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At the March 7 District 65 finance committee meeting, Kathy Zalewski, the district’s business manager, said the District planned to cut 22 homeroom teaching positions to balance the operating budget for the 2022-23 school year (FY’23) .
In the last three years, the District’s total student enrollment has declined by 1,142 students. In the same period, staff have increased by 58 full-time equivalent (FTE) positions. Even with the cuts of 22 positions, the ratio of staff per students will remain much higher than pre-pandemic levels.
The projected operating deficits
In February, Zalewski presented two scenarios for the financial projections. One scenario assumed the City of Evanston would continue to pay for the district’s crossing guards, which amounts to about $600,000 a year. The second scenario assumed that District 65 would be required to pay the cost of crossing guards.
Superintendent Devon Horton said the city has historically paid the cost of crossing guards, but the city has recently said that District 65 should pay the cost and city officials were not interested in a proposal made by District 65 administrators to phase in the cost over several years. “So we have to be prepared” to take on that cost, Horton said.
If the district must pick up that cost, the projected operating deficits will grow from about $1.3 million in FY’23 to about $13.1 million in FY’27. The chart below shows the year-by-year amounts.
The projections paint a much rosier picture than the financial projections presented in September 2021. The main reason is that the District may levy higher property taxes going forward in light of the high Consumer Price Index (CPI) for the 2021 calendar year. Click here to review prior article.
In light of declining student enrollment, Zalewski said the district will definitely be reducing the number of classroom sections and homeroom teachers by 22. The reduction of these positions will occur through retirements and resignations.
Zalewski said, “Initially we thought the declining enrollment had to do with the pandemic. But now we know from Dr. Kofron [a demographer working with the district] that this trend is here to stay. Because we were not sure in the past, we haven’t really adjusted our staffing levels. Now, a) we know that this is a fact, and b) we know that we have a real need with these projected deficits.”
Zalewski added, “We may have additional student needs or programmatic needs, so we may be adding or decreasing in other portions of the budget.”
Raphael Obafemi, chief financial officer, explained that the district is mandated by law to provide the services required by students’ individual education programs (IEPs), and may have to hire additional teachers or aides to meet those needs. In addition, he said, the district may be required to hire additional teachers to meet the needs of English language learners. At this point, he said, they could not say whether or not they will need more or fewer teachers and other staff to meet the needs of these students.
Cutting the 22 positions will save about $1.65 million, Zalewski said. She added that “non-personnel expenditures will be reviewed closely for efficiencies.”
Andalib Khelghati, assistant superintendent of human services, said administrators were working to make sure they would have sufficient staff to support students. He added, “We’ve had quite a bit of attrition this year, both from resignations and for other reasons, leaves of absences,” he said. “And so, as a result of that we are confident that we’re able to accommodate these reductions without a dismissal or having anybody lose their position this year as a result.”
Aligning staff with declines in enrollment
Zalewski said that the reductions in staff would “align staffing need with declining student enrollment.”
In just the last two years, student enrollment for grades K-8 has declined by 932 students, and the number of full-time employees has increased by 40, according to district reports.
In the last five years, student enrollment for grades K-8 has declined by 1,166 students. During the same time, the number of full-time employees has increased by 129. The chart below illustrates the changes.
The district, however, is proposing to reduce staff by only 22 positions.
For FY’19 (a pre-COVID year), District 65’s total student population was 7,931, and the total FTEs were 1,207, or 6.57 staff members per student. Assuming the total student enrollment in FY’23 will be 6,789 (the same as this year), the district would need to reduce staff by about 233 positions to have a 6.57 student to staff ratio.
The RoundTable asked Obafemi why the District was reducing staff by only 22 FTEs to align with the decline in student enrollment and why there are so many more staff members per student than three years ago.
“What we’re finding out, especially with the pandemic, is a lot of our students need more support than they did before,” said Obafemi. “And the fact that we have kids who have been out of school for a whole year, more of our students have emotional needs than they did before the pandemic. For example, this year, for the first time, we hired counselors. We’ve never had counselors before. And those counselors are working with our kids. So even though I hear you, the enrollment is going down, the level of needs that students have seems to be going up. And we attribute a big chunk of that to emotional issues that have been visited upon our children by the pandemic. So we can’t just apply a ratio, and just keep it like that. Remember, staff assignment is driven by the needs that exists among our students.
“Just to be clear,” Obafemi continued, “we would like to reduce more staff. But at the core of what we do, since we’re in the business of education, we want to make sure that a) our students get the support they need to be able to achieve their ultimate potential, and b) to be able to have the level of growth and achievement that they need to be successful. So, we’d like to reduce more staff, but we have to take into account the increased need that seems to be around now because of the pandemic and experiences in the last few years.”
When asked if the district needed a higher staff-to-student ratio than three years ago – in the range of an additional 230 positions – to meet the needs of kids, Obafemi said, “Yes.”
Additional considerations going forward
Zalewski said the district plans to use the Master Facility Plan and the Student Assignments and Demographic Study to balance the budgets for FY’25 and beyond. Some major items going forward include the following:
On March 14, the school board approved establishing a new school in the Fifth Ward, with a construction cost of $40 million. The plan is to finance the cost of the new school through the issuance of lease certificates, which would require payments of about $3.2 million per year for about 18 years. These amounts would have to be paid out of operating revenues. Obafemi said the district could offset this cost by reducing bus transportation costs. No written analysis has been provided yet on this issue.
Second, the district may reduce spending by closing a school building, in addition to Bessie Rhodes. On March 7, Superintendent Devon Horton told members of the finance committee, “Just for transparency, if we’re able to build this Fifth Ward school, what happens is it will open up space in other facilities that we own, and that would allow us to look at potentially closing other campuses and doing co-locations at a couple of spaces. I won’t get into any specifics, but there’s a lot of square footage that we can do some things different with. And that’s with the relocation of other programs and things like that.”
Third, if the CPI comes in higher than 1.5% for the 2022 calendar year, it would enable the district to increase its property tax levy in December 2023 more than assumed for purposes of the financial projections. For example, if the CPI comes in at 5% for 2022, the school board will be able to increase its property tax levy in December 2023 by about $4.2 million more than projected. In this scenario, it would reduce the projected deficits by $4.2 million in fiscal year 2025 and in each subsequent year.
Fourth, the district has a significantly higher staff to student ratio than in pre-pandemic years. The district may be able to reduce expenses by reducing staff.
Balancing revenues and expenses
Obafemi stressed again that the district planned to balance revenues and expenses to balance the budgets going forward and not dip into reserves to do so.
“I just feel compelled to say this,” he said. “As we look at the projections, and as we see that there are deficits in the out years, the direction from this board, and the commitment of this administration led by Dr. Horton is that we do not balance budget with reserves. We have to live within our means. Our revenues have to align with our expenditures. And if we see anything that shows that the revenues are not going to cover expenditures, we have to make adjustments.”
Zalewski said she planned to bring a draft tentative budget for FY’23 in June for the finance committee to examine.