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With little comment about the finances but much praise for Chief Financial Officer Mary Rodino, the District 202 School Board at its Sept. 16 meeting approved its budget for the fiscal year ending June 30, 2020 (FY’20).
At $90.6 million, the overall budget projects a 5.5% increase in expenditures over last year’s budget. The coming year’s operating expenditures, pegged at $79.4 million, are projected to exceed last year’s by 4.1%. The District provides comparisons to the prior year’s budget but not to the actual expenditures or revenues for that year.
The District’s largest source of revenue is property taxes, which fund 84% of the operating costs. The District’s share of the total property tax bill is about 25%.
The $79.4 million of operating expenditures includes expenditures for education, operations, maintenance, transportation and working cash.
• Salaries, projected at $53.8 million – an increase of 2.6% over last year’s budget – represent 68% of the expenditures. “The increases are due in part to higher enrollment and to salaries for personnel at the Evanston Township High School Day School,” Ms. Rodino said. The Day School, at 1233-35 Hartrey Ave., opened this summer.
• Employee benefits, such as health insurance and life insurance, account for another 9%. In addition, the District subsidizes a portion of the health insurance of certain retirees. The District projects a “modest” increase in health insurance costs in the first half of the year. Since health contracts are based on the calendar year, they could increase in 2020.
• Purchased services expenditures for FY’20 are estimated to be $6.89 million, an 11% increase from FY’19.
• Tuition expenditures are projected to decrease by 21% to $4.24 million, principally due to a decrease in the number of off-campus placements. The opening of the Day School brought some ETHS students back to Evanston for education, resulting in a decrease in tuition paid to other school districts.
• Expenditures and revenues for transportation are each projected at $1,225,000.
The District’s property tax levy is subject to tax caps that are tied to the consumer price index, or CPI. Under tax caps, the tax levy may be increased by either 5% or the CPI, whichever is lower. This budget is impacted by a 2.1% CPI for the 2018 levy and a 1.9% CPI for the 2019 levy.
Tax caps do not apply to new property in the District, so this budget includes about $1.5 million in “new “property tax revenues from property added when the Washington National tax-increment financing (TIF) district was retired. In subsequent budgets, that property will be subject to the tax cap.
• Anticipated revenues from property taxes, which provide 84% of the revenues for the District, are $72.8 million, $66.7 million of which will be allocated to operations.
• The corporate property replacement tax (CPRT) is part of the State income taxes. The projected revenue from the CPRT is $2 million. Ms. Rodino said the CPRT is “always at risk,” because the General Assembly could either prorate it, which would reduce the amount the high school would receive, or could eliminate it altogether. Still, she said, it is a nice sum to have.
• The amount budgeted for other local revenues is $3,726,000.
• General State Aid has been changed to the new Evidence-Based Funding (EBF) model. This revenue stream includes what was formerly paid as General State Aid, TBE/TPI (Bilingual) grant, Special Ed Personnel and Special Ed Extraordinary grants. Overall. This revenue source will remain flat for FY’20.
• State Categorical Aid consists of monies received from the State that are aimed at specific needs and programs. These include such things as Special Education room and board, transportation, and some bilingual programs. Revenues for FY’20 are flat compared to FY’19. This is expected to be the case most years, and may even decline, Ms. Rodino said.
• Federal aid represents the amount received from the federal government such as Title I/II funds as well as food subsidy funds. The District also receives IDEA money and DHS (Department of Human Services) funding. Total funding for FY’20 is expected to decline slightly.
Ms. Rodino said she expects the school to spend about $5 million in capital improvements in the coming year.
This includes a transfer of about $2 million to the Capital Improvements Fund from the Education Fund for much needed infrastructure projects, Ms. Rodino said. This is permitted by State law. The school will likely issue bonds in the spring to cover some of the capital expenses, she added.
“There are always needs. … There’s always a window that leaks, always something that needs to be maintained … every year,” Ms. Rodino said.
“The problem is the school building is 100 years old,” said Superintendent Eric Witherspoon. The new parts are 50 years old. That challenge is simply not going to go away.”
The bulk of the funds transferred from the Education Fund came from the retirement of the Washington National tax-increment financing (TIF) district.
District 202, like all public-school districts in Illinois, continues to face threats from Springfield: a potential property tax freeze and a possible shift of some pension costs from the State to local school districts.
“I haven’t heard much about a property-tax freeze,” Ms. Rodino said, “but I think we will later in the fall.”
She said the plan is to use the TIF money for capital projects as long as possible, but, should the legislature implement a property-tax freeze, those funds could be used to help make up the shortfall created by the freeze.
The second threat, a possible shift of the “normal” cost of funding teachers’ pensions from the State to the local school districts, could add about $2 million per year in additional costs to the District, Ms. Rodino said.
Dr. Witherspoon said in his transmittal letter to the budget, “What continues to be of concern with this final budget is again not what is known but what is not known. … We do not know if interest rates will continue to increase, and if/when a property tax freeze will be mandated. Because of these significant unknowns, close monitoring of economic and political events over the next year will continue to be critical.”
In addition to monitoring the goings-on in Springfield, the District will consider several other financial strategies for the coming year:
• Continuing the four-day summer school and purchasing natural gas futures on the open market will continue to curb increases in the District’s energy budget. The District says it has made “major efforts” to reduce energy costs by entering into futures contracts to hedge the cost of electricity.
• The District is also replacing most of its exterior lighting with LED energy efficient lighting and securing State grants for much of the retrofit.
• New capital improvement purchases will assist in providing lower operating costs with new roofs which will reduce increasing maintenance costs.
• The wellness initiative will assist the District in starting to control its long-term health insurance costs.
• The District also says it will diversify its revenue portfolio as much as possible, to reduce its dependence on property tax revenues. Reserves in the Education, Operations and Maintenance, Transportation and Working Cash funds will be a minimum of 33%.
The District will continue its values-based budgeting with these three considerations, Ms. Rodino said: “Instruction is always the top priority. Maintain a reasonable student-teacher ratio. Avoid personnel layoffs.”
Pat Maunsell said, “I think I can speak for everyone here that you do such a good job of representing our values and maintaining our bond rating [Aaa]. I am grateful to you again and again for coming back to us with a budget that reflects our values and keeps us in check.”
Ms. Rodino said, “I take credit partly, but I worked with Bill Stafford [at ETHS and at the City of Evanston]. We worked really well together.” She said she and her staff talked with people in different departments, asking, “What is a necessity and what is a luxury?”
Board President Pat Savage-Williams said, “What struck me was how well you know the school, how well you know our values.”
Ms. Rodino said, “I try to make it so we talk about situations and not just numbers.”