Story posted Wednesday, November 11, 2009
District 64 Deals With 'What Ifs' Of Finances
By DWIGHT ESAU Journal & Topics Reporter
The good financial news for Park Ridge-Niles School District 64 is that it currently is in excellent financial condition.
The bad news is, the district is so dependent on outside funding sources that it doesn't know and can't predict accurately how long this positive situation will continue.
The better news is, it has time in the next two years to do some contingency planning and adopt policies built around various "what if" scenarios.
To deal with this challenging situation, the district has created a Community Finance Committee (CFC) to help advise the board of education on finance matters. This week, CFC co-chairman Craig Elderkin presented a current analysis of the district's financial position and where things are headed in the next 10 years.
In the next two years, District 64 will be doing a lot of "best case" and worst case" scenario thinking, he said. It will take the form of, "If this happens, we should do this," and/or "If that happens, we should do that."
Since the district generates only a small fraction of its own revenues and depends primarily on property taxes, state aid, and various grants to fund its operations, it must rely heavily on past revenue trends, perceptions of the current and future economy, and estimates of state support of education.
The CFC has developed some tools for the district board and staff to use in the next two years to keep its financial position positive. The committee, Elderkin said, has developed a range of scenarios adjusting for differing inflation rates, changes in district staffing needs (where the biggest chunk of its money is spent), future health care cost trends (probably up substantially, Elderkin said), the future level of support needed for special education (disabled students) programs, and, of course, economic trends generally.
"At the time of the successful tax rate referendum in 2007, the district anticipated being able to maintain its operating fund balance (reserve) target of 33% of annual expenses for 10 years without returning to voters again for a tax revenue increase," Elderkin said. "Our study group scenarios for 2017 now show that the fund balance objective is still reachable in the best case, or may begin falling below the target a year early in the worst case."
In the midst of all this, the board did approve this week a tentative property tax levy for 2009 that totals $56.9 million, about 4.9% above last year's levy. Since it is less than a 5% increase, the district is not required to hold a "Truth in Taxation" public hearing on this levy this year. But the board, at the recommendation of its staff, decided to hold one anyway. It will be conducted at 7 p.m. on Monday, Dec. 14, before the board formally adopts the levy and files it with the Cook County Collector.
The levy provides about 80% of the district's revenues for the next 12 months. In a separate levy, as required by law, the district tentatively approved a levy of $2.7 million for debt service for 2010.
Most of the main levy goes for general educational purposes and operations and maintenance of district facilities (about $50 million). The rest goes for transportation, employee benefits and retirement, liability insurance, special education activities, and reserves.
The levy essentially is a request to county officials for a specific level of property tax revenue for a given year. This year's levy estimates are especially difficult, according to Becky Allard, the district's business manager, because the real estate slump has lowered property values and made it very difficult to predict the district's total property land value, on which property tax revenues are based.
Speak Out!
Comments are edited first by Journal staff before running in print and appearing online.