sense this year as it looks like the State’s budget will not be resolved anytime soon. As of yesterday the State Legislature still had not even passed a continuing measure to fund the K-12 public schools,” said the memo to the Board accompanying the budget.

A budget hearing will be held during the first Board meeting in September where a proposed final budget will be presented. Final approval of the FY 2017 Budget will be at the second Board meeting in September.

 

“In response to the goals adopted by the School Board,” Eric Witherspoon, Superintendent, said, “I am recommending the following strategies reflected in the budget:

• Continue our Equity work and addressing racial disparities in achievement with the staff, students and greater Evanston community and expand initiatives to increase and improve equitable learning opportunities to benefit all students.

 • Improve the sophomore learning experience by raising the academic expectations and honors challenges.

• Using multiple measures and a new sophisticated assessment system aligned to ETHS predictors, more precisely identify and monitor each student’s college and career readiness and then use that individualized data to counsel and advise students and their parents for post-secondary planning and transitioning.

• Continue our one-to-one technology program by equipping all incoming freshmen with a new Chromebook computer. This year, through a planned redeployment of Chromebooks, all students at ETHS will have a personal Chromebook.

• Continue our new and exciting partnership with Northwestern University involving STEM and other cutting-edge learning opportunities for our students and staff.

 • Continue our numerous partnerships with Northwestern University in the arenas of research, cooperative programs, and college scholarship opportunities. 

 • Continue our Geometry in Construction classes and partnerships with the community, Evanston businesses, the City of Evanston and Community Partners for Affordable Housing who are providing assistance with this exciting program.

• Continue our new Algebra in Entrepreneurship class and continue to partner with our business community to expand this exciting new learning format.

 • Continue strengthening our System of Supports for our students, a commitment providing personalized support to raise achievement for all students, including our Academic Intervention Team, Freshman Advisory Study Halls (FASH), Wildkit Academy, Academic Study Centers, HUB Student Center, College and Career Counseling, Y.O.U. and Y.J.C. on-site partnerships, teamASAP, freshman and new student transition program and more.

• Increase interventions that will increase student well-being such as support during hospitalizations, support for transitions, ETHS transition house, grief support, Restorative Justice, alternatives to suspension, conflict resolution, developing soft skills that build confidence and success in life, nutrition and more.

• In addition to all these important improvements, the District will continue to invest in textbooks and instructional materials, technology, preventive maintenance, our outstanding extracurricular and athletic programs, AVID, STAE, AP classes, chem/phys, the fine and performing arts, career education, and so much more that defines an ETHS investment in education.”