It appears now that District 202 could end the 2017-18 school year with an operating deficit of about $9 million because of escalating costs and declining revenues, but the numbers could change significantly depending on state funding.
At this point, the district plans to use budget reserves to offset the deficit, but officials caution that the Legislature is still debating a new funding model that could add $5.8 million to $7.9 million to the district’s bottom line.
The Plainfield District 202 Board of Education approved the 2017-18 budget at its August 21, 2017 regular meeting following a public hearing as required by law.
District 202’s total 2017-18 budget, including debt service and capital projects is $302 million, up from $290.7 million last year. Total revenues are expected to be $286.5 million in 2017-18, down from $292.2 million last fiscal year.
Of that figure, the 2017-18 District 202 Operating Budget shows $252,294,055 in expected expenses and anticipated revenues of $243,027,868, resulting in a $9.3 million projected operating budget deficit.
The Operating Budget pays for all daily operating expenses including salaries and benefits, which comprise about 79 percent of the Operating Budget this year.
PLEASE NOTE: The State of Illinois defines the “Operating Budget” as the Education, Operations and Maintenance, Transportation and Working Cash funds for purposes of assessing and rating school districts’ financial health.
STATE ISSUES LINGER
However, the General Assembly is still negotiating the final version of “Senate Bill 1.” SB1 includes a new funding mechanism based on 27 points reflecting local school districts’ economic needs, socioeconomics and demographics.
Governor Bruce Rauner recently vetoed portions of SB1, claiming it unfairly favors Chicago over other needy districts.
The original version of SB1 would have yielded about $5.8 million more each year in state funding to District 202. Rauner’s amended version would give District 202 about $7.9 million more annually. However, critics have said that Rauner’s version of SB1 would be less equitable and less stable over time, leading to lower education funding.
At this time the Legislature is still debating the funding bill.
School opened on August 17. If necessary, Superintendent of Schools Dr. Lane Abrell said District 202 will sell tax anticipation warrants or borrow money through other means to keep the doors open next spring, as it did for several years during the district’s heavy growth period and the recession.
Tax anticipation warrants are effectively short-term loans, paid back with eventual tax proceeds. Local taxpayers would have to pay interest on short-term loans, which means less money for the classroom, Abrell said.
District 202 endured four years of fiscal austerity and significant budget cuts made to counter the ongoing effects of a weakened economy and 10 years of unprecedented growth.
From 2009-2012, District 202 cut about $42 million in operating expenses, mostly by eliminating about 345 full-time teaching, support staff and administrative positions.
PROJECTED OPERATING REVENUE DOWN
District 202 will “prorate” state funding at 92 percent of reimbursable expenses for the fourth straight year to hedge against the state cutting funding later.
“Prorating” is the practice of budgeting general state aid at less than what the state actually owes local school districts or even what is telling districts to expect just in case the state once again reduces funding. The state is supposedly planning to provide 100 percent of general state aid funding.
2017-18 anticipated operating revenues are down about $13 million from the 2016-17 (unaudited) budget, which showed $256,053,899 million in revenues.
The drop reflects declining overall general state aid due to decreasing enrollments and increasing equalized assessed property values; and budgeting for only two mandated state categorical payments.
Mandated categorical funds pay for transportation and special education. The district normally gets four mandated categorical payments. Altogether, the district expects to lose about $15 million in state funding this fiscal year.
PROJECTED OPERATING EXPENSES UP
Projected 2017-18 operating expenses are up about $10.8 million or about 4 percent over the 2016-17 (unaudited) budget, which included about $241,476,599 million in expenses. Most of the increase is due to salaries and benefits.
The 2017-18 budget essentially maintains staffing, service and building budgets at current levels.
It does not include funding for any major new initiatives, programs or capital expenses. Administrative salaries are expected to increase 2.5 percent. Non-union support staff salaries are expected to increase 2.25 percent.
The new budget also includes funds for a salary increase for teachers. Teacher contract negotiations are continuing this summer.
The 2017-18 budget includes a $1 million contingency for building-specific enrollment changes and special education needs, as has been done the last several years. It also reflects an 8 percent increase in health care costs.