During a Board of Education Financial Workshop on Monday, Nov. 28, Assistant Superintendent for Business David Bein shared an update regarding the District’s financial health and budget forecasts.
Bein said that responsible spending should help the District maintain a balanced budget over the next three years. However, state education legislation uncertainty could affect this forecast.
Bein explained that District 58 receives most (89 percent) of its revenues from local property taxes. Laws restrict these taxes from increasing more than the Consumer Price Index, or CPI, each year plus any new growth in real estate. The 2016 CPI may finish between 1.5 and 2.2 percent for 2016, and it has averaged only 1.9 percent annual increases over the last 10 years.
“Meanwhile, District 58’s expenses are not capped and frequently grow at rates much higher than the CPI,” Bein said. “This imbalance creates budget and planning challenges. For example, if the District’s revenues only increased by 1.5 percent, as an example, it is challenging to perpetually balance a budget if expenses grow by 4 percent, for example.”
Due to responsible and careful planning, the District has been able to allocate its limited resources to best serve students and achieve the Board’s strategic goals.
Bein took these challenges into consideration when creating the 2016-17 budget and developing forecasts for the next three years. Bein also made several underlying assumptions regarding future budgets. These assumptions include:
An annual average of $20 million in new property will be added to tax rolls.
State funding will stay flat. No state funding formula changes, pension cost shifts or property tax freezes will occur.
State aid, federal revenue and interest earnings will remain flat.
The CPI will finish at 1.5 percent for 2016 and increase to 2.0 percent in 2017.
Staffing will stay relatively flat, with the possible addition of three full-time positions.
The cost of benefits will continue to rise faster than inflation, although careful plan management should moderate increases.
“Last year, District 58 switched medical insurance providers from Humana to Aetna, and premium rates were increased 5.5 percent. This helped offset some of the rising costs associated with benefits,” Bein said.
Bein’s three-year financial forecast shows a slight increase to the District’s overall fund balance. However, he explained that this forecast does not include the full costs of some of the projects and improvements that the District is currently working toward, including portions of the 1:1 technology refresh, English-Language Arts curriculum adoption, Science curriculum adoption, phone system updates and the possible Lester School facility upgrades that may occur.
“We are using the recent demographer report, facility study information and other resources to evaluate student needs and building capacity at Lester, and this review may result in a recommendation,” Bein said.
Bein also shared a building planning update. Regular building upkeep is essential to ensuring the District’s schools remain safe for students and staff. The District’s Buildings and Grounds Department keeps a running list of necessary school projects and their priority in the official District 58 Five and Ten Year Maintenance Plans. Beyond that, District 58 conducts regular building and facility inspections, which help to inform the decisions of the District. If a potential safety risk is identified, those issues are top priority for the District.
During his three-year forecast, Bein is not predicting the need for major facility projects. However, in the subsequent five years, many District buildings will require more significant work, including window replacements, electrical upgrades, plumbing repairs, and carpet replacement/abatement. Beginning in 2025, in addition to ongoing maintenance and repair projects, costly roof replacements are anticipated. Bein noted that the District may consider issuing bonds to restructure debt and help offset these future costs.
Learn more about the Financial Workshop by reviewing Bein’s Financial Workshop presentation.