Post by WeNeed3 on Feb 25, 2009 6:54:37 GMT -5
D203 financial picture grows less rosy
Changing economy means budget deficits likely sooner
February 25, 2009
By TIM WALDORF
Naperville School District 203 is not immune to the financial woes the rest of the world is experiencing.
"Six months ago, I would have told you our finances were in pretty good shape, but the economy has caught up to us," said Superintendent Alan Leis during a budget presentation to the board during its meeting last week.
BY THE NUMBERS
2017 The year District 203's 2008 financial projections showed its cumulative surplus running out.
2014 The year the district 2009 financial projections, updated to account for recent economic changes, shows the district's cumulative surplus running out.
The district's 2008 financial projections showed it could get though 2013 with a balanced budget of roughly $259 million, but that expenditures would begin to eclipse revenues in 2014 or 2015. Then, according to the projections, its cumulative fund balance, which was projected to top out at $41 million in 2013, would begin to decline to nearly $0 by 2017.
Since those projections were calculated, a number of economic events have occurred that have changed them dramatically, said Dave Zager, District 203's assistant superintendent for finance.
The state and federal funding are projected to be "flat at best," Zager said.
And the district's interest income has decline in conjunction with rate cuts. Zager also noted that the Illinois Municipal Retirement Fund, which is the pension fund for non-certified staff, lost about 28 percent of its market value in 2008. "With that loss in market value and employee contributions fixed by statute at 4.5 percent of salary, the district's contribution will have to go up to make up for that shortfall," Zager said.
Health insurance costs are increasing, too, he noted.
"What we're experiencing right now is a shift from single (coverage) to family (coverage) as employee spouses have either lost jobs or lost health insurance coverage," he said.
But the biggest change to the 2009 projections is due to the tax cap, which limits the district's year-to-year increase in property tax revenue to 5 percent or the prior year's inflation rate, whichever is lower. The 2008 inflation rate that will dictate school district's 2009 property tax levy increase is 0.1 percent, the lowest it has been since the tax cap went into effect in 1991. "That means our 2009 tax levy can increase 0.1 percent," said Zager, noting the 2008 projections were based on 2.5 percent inflation rate calculations, as 2.5 percent was the 10-year average of the inflation rate.
"You put that all together, and our projections for 2009 indicate quite a bit of a change from what the projection was before," Zager said.
The district's 2009 financial projections now show it maintaining a balanced budget of $235 though 2011. But expenditures now begin to eclipse revenues in 2012 or 2013, and, according to the latest projections, District 203's cumulative fund balance, which is now projected to top out at $27 million in 2012, would be spent by the end of 2014.
"We've talked about what options we have when our budget balances dwindle," Leis said. "There are really only two: cutting expenditures, or possibly considering an operating referendum, and we want to recognize and say right up front that that would have to be a last resort in this community given some of the issues and concerns that are frequently expressed."
Leis stressed that these are the district's best projections, and that they could change moving forward.
But, he emphasized, these changes have the district looking at more than just next year's budget -- it is looking for long-term savings by freezing supply expenditures at schools, considering central office reductions, and possibly delaying further implementation of its new, elementary-level foreign language program.
"And it is likely that, because we have to, at the next board meeting we will notify particularly certificated employees if there's a likelihood that they might not have a job next year," Leis said
This is an action the district is legally required to take every year, but, Leis said, "it is possible that this list will be a little longer than it normally is."
Finally, Leis said the district may see some savings due to projected enrollment reductions and their impact on staffing ratios.
"We're working at how can we very strictly adhere to our staffing standards," he said. "Our goal is not to increase pupil-teacher staffing ratios, but we need to look at being fair and equitable to everyone at all levels."
Leis said in his conversations throughout the district, he has learned of increased anxiety among students and parents who are facing financial crises of their own. "We do this not to whine," he said, "but simply to explain what is happening and why we're going to need to reduce future spending."
www.suburbanchicagonews.com/napervillesun/news/1448014,6_1_NA25_D203_S1.article
Changing economy means budget deficits likely sooner
February 25, 2009
By TIM WALDORF
Naperville School District 203 is not immune to the financial woes the rest of the world is experiencing.
