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Chief Financial Officer Mary Rodino gave District 202 Board members and administrators their first formal look at Evanston Township High School’s tentative budget for fiscal year 2020. Speaking at the District 202 School Board meeting on June 10, Ms. Rodino presented an overview of revenues and expenditures and advised Board members of potential financial threats from the State legislature.
Ms. Rodino requested that the Board approve the tentative budget – which they unanimously did – so that there would be a framework to begin the new fiscal year, which begins on July 1.
The $90.4 million budget – $79.2 million of which is for operations – reflects a 5.3% increase over the FY 2019 budget. This figure includes the operating funds as well as the non-operating funds, such as bond and interest, capital and Illinois Municipal Retirement Fund (IMRF). Again this year, the budget is balanced.
The budget shows 84% of the operating revenues come from property taxes. District 202’s share of the property tax bill is about 25%.
The School District is subject to tax caps, which limit the levy on existing property to the lesser of the consumer price index (CPI) or 5%. The CPI for the 2018 levy is 2.1%; for the 2019 levy, it will be 1.9%. New property added to the District, as when a tax-increment financing (TIF) district expires, is not subject to tax caps in the first year. Funds from the Washington National TIF plus taxes on new property in the District added $1.5 million to $1.8 million in revenues.
Additional revenue sources are listed as other local revenues, 5%; Categorical State Aid, 4%; Evidence Based Funding (EBF, which replaced General State Aid two years ago), 1%; federal aid, 4% and corporate property replacement tax, 2%.
“We always try to have conservative revenue estimates,” said Ms. Rodino. She said EBF, Categorical State Aid and federal aid will likely remain flat for the coming year. Most but not all of the money from the State is remitted on time, she said.
“State revenues are not our bread and butter,” Ms. Rodino said. “I always felt like if the State left us alone, we’d be OK.”
The District will not increase student fees or summer school fees for next year.
At $79.2 million, the budget for the operating funds shows a 3.8% increase over the FY2019 budget.
The Education Fund, the largest operating fund, is pegged at $69.8 million – an increase of 4.1% over last year. The increase is mainly due to anticipated salary increases and staffing additions including the Day School.
Salaries and fringes represent 68% of expenditures – a 2.35% increase, due, said Ms. Rodino, to contractual obligations, a trend of higher enrollment, and salaries for the Day School staff, which were previously allocated differently. Fringe benefits, with an increase of 4%, represent 9% of the operating funds. Purchased services are expected to increase by 11%. Decreases are expected in supplies and materials (2%), capital outlays (1/2 %) and tuition (22%).
Other funds and their fluctuations are:
• Operations and Maintenance Fund: $7.82 million, an increase of 2.4%.
• Tort Fund: $360,000, similar to last year.
• Bond and Interest Fund: $2.75 million (less than last year), based on actual debt service payments due within the fiscal year.
• Transportation Fund: $1.22 million, a slight decrease mainly due to a continued reduction in special education transportation costs.
• IMRF Fund: $3.42 million, higher than last year due to increased wages and an increase in the IMRF employer rate.
• Capital Fund: $5 million, based on spring 2020 debt certificates and ETHS Foundation funding.
Threats from Springfield
While the tentative budget is balanced with revenues believed to be reasonably anticipated, Ms. Rodino warned that actions in Springfield could throw added costs to the District. Two major threats are the potential of a property tax freeze and of a shift of certain pension costs to local school districts. Both of these threats to finances for local public schools have been on legislators’ agendas for several years.
Lawmakers have suggested that an increase in income tax might be tied to a freeze in property taxes. Since both School Districts receive the bulk of their funds from property tax revenues, a property tax freeze would affect not just the FY 2020 budget but other future budgets. State lawmakers have not come up with a viable plan for alternative funding of education should the property tax freeze be implemented.
A similar additional cost would come from a shift of the “normal” cost of pensions from the State to each local school district. The normal cost is the annual contribution to the teachers retirement fund, which, Ms. Rodino said, could amount to more than $2 million in new expenses each year. “It seems to have been dropped for now,” she said, and should it be implemented, “it would probably be phased in down the road four or five years, but it’s still a real threat.”
The Corporate Property Replacement Tax, about $1 million in revenue for the District, continues to be at risk, she said. “Every year we hear they might do away with it. The State might keep it. I haven’t heard anything since last fall.”
The budget was crafted on the principle of “values-based budgeting” For District 202 the priorities are instruction, maintaining a reasonable student-teacher ratio and avoiding personnel layoffs when possible. Nonetheless there is a Plan B for further reductions if the State further reduced EBF revenues, enacts a property tax freeze or shifts pension costs to the local school districts. These could involve reductions in personnel and expenses “as a worst-case scenario,” Ms. Rodino said.
A provision in the Educational Fund allows the District to transfer $2 million to the Capital Improvements Fund “for what we hope to use for a big capital project in the building,” Ms. Rodino said. About $1.1 million will go toward fixing windows, particularly in the north wing.
Conclusion and Comment
“We know that instruction is always a top priority for all of us,” Ms. Rodino said, adding, “I think the District has done a great job in maintaining a student-teacher ratio.”
Board President Pat Savage-Williams thanked Ms. Rodino for the presentation and said, “You’re very clear.”
Student Board Representative Echo Allen said some students thought students’ scores on standardized test helped fund the school and asked whether that is the case.
“I’m not aware of funding tied to test scores,” Ms. Rodino said.
The Board will hold a hearing on the budget in September, and final approval of the budget is scheduled for the Sept. 16 Board meeting. State protocol for public school budgets mandates that the final budget must be passed by the end of the first quarter of the new fiscal year, Sept. 30 for District 202.