Increased expenses and a low consumer price index (CPI) have created a structural deficit at School District 65 that, without drastic measures being taken, is projected to increase from $4.5 million in fiscal year 2017 to $10.7 million by 2021.
That does not include threats from Springfield – proposed legislation that, if passed, could burden local school districts with millions of dollars of added expenses.
The table below summarizes the District’s projected operating deficits, and the potential lost revenues and added expenses if legislation under consideration in Springfield is enacted.
Repeating that information – which has been stated publicly for the past year – at the Oct. 10 Finance Committee meeting, District 65 administrators presented a timeline for meetings and community input that would position the Board to decide in January whether or not to place a referendum on the April 4, 2017, ballot.
State-imposed tax caps, tied to the CPI, limit the amount of property tax revenues a public school district may levy each year. That is, the levy may be increased only by the CPI or by 5%, whichever is less.
A memo from Business Manager Kathy Zalewski stated, “The CPI factor for the last two calendar years was under 1%, 0.8% for 2014 and 0.7% for 2015. These factors will determine the growth in the District’s largest revenue sources in FY17 and FY18. The CPI factor as of August of 2016 is 1.9%, which represents a 0.2% increase from the previous month.”
Because of the way tax caps operate, a low CPI in 2014 and 2015 has the effect of reducing the tax revenue in subsequent years as well.
Superintendent Paul Goren presented an overview of topics to be covered at November, December, and January Board and Finance Committee meetings:
The Nov. 7 Finance Committee meeting will focus on an overview of the structural deficit, increase in student enrollment, a history of reductions and expenditures and limits on revenue, the status of fund balances, and benchmarking to peer districts.
“Much of the information coming on Nov. 7 has been shared with the public over the course of the past year,” said Finance Committee Chairman Richard Rykhus. The materials at that meeting will pull it all together, he said.
“We have been proactive” in reducing expenses and looking for revenue wherever possible, said Dr. Goren. He said 25% of the operating budget is in reserves, which helps the District keep its bond rating up and obtain an advantageous interest rate when bonds are issued.
At the Dec. 5 Finance Committee meeting there will be a presentation on ways to reduce expenses and increase revenue through a referendum.
Discussion will include the impact on the District’s projections and on its programs and services if a referendum is approved by the taxpayers, as well as the implications of the referendum for the taxpayers of the District.
There will be a combined Board and Finance Committee meeting on Dec. 19, at which the Finance Committee will make a recommendation to the Board about whether to place a referendum on the April ballot.
The Board will vote on the referendum question on Jan. 10, 2017. Jan. 17, 2017 is the last day for the Board to vote on whether to place a referendum on the April ballot.
“We are looking forward to energizing conversations,” said Dr. Goren.
“It’s a lot of ground to cover, but it’s doable,” said Board President Candance Chow.
“This is really our FYI for the community,” Mr. Rykhus said. “This is our plan.” He advised those in attendance and those watching the meeting on television to “pay attention to the Finance Committee meetings.”
Asked whether the Board was considering an operating referendum or a capital referendum, Ms. Chow said at present they are looking at an operating referendum. Money from an operating referendum can be used for many capital expenditures, she said, but it cannot be used, for example, to fund a new school building.