The Examiner U-46 News Feed
Proposed U-46 budget reveals opposing trends
By Seth Hancock
Is increased spending coupled with declining enrollment sustainable?
The Board of Education in School District U-46 was presented with the Fiscal Year 2018 budget, which reflects a deficit of $8.9 million, at its meeting on Monday, Aug. 14.
Jeff King, chief operations officer, did say at a finance committee meeting on Monday, Aug. 7 that the district is “kind of in a wait and see mode” as the state’s General Assembly is still working out school funding. At the Aug. 14 meeting, the administration said there will likely be a budget amendment, which would go through the same process of approval, once the state has approved a measure.
In its current form, the budget expects total expenditures at $517.9 million, a $6.5 million increase from last year) and revenues at $509.1, a decrease of $3 million from last year.
The largest expenditure increases come from salaries and benefits with salaries increasing by $5.7 million, from $264 million to $269.7 million, and benefits increasing $2.2 million from $95.5 million to $97.7 million. Property tax revenue is expected to rise $2.6 million from $300.8 million to $303.4 million.
Dale Burnidge, director of financial operations, said the district will “have a property tax increase for the third year with an abate.”
A public hearing on the budget is set for Monday, Sept. 11 with final adoption expected two weeks later on Sept. 25.
Board member Phil Costello asked at the finance committee meeting what the current fund balance looks like from the current budget to which Burnidge said “our operating funds should be pretty close to break even” after receiving a third categorical payment from the state, and at the Aug. 14 meeting he said “today we did get $7.5 million” which was the fourth payment for the current fiscal year.
At question now is how Senate Bill 1, a so-called “evidence-based” school funding model, will fold after Gov. Bruce Rauner’s amendatory veto to remove what he called a “bailout” of Chicago Public Schools. The state’s senate voted to override that veto by a 38-19 margin on Sunday, Aug. 13, and the state’s house will take a vote this week.
However, board member Jeanette Ward noted at the meeting that U-46 would see more funds from the state if the governor’s veto were upheld. U-46 CEO Tony Sanders opposed the amendatory veto, but according to the Illinois State Board of Education’s (ISBE) results, on the veto U-46 would receive $12.8 million more than under the original form of SB1.
If the veto is not overridden or accepted and the state has to start from scratch on school funding, board member Sue Kerr asked how long the district could stay open without it. King said “you could probably make it till February” before needing to seek loans.
If nothing is approved by the state by around November, King said: “At that point we would want to seriously look at where we’re spending money and probably stop spending it in many places so we can stretch the longevity of using our reserve funds.”
The district’s reserves are around $116 million and Ward asked: “That reserve that we hold in hand, much of it is encumbered for debt payments, correct?”
Burnidge said that was correct, and “about $40 million” would go to debt payments in January.
“So at first, if you’re an outsider looking at the high level facts, at first it might look like we have enough reserves to go for almost the whole year,” Ward said. “But it’s because that reserve is encumbered it can’t be used for running things.”
King said currently on staffing “we’ve been hiring the new classroom teachers… but on the operations side I can tell you we have 50-plus open positions.”
Costello applauded the finance team’s effort and work on producing the budget, but he has concerns, one being potential cuts.
“What proactive cuts would we be making pending financial decisions, that’ll be imperative that we have a good sense on that before we approve a budget,” Costello said.
At the finance committee meeting Kerr asked if that still includes the possibility of pool closures and King said: “My advice would be to cut as much as we can as quickly as we can do it.”
In June, the district floated that possibility and said that would save $500,000 but that led to some public opposition including from Kayla Filipek, a former Bartlett High School swimmer who has a full-ride to a Division-I school and also competed in the Olympic trials.
“I’m white, I’m from a middle-income family and I’m half an inch too short to get a scholarship for being unusually tall for a female,” Filipek said in June. “Those are not good odds for receiving substantial financial aid for college. Swimming changed that.”
Filipek added: “Shutting them down takes away the prospect of achieving dreams from those in the middle of their journey as well as from those who have yet to begin.”
Another concern for Costello, as well as Ward, was the current trends on enrollment. Ward noted at the Aug. 14 meeting that the budget showed U-46 buildings at 78 percent utilization in 2014-15 with projections showing 73 percent utilization in 2020-21 which King said was correct based off the projections using the state’s birth rate.
Enrollment projections within the budget show around a 2 percent decrease each year in student population down to 36,360 from the FY2017 actual enrollment of 39,640. From the ISBE’s report card U-46’s high enrollment was 40,687 in 2012 making the projected results a 10.6 percent decrease by 2020-21 from the high.
While enrollment may drop by 10.6 percent, expenditures are projected to rise by 22.6 percent from $430 million in FY2012 to $527 million in the 2020-21 school year, and Costello questioned the sustainability.
“I know that you have that forecast based on the numbers, but is it sustainable to have that without significant changes given the fact that we’ve got contractual increases in salaries and benefits as well as the debt service?” Costello asked.
“It will probably precipitate another conversation about our utilization of facilities” said King who added there are about four schools between 50-60 percent utilization and that’s “really too low to operate.”
The board approved a one-year contract with the district’s teachers, Ward the lone current board member to vote no, earlier this year which included guaranteed pay raises averaging 3.1 percent each year. Although voting for it at the time, Costello said he’d like to see the district move towards a performance-based contract.
Illinois’ current debt stands at $154.9 billion according to usdebtclock.org, the state has consistently ranked at or near the bottom in the nation on George Mason University’s Mercatus Center’s ranking of states for fiscal health and Illinois saw the largest decrease in population in the nation for three straight years according to Internal Revenue Service data.
Considering the worries at the state level and the enrollment trends continuing to decline, The Examiner asked the administration how it justifies increasing expenditures by $6.5 million this year. The district did not respond.