Budget Shortfall DeKalb District 428

Election night not only brought new faces to local elected offices and candidates to the fall general election, but also a special presentation to the regular District 428 school board meeting. Mike Frances, from PMA Financial Network, presented to the board and others present the annual Financial Planning Program, which is an analysis and projection model used to help make financial decisions for the district.

Based on assumptions provided by the District and other information gathered by PMA (including opening the new high school in FY2012), this model uses FY2010 as a base along with 5 years of audited reports, including factors such as Equalized Assessed Valuation (EAV), Tax Levy and Extensions, Enrollment, and several related items to predict revenue and expenditure for the coming years. The district appears to rely heavily on this model to build its budget.

Most significantly, this year’s report emphasized the uncertainty of state funding, which for District 428 is about 27% in FY2010. Mr. Francis also pointed out that Stimulus Funding (ARRA) in 2009 to Illinois Education  is $1billion, which is assumed to not be available in following years. This alone will result in a reduction of $364 per each student in General State Aid, amounting to a total loss of about $2 million in state aid to the district. Adding other known losses of revenue sources, the shortfall from the anticipated budget expenditures will amount to a range of $2.4 to 4.4 million.

This model and projection apparently does not include potential loss of property tax revenue (which supplies about 62% of the District’s funding) that may result from EAV reductions due to a dozen or so corporate businesses in the district filing appeals to their present EAV. Assistant Superintendent Andrea Gorla announced this potential revenue loss after the PMA study was presented. The district’s attorney has been notified in case it becomes necessary for the district to become involved in the appeals. This issue has potential to reduce funds further either through granting of appeals or litigation costs.

Summation of the fiscal condition of the district shows a balanced budget and healthy fund balances in the recent past and through 2009, but with progressively diminishing year-end fund balances through the next two years and increasingly large deficits beginning in 2013.

Ms. Gorla reviewed a long list of line items, which might be reduced or cut to try and reduce up to several million dollars of spending and thereby balance the budget. Discussion included potential reductions to Discretionary Staff, such as assistant coaches, club leaders, or other expenses, which are not part of the mandated core program of the schools. Substitute teacher wages were discussed, as well as potential other changes to all administration and other staff as it might pertain to savings on Salary/Benefit expense which is 76% of the FY2010 budget.

Dr. Roger Scott reviewed the possibility of increased enrollment fees and there was some discussion regarding other non-mandated programs such as the non-classroom aspect of drivers education, the Pre-K and Early Childhood programs, and several other items. Board member Holly Wallace expressed concern about increasing out of pocket costs as a parent with children in the district. There was some discussion regarding methods to reduce other costs, such as supplies, if the registration fees increase. The board is taking all this financial information under review and will respond to the administration with further discussion and direction over the next many weeks.

School closings and potential cost savings were discussed. The administration met with all building Principals and claims consensus on administration recommendations with one exception. Superintendent Briscoe expressed thanks for direction on structure of grade levels and pointed out the board listened to the residents of the district on this issue. Knowing grade configuration, he is now working with his team regarding best use of buildings and looking for ways to save expense. The administration recommended to close one of either Malta Grade School, or Wright, if the current program at Wright is moved to Huntley or another location. There was significant discussion of the pros and cons of various scenarios, including the effect of loss of funding at NIU, which could impact several teaching partnerships with the district. NIU is waiting on the district for more information and further discussion.

Mr. Don Biggs informed the meeting of estimated actual costs for essential or full repairs to both Malta buildings. In very round numbers, $2-3 million dollars would be needed soon for either Wright or MGS, with full remediation of MGS costing perhaps as much as $5.5-6.5 million. According to Mr. Biggs, cost for a replacement building for Malta Elementary would be about $7.2 million.

Chesebro Elementary was also discussed for potential closure if state funding for the Pre-Kindergarten/Early Childhood program was eliminated. To that end, the board directed the administration to hold off on any immediate construction to that building. A decision must be made as to where to spend $3.3 million dollars of returned TIF funds by 2012 or they are lost. If Chesebro is closed, it is presumed the funds will be shifted to either Clinton Rosette or Huntley. TIF monies must be spent within the TIF district according to current statutes. Mr. Biggs also pointed out the necessary timelines for construction preparation regarding modification to these schools within the TIF districts. This will also drive the decision making to some extent.

The board will take the administration’s recommendation for closings under consideration along with the financial data presented at the meeting. The ultimate goal is to balance the budget within the constraints determined necessary by the board.

Several other motions on items of business were quickly passed, including changes to policies presented last meeting. One motion was to assign recently mandated Freedom of Information Officer duties to two district employees, Russ Fletcher and Vicci Haeseker.

During the public comment section at the start of the meeting, Eric Biletzky, citizen from Malta, asked the board what it would take to get a public advisory committee started. Several board members spoke to the issue, saying it had been done in the past and would perhaps be a good idea again, although some were not so sure it could be up and running in time to provide input on issues that need decisions in the immediate future. The idea is to be added to the agenda for an upcoming meeting for further discussion.

The board adjourned at approximately 10:20 pm.

Editor’s Note: Kerry Mellott is a citizen advocate for good government.