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Kick Them While They are Down

An In Depth Look at The Budget of School District U-46

Jennifer Van Deusen 6/23/2011

After reviewing past budgets from School District U-46 a proposal budget was created for FY2012. After many adjustments to expenditures and revenues were made the deficit was reduced, but the budget was not balanced. After the budget was created the tentative budget created by the district was exposed. It provided more depth as to certain components and how they will affect the budget in 2012. The comparison of the two budgets provided much insight into the financial structure that exposes the highs and lows of the educational world.

Introduction School district U-46 is the second largest district in the state of Illinois, next to Chicago Public Schools. The territory of the district spans from three counties in Illinois: Kane, Cook, and DuPage. The unemployment rates in Cook and Kane counties remain higher than the state and national average. Due to inflation property taxes will continue to grow as they have done in years past. All of these variables contribute to the financial structure of the district. In order to keep six high schools, eight middle schools, 41 elementary schools, and 5 pre schools a float revenues and expenditures must be measured and examined in order to predict for the financial structure of the next fiscal year. For the fiscal year 2012 past budgets were examined along with current financial trends to determine the financial infrastructure that keeps the district, community, parents, and students informed on how financially U-46 can achieve success. J. Van Deusen Budget FY 2012 In creating a budget for FY 2012 many components must be taken into consideration in order to best assess the management of funds. The decisions made for the 2012 budget were made on basis of financial need. The state of Illinois owes School District U-46 11 million dollars to which the district will not see for quite some time, as the state is in financial turmoil in itself. The logistical thinking came down to- take in more than the district is spending. In FY2011 there was a remaining deficit of 25 million dollars that would have to be tacked on to any finishing totals for 2012. Of course that number could be reduced by almost half had the money owed by the state been paid. Since that money is what is considered an unknown variable, shifting and compensating in other areas was an essential move in order to reduce spending and deplete the deficit.

Revenues (Taxes): Property taxes along with building revenues will continue to increase. The taxes in part to inflation and the new construction revenue spanning from three counties will add to the districts yearly revenues. Roughly eight million dollars has accrued for FY 2012 putting the total at $280,000,000.00. In order to determine this number growth trends from the past several years were utilized and the patterns were followed. Local Revenue: The local revenue grew by one million dollars this was partly due to the slump in the economy causing some people to downsize their homes and an influx in the amount of families moving to one of two mobile home parks located within the district. This increase in revenue was attributed to the tax in those areas. General State Aid: The financial conditions of the state of Illinois had a direct correlation on the drop in revenue for general state aid. The seventeen million dollar decrease is in addition to the 11 million dollars the state owes the district from FY 2011. High unemployment and bankruptcy numbers for Illinois attribute to this shortage. Categorical Funds: These funds remained the same with little to no change in revenue. The funds contributed $71, 636,153.05 to the district revenue. Federal Aid: In speaking with a financial mentor, Dale Burnidge, cautioned that in 2012 the ARRA stimulus funds would be eliminated. The district has been extremely dependent on this stimulus since 2009. The ARRA funds have been removed from the 2012 budget at a loss to the district of about nine million dollars. Thus, bringing the total federal aid to $35,468,891.01. Other Revenue: The other revenue amounts were kept the same with little to no change in amount. The other revenue brought in to the district stayed on track with past years at a total of $117,800.00.

Total Revenue: Despite the dramatic decrease in federal aid in FY2012 I am projecting an increase in total revenue of $142,426.41. Had the stimulus funds still been in effect it would have added roughly nine million dollars to the revenue total. Salary Expenditures: In order to balance the amount of money being spent with the amount of revenue coming in a close examination of the expenditures was in place. A reconstruction of the administration in all six of the high schools is an essential first step in reducing cost. In each of the high schools a divisional runs each curricular department. They are administrators and paid an administrator salary. Many of the high schools in surrounding districts have done away with this position in an effort to save money. This shift and change in administration is a wise move for the benefit of the district. The department head position will be eliminated. The principal and two assistant principals along with deans that are considered administrators will be the only administration in each building. A lead teacher from each department will receive a pay increase for extra duties. The salaries for teachers have been increased slightly to accommodate for this exact purpose. At the district level many of the assistant superintendents positions can be combined, and other positions eliminated. For example a K-6 Literacy Superintendent can be a combined position with the 7-12 Literacy Superintendent to form the K-12 Literacy Superintendent. This shift in administration will save the district just under seven million dollars. Many of the salaries or positions are a form of luxury when a school district is doing well, but not essential when a district is struggling. Clerical aides are given $740,681. Teachers and administrators can plan accordingly to copy or prepare their own essential materials without the need of a clerical aide. Making these essential cuts will help to stretch the educational dollar.

Employee Benefits: Following patterns of recent years insurance, contributions, and retirement programs have an increase in cost. This increase in the budget amount was noted in a two million dollar increase. Purchased Services: The total amount for purchased services was reduced by just fewer than six million dollars. Many of the services mentioned appeared unnecessary, in that other forms of servicing would do the job and save money. The advertising and binding budgets both received serious decreases. Many forms of communication including advertising and informative materials are being sent out through electronic resources. These email blasts are more cost effective and easy on the environment. There was an increase in copier supplies and services, as the clerical aides are an eliminated position more attention will be needed on the machines in terms of maintenance and upkeep. Supplies and Materials: In FY2011 there was an increase in the budget for the new math textbook initiative. There will not be another textbook initiative for quite some time; as a result the budget allotted for textbooks was reduced by one million dollars. Capital Outlay and other objects: In FY2012 it is proposed that these numbers will remain the same. A similar amount has been budgeted for buildings, equipment, etc. Total Expenditures: The total amount shaved from the expenditures was just under 13 million dollars. It is always difficult to try to take away from education, as the more a district has the more they can do. School District U-46 Tentative 2012 Budget Upon review of the actual district budget for 2012 many components implemented by the district were not even considered during my interpretation/implementation. Some of the unknown factors the district established were the categorical payment schedule. The payment

schedule in years prior would normally be four payments, where it is headed now towards three. This means less money in terms of revenue for the district. FY2012 is also a contract negotiation year for teachers, so the amount allotted to teachers in terms of salaries could be higher, frozen, or even lower that where it is now. The district also made a few assumptions regarding revenues. Some of them will have an even greater impact on the deficit than originally thought. The three categorical payments mentioned above in place of what were formally four payments will result in the loss of seven million dollars in revenue. The schools budget runs parallel to changes made by the state. The state of Illinois is altering the reimbursement of transportation for regular education students. This will result in the loss of $350 thousand dollars in revenue. The district noticed an increase in money provided federally through the free and reduced lunch numbers; hence the district has shifted $1.6 million dollars in food service revenue. The district is anticipating a decrease in total revenue by 17 million dollars. For expenditures in FY2012 School District U-46 is assuming that medical insurance rates will climb by 9%. In terms of technology and professional services the district has increased those funds by three million dollars in order to cover new technology systems. Even though the math book adoption has gone through they increased textbooks by $1.1 million to cover the overage costs. The rising cost of diesel