A memo from Evanston Township High School Chief Financial Officer Mary Rodino to members of the District 202 School Board and administration discussed how the COVID-19 pandemic has affected and will affect the District’s financial situation.
The May 7 memo said the District would likely be in good shape for the remainder of the 2019-20 year and described certainties and uncertainties that would have to inform the District’s upcoming budget. Still, Ms. Rodino said at the May 11 meeting that, although no one knows how grim the next few months will be, she believes the District’s reserves should see the District through.
The End of the Present Fiscal Year
District 202, like many school districts in Cook County, “expects that this year’s financials will look good,” the memo said, with revenues on track and spending under budget.
Revenues
While the Evidence-Based Funding from the State is expected in full, other State payments may be lagging. “It is not uncommon for the state to eliminate the fourth quarterly categorical payment, and whether or not that will happen remains to be seen,” the memo said.
Federal revenues are “generally on track,” with some variations, Ms. Rodino said. Lunch revenues will be below budget, but the City will likely make the District whole on that. The City, District 65 and District 202 are partnering to provide breakfasts and lunches to families of students who would normally receive these meals at school.
Additional revenues may come from the ETHS Foundation, the CARES Act (Coronavirus Aid, Relief and Economic Security) and the Federal Emergency Management Association. The ETHS Foundation is raising funds to cover the hotspot expenditures and other costs. The District has received $289,000 in CARES Act funding and has applied to FEMA for disaster funds to reimburse certain costs associated with the pandemic.
The City of Evanston, not District 202, will file claims for the lunches served when school is not in session. The City, however, “has pledged to pay the District for the entire cost of meals served. Staff has billed the City for March meals, and April billing is in progress,” according to the memo.
Because the class of 2020 faces such an abruptly uncertain future, Ms. Rodino said, it is more important than ever to concentrate on career planning and placement services.
“Our students who are striving to enter the workforce are at risk right now and struggling greatly. They are asking us for our help as they face a difficult future in a world upended by this pandemic,” Ms. Rodino’s memo said.
To help those students, the District filed Title I amendment to redirect some funds from events that will not take place – such as professional development and Wildkit Academy sessions – toward career planning and placement services with community partners.
Expenditures
Teachers are being paid, Ms. Rodino said, but department heads have been cautioned to order only “what they need to order.” She said she has told department chairs they could supplement their requests later in the year if necessary and feasible.
COVID-19 expenses, which of course were unforeseen during last year’s budget process, include $40,000 for mobile hotspots, an additional $17,000 in IT expenses such as upgrades to the Zoom videoconferencing software, $43,500 in additional cleaning supplies and face masks, and likely another $120,000 for summer curriculum planning and additional summer school salaries, Ms. Rodino said.
Some of these costs, such as the mobile hotspots, will slide into next year’s budget, as they are one-year contracts that extend into the next fiscal year. Ms. Rodino said she believed that the present budget could absorb most of these added costs.
Superintendent Eric Witherspoon said praised Ms. Rodino’s efforts and presentation and said, “Clearly, I think we’re going to end this year fine and have a little bit of wiggle room as we face the unknown in the coming year.”
The 2020-21 Budget
The Board will review in June a tentative budget for 2020-21, and, “it is very likely that there will be significant uncertainties at that time,” the memo said.
Approving the tentative budget will allow the District to begin financial operations by July 1, even though the vote on the final budget will not occur until September.
Uncertainties about funds available for the upcoming fiscal year may be unresolved for a while. Staff anticipates a reduction in State revenues, particularly in Evidence-Based Funding and Corporate Property Replacement Tax. The State could also impose the property tax freeze that has been much discussed but not yet implemented.
Further, even if the State does not impose a property-tax freeze, Cook County could extend the deadline to pay property taxes, a measure that would delay the remittance of funds to the school.
On the somewhat positive side, Ms. Rodino said it may be that the federal government would allow greater than normal carryovers of unspent grants, such as Title I, II and IDEA (Special Education), because of under-spending. The normal carryover is 15%.
Board member Gretchen Livingston said she had seen several scenarios for the upcoming school year with dire predictions.
“Evidence-Based Funding is not going to be anywhere near the $300 million [anticipated]; it’s not going to materialize. There are different models on how that’s going to look.
A “more worrying” model, she said, is an Illinois State Board of Education model that not only eliminates Evidence-Based Funding but “contains a claw-back to 2017” – meaning that certain school districts would have to refund the Evidence-Based Funding received since 2017. District 202 would be in that category of district.
Ms. Rodino said she had seen several models – one for a quick recover, one for a really slow recovery and one a worst-case scenario. She said the models “depend on who you ask. … The thought is that things would have to be really terrible for that even to be considered.”
She added, though, “This is the reason we have rainy day funds … to carry us through four or five months of spending. If we have to deal with it [the claw-back] that fund balance allows us to pull together a quick budget.”
The $1.5 million in tax-increment financing (TIF) funds was allocated for capital improvements, but about $1 million of that could be redirected, she said.
Ms. Livingston said, “I think this political claw-back is looming. I think now is the time to think about the worst-case scenario. … I think we’re doing all the right things. I loved your point about the fund balance, because it seems that State legislators don‘t get that at all.”
Ms. Rodino added another reason that cushion could be needed. “Lake County may split its property taxes revenue into four installments instead of two. For districts that rely on property taxes, like us, that would be devastating. … If that happens, and the Evidence-Based Funding [is pulled or the claw-back occurs], that would be a 1-2 punch.”
The Lake County Board reportedly voted this week to do that, deferring the second half of each installment for a few months.
Board President Pat Savage-Williams said, “This is the time to consider the worst-case scenarios. We don’t know what’s around the corner, and most of us anticipate that it cannot be good.”
Ms. Rodino promised updates as information is available and said the tentative budget will be “as conservative as possible, to allow as much room as possible for unexpected declines in revenues.”
“Anything that isn’t’ clear in June will, hopefully, be more clear in September,” she said.