"Six months ago, I would have told you our finances were in pretty good shape, but the economy has caught up to us," said Superintendent Alan Leis during a budget presentation to the board during its meeting last week.
BY THE NUMBERS
2017 The year District 203's 2008 financial projections showed its cumulative surplus running out.
2014 The year the district 2009 financial projections, updated to account for recent economic changes, shows the district's cumulative surplus running out.
The district's 2008 financial projections showed it could get though 2013 with a balanced budget of roughly $259 million, but that expenditures would begin to eclipse revenues in 2014 or 2015. Then, according to the projections, its cumulative fund balance, which was projected to top out at $41 million in 2013, would begin to decline to nearly $0 by 2017.
Since those projections were calculated, a number of economic events have occurred that have changed them dramatically, said Dave Zager, District 203's assistant superintendent for finance.
The state and federal funding are projected to be "flat at best," Zager said.
And the district's interest income has decline in conjunction with rate cuts. Zager also noted that the Illinois Municipal Retirement Fund, which is the pension fund for non-certified staff, lost about 28 percent of its market value in 2008. "With that loss in market value and employee contributions fixed by statute at 4.5 percent of salary, the district's contribution will have to go up to make up for that shortfall," Zager said.
Health insurance costs are increasing, too, he noted.
"What we're experiencing right now is a shift from single (coverage) to family (coverage) as employee spouses have either lost jobs or lost health insurance coverage," he said.
But the biggest change to the 2009 projections is due to the tax cap, which limits the district's year-to-year increase in property tax revenue to 5 percent or the prior year's inflation rate, whichever is lower. The 2008 inflation rate that will dictate school district's 2009 property tax levy increase is 0.1 percent, the lowest it has been since the tax cap went into effect in 1991. "That means our 2009 tax levy can increase 0.1 percent," said Zager, noting the 2008 projections were based on 2.5 percent inflation rate calculations, as 2.5 percent was the 10-year average of the inflation rate.
"You put that all together, and our projections for 2009 indicate quite a bit of a change from what the projection was before," Zager said.
The district's 2009 financial projections now show it maintaining a balanced budget of $235 though 2011. But expenditures now begin to eclipse revenues in 2012 or 2013, and, according to the latest projections, District 203's cumulative fund balance, which is now projected to top out at $27 million in 2012, would be spent by the end of 2014.
"We've talked about what options we have when our budget balances dwindle," Leis said. "There are really only two: cutting expenditures, or possibly considering an operating referendum, and we want to recognize and say right up front that that would have to be a last resort in this community given some of the issues and concerns that are frequently expressed."
Leis stressed that these are the district's best projections, and that they could change moving forward.
But, he emphasized, these changes have the district looking at more than just next year's budget -- it is looking for long-term savings by freezing supply expenditures at schools, considering central office reductions, and possibly delaying further implementation of its new, elementary-level foreign language program.
"And it is likely that, because we have to, at the next board meeting we will notify particularly certificated employees if there's a likelihood that they might not have a job next year," Leis said
This is an action the district is legally required to take every year, but, Leis said, "it is possible that this list will be a little longer than it normally is."
Finally, Leis said the district may see some savings due to projected enrollment reductions and their impact on staffing ratios.
"We're working at how can we very strictly adhere to our staffing standards," he said. "Our goal is not to increase pupil-teacher staffing ratios, but we need to look at being fair and equitable to everyone at all levels."
Leis said in his conversations throughout the district, he has learned of increased anxiety among students and parents who are facing financial crises of their own. "We do this not to whine," he said, "but simply to explain what is happening and why we're going to need to reduce future spending."
www.suburbanchicagonews.com/napervillesun/news/1448014,6_1_NA25_D203_S1.article