District 200 is projecting budget surpluses over the next five years, but gets an incomplete grade until contract negotiations conclude.
Over the next five years, School District 200 should run budget surpluses, according to projections reported at the January 25 Board meeting. Assistant Superintendent for Business Operations Bill Farley presented estimates from District consultants, PMA Financial, indicating that after the current year’s break-even budget, the Fiscal Year 2013 budget would post a $710,000 surplus, rising to $2.7 million in 2014, $4.3 million in 2014, $5.1 million in 2016, and $4.6 million in 2017, the end of the projection period. Total District revenue would increase from about $146.5 million this year to $161.6 million in Fiscal Year 2017 (excluding bond and interest payments, which will increase significantly as the District’s back-loaded debt payments come due).
This is a very positive step for the District, and indicates that budget improvements made in prior years are beginning to bear fruit as they compound over time. These projections are consistent with what I have said for a while: with growing revenues and gradually declining enrollment, the District should have no trouble balancing its budget, IF it continues to control spending. With surpluses, the District can also build up reasonable reserves to smooth its cash flow and end the need for short term borrowing to pay bills.
The budget projections make numerous assumptions about future revenues and expenses, including that the District will continue to “tax to the max” by increasing its levy to the maximum amount allowed under the property tax cap law. The Board has consistently done this, although for the first time in recent memory, there was dissent on the 2011 levy. Newly elected Board Member Jim Gambaiani opposed the property tax increase and was the sole “no” vote on the levy at the November 9, 2011 Board meeting. The projections, however, assume that the District will collect as much as it legally can in future years, which would be a roughly 3% increase in property taxes next year (for your 2013 tax bills) and 2.5% every year thereafter. Thus, property taxes would fund all of the increase in District spending; state and federal funding is expected to stay flat or decline slightly.
However, the District gets an “incomplete” at this time because the biggest expense item – salaries – has yet to be resolved. Both of the District’s collective bargaining agreements are being renegotiated this year. The PMA projections assume that a partial salary freeze will be implemented next year, and thereafter that overall payroll growth will be limited to about 2.5% per year thereafter. But negotiations continue. If the Board is overly generous with raises – as it has been in the past – the projected surpluses could easily shrink or disappear altogether.
It was also revealed that the salary “freezes” have been as mild as this year’s winter (so far). Fully 10% of District teachers – 103 out of a full time equivalent staff of 1,034 – are currently in pre-retirement mode. This means that each of them will be getting guaranteed 6% pay raises next year, regardless of any freeze or limitation. These raises are included in the District’s budgeted spending projections.