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District U-46 Board formally ratifies budget

By Seth Hancock
  The Board of Education in School District U-46 unanimously approved, a 7-0 vote, the Fiscal Year 2020 budget which increased spending by 6.5 percent but projects a 2.5 percent decline in enrollment at its meeting on Monday, Sept. 23.
  Expenditures are set at $594.3 million ($36.2 million higher than last year’s $558.1 million) and enrollment is expected to drop by 950 students, 38,394 to 37,444. Spending increases with enrollment declines has become a long-term trend in U-46 and is projected to continue indefinitely.
  Revenues are set at $596 million, up $34.9 million or 6.2 percent from $561.1 million.
  Salaries and benefits are the largest expense at $403.7 million ($14.4 million increase from last year). Salaries will have risen $49 million ($254 million to $303 million) since 2016 and benefits by $11 million ($90 million to $101 million) which combined is over $38 million faster than the rate of inflation according to the Bureau of Labor Statistics (BLS) inflation calculator.
  Local sources make up the largest revenue side which is expected to increase $9.3 million ($323.6 million to $332.9 million) including a $3.1 million increase in property tax revenue ($303.8 million to $306.9 million). U-46 plans to again raise its property tax levy by the maximum allowed under the law while also planning an abatement.
  The district expects to receive $197 million from the state under the so-called “evidence-based” funding formula, an increase of $22.5 million from last year.
  The projected loss of 950 students this year would be the fifth straight year of enrollment declines, but U-46 plans to increase staff by 84 full-time employees (FTE) for a total of 4,810. U-46 expects to only utilize 67 percent of its capacity.
  The number of FTEs will have risen by 576, an addition on average of 115.2 FTEs annually, since 2016 while enrollment has declined by over 2,000 students since then.
  From FY2012 to FY2019, enrollment has dropped 5.6 percent (2,293 fewer students) and spending has increased by $128.1 million (29.8 percent) which is over $80 million faster than the rate of inflation according to the BLS inflation calculator.
  Forecasted from 2018-2019 to 2022-2023, the district expects a loss of 3,449 more students, 862.3 annually, for a 9 percent decrease in enrollment (38,394 to 34,945). At the same time, spending is projected to rise 14 percent to $636.2 million total.
  Using budget information and Illinois State Board of Education data, if the district’s future forecasts become reality there will have been a 14.1 percent decline in enrollment from 40,687 students in 2012 while costs will have risen 48 percent from $430 million in FY2012.
  The budget is $14.7 million higher in spending from the tentative budget of $579.6 million in June and $35.2 million higher than the $559.1 million set in the FY2019 budget projections.
  The board spent little time discussing the budget but provided their own justification.
  When first presented at the Aug. 12 meeting, the board spent less than 10 minutes discussing the budget with the majority of that time spent by the administration lauding itself for increasing staff, and at the Sept. 9 meeting it took less than a minute to present the budget resolution.
  Board member John Devereux said at the August meeting that he had questions but didn’t need to ask them because of the details in the budget. Board member Melissa Owens, who was absent at the August meeting, echoed that prior to the vote saying “the team does a really great job of developing that executive summary” to “explain the thinking behind the budget.”
  Owens said she was “happy to support this budget” and that it “is holding the line on property tax increases” because of the planned abatement, a procedure that the district says effectively holds property tax rates flat.
  However, the district has admitted in the past that the abatement holds the tax increases into the future meaning taxpayers will pay the increases in the future.
  Dale Burnidge, director of financial operations, said “looking forward, we’re projecting about $6 million a year” in additional property taxation with an estimated levy of $324 million by 2022.
  In Kane County, where U-46 is based, property values have dropped by 29 percent but property taxes have risen by 4 percent since 2007 according to Illinois Department of Revenue and Federal Housing Finance Agency numbers.
  Based on the district’s revenue projections for this year, U-46 could theoretically cut its property tax levy by over $30 million and still increase spending this year. If the levy were held flat, spending could increase by $33.1 million.
  U-46 CEO Tony Sanders said the trend of more spending with less students is justified because the state says U-46 is “the furthest from adequacy” of other unit school district under the “evidence-based” funding formula, a bill which gives Illinois control in determining how school districts spend funds.
  The state hiked the personal income tax rates by 32 percent and the corporate tax rate by 33.3 percent to pay for the “evidence-based” formula. Furthermore, state taxpayers have seen hikes recently with 21 new tax and fee increases signed by Gov. J.B. Pritzker with more being proposed.
  Illinois is $161.3 billion in debt according to usdebtclock.org, population has continued to decline and it is ranked the worst in the nation for financial health according to George Mason University’s Mercatus Center’s annual report. Since 2010, Moody’s Investor Service has consistently rated Illinois as the worst state in the nation with a near junk-bond status and $234 billion in unfunded pension liabilities.
  Owens said U-46 has seen “slightly declining enrollment” which “does not impact our overhead at all,” and “this is about providing a service to our students, and that’s what this budget does.” Sue Kerr, the board’s president, said she agreed with that assessment.
  Since other schools spend more, Owens said U-46 needs to spend more. She lamented a “shortfall” between how much U-46 spends per student compared to the state average according to the annual report card released by the Illinois State Board of Education (ISBE).
  The $594.3 million in budgeted spending along with projected enrollment of 37,444 equates to $15,872 per student. ISBE’s numbers from last year showed the state average per student spending was $13,337 in last year’s report card.




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