Aware of financial threats from Springfield and not yet certain of the full impact of the COVID-19 pandemic, the District 202 School Board on June 8 approved a $93 million tentative operating budget for the upcoming school year.
Approving a tentative budget, said Evanston Township High School Chief Financial Officer Mary Rodino, will allow the school to continue operations after the new fiscal year begins on July 1 until the final budget is approved in September. Further, since the second installment of property taxes is due in August, the District should have an idea by September how much revenue it will receive from property taxes.
As Ms. Rodino walked Board members and administrators through the tentative budget, she repeated what she said previously about the uncertainties about both expenditures and revenues in light of legislative threats about pension costs and a property tax freeze as well as efforts to mitigate the costs of the COVID-19 pandemic.
In his budget-transmittal letter to School Board, Superintendent Eric Witherspoon said, similarly, “What continues to be of concern with this budget is again not what is known but what is not known. We do not know what legislature will eventually decide about teacher pensions and what District costs might be. We do not know how the current economic downturn will ultimately affect interest rates, and if a property tax freeze will be mandated. But most urgent are all the unknowns caused by the COVID-19 pandemic and the unknown needs and costs looming in the future.”
Ms. Rodino said she and her staff had put in their best attempts to estimate revenues and expenditures, and they will improve and tighten the budget over the next few weeks as information about the impact of COVID-19 becomes clearer.
The Tentative Budget
The tentative budget shows a 2.4% increase in operating expenses and a 2.6% overall increase in expenditures over last year’s budgeted amount. It is balanced at present, but adjustments down the line are likely.
The Education Fund is the general operating fund of the District, used primarily for most of the instructional and administrative aspects of the District’s operations. It is balanced with budgeted revenues and expenditures for FY 21 at $71,500,000.
District 202 takes about 25% of the property tax bill.
Revenues are less certain this year, as property tax revenues could come in later than anticipated because of County-approved collection-delays, and state and federal funds could be the same as or possibly lower than last year’s levels.
Property tax revenues, $74.7million, 2.8% increase over last year: About 84 % of the District’s revenues come from property taxes. The District is able to increase its annual property tax levy by 5% or an amount equal to the Consumer Price Index, whichever is less. Property tax revenues are collected in two installments, in two different years, so the combined tax cap is a blend of the CPI of 2018 (1.9%) and 2019 (2.3%). About $69 million will be allocated to operations.
Revenues from other local sources – such as tuition, interest on investments, food service and student fees – budgeted at $3.9 million, represents no increase over last year.
If the property-tax freeze threatened from Springfield does in fact materialize, it would significantly limit the expected revenues. Ms. Rodino said discussions continue at the State level, as the State response to taxpayers seeking financial assistance from the fallout of COVID-19.
Corporate Personal Property Replacement Tax (CCPRT), $1.5 million, 25% decrease from last year: The corporate property replacement (CPRT) tax is part of the state income taxes that are collected; it generally reflects the state of the Illinois economy. This tax is allocated to the Education, Operations and Maintenance, IMRF and Transportation Funds. This reduction is similar to the temporary reduction in 2009 -10
Evidence-based funding (EBF), $2.9 million, no increase: These State funds include what was formerly paid as General State Aid, TBE/TPI (Bilingual) grant, Special Education personnel and Special Education extraordinary grants. This year they are expected to be flat at best, Ms. Rodino said. As of this month, she said, “the State has pledged level EBF funding.” There has been some talk that the State might ask for the return of some EBF funds it allocated to school districts over the past two or three years, but that threat has not materialized.
State Categorical Aid, $986,000, 4% decrease: State Categorical Aid consists of monies received from the State aimed at specific needs and programs such as Special Education room and board, transportation and some bilingual programs. The projected amount of State Categorical Aid reflects a decrease of 4% – from about $1 million to $986,000.
Federal Aid, $3.2 million, slight increase: Federal aid comes in the form of Title I/II funds and food-subsidy funds. The District also receives IDEA (individuals with Disabilities Education Act) money and DHS Department of Human Services funding. Total funding for FY 2021 is expected to increase slightly, due to federal pandemic assistance, Ms. Rodino said.
Other Revenue Sources: There will be no increases to student fees for present summer school or for the coming academic year; a parking increase of $50 was approved previously by the Board.
Education Fund, $71.5 million: The bulk of the $81 million operating budget, 69%, will be spent on salaries, and another 9% on benefits. The total salaries are estimated to be $55.8 million, an overall increase of 3.4% over last year. Total fringe benefit expenses are estimated to be $7.05 million, an increase of 3.0% over last year. The total increase in Education Fund expenditures over last year is 2.4%.
Operations and Maintenance Fund, $7.9 million: The Operations and Maintenance Fund provides funding for the operation and maintenance of the Districts buildings and grounds. The projected increase is 2.1%; budgeted revenues and expenditures are balanced.
Transportation Fund, $1.2 million: The Transportation Fund accounts for expenditures made for student transportation. There is virtually no change from last year, and the expenditures and revenues, as projected, are balanced.
IMRF/Social Security Fund, $3.4 million: This fund accounts for expenditures made for employee retirement expenses; expenditures and revenues, as projected, are balanced and show a decrease of 1.3% from last year. The threat lingers that the legislature would shift the normal portion of the Teachers Retirement System pension to the local school districts, Ms. Rodino said. Were that done, the District would see another $2 million in expenditures, she said.
Bond and Interest Fund, $3.3 million: The Bond and Interest Fund accounts for the accumulation of resources for, and the payment of, long-term debt principal, interest and related costs. Budgeted revenues for FY 2021 and expenditures are balanced. The 22% increase from last year reflects the issuance of the 2020 debt certificates. These debt certificates have a shorter payback period (10 years vs. 20 years) than bonds. The increase is funded by a transfer of revenues from the Education Fund (partial proceeds from the Washington National TIF funds).
Other Expenditures: Purchased services are projected at $7.5 million, a 1.5% increase over last year. Supplies and materials are estimated at $3.7 million, a 2.4% increase. Capital outlays, at $1.4 million, are decreasing by .2%, and tuition costs to educate students outside the district are expected to remain flat.
A “floating” amount of about $900,000 will be transferred to the Capital Improvements Fund for infrastructure improvements, if finances permit; otherwise those funds will remain in the Education Fund.
The fund balance, or reserves, amounts to 33%-40% of the overall budget, Ms. Rodino said, adding. “If property tax payments are delayed, it’s important to have this money.” She added that, if the fund balance gets too large, money would be available for other uses.
Values and Strategies
Instruction is always top priority in creating the budget, Ms. Rodino said. The top priorities are maintaining a reasonable student-teacher ratio and avoiding personnel layoffs wherever possible.
To keep costs down and be prepared for changes, the District will do the following:
- Monitor state’s financial condition and monitor revenues (and expenses)
- Install capital expenditures that reduce operating costs
- Continue employee wellness strategies for health care cost containment
- Plan re-organizations based on analysis as needed (if the State reduces EBF funding, enacts a property tax freeze or shifts pension costs). A worst-case scenario would entail reductions in personnel expenditures.
- Reduce contractual and consulting services
- Conserve energy and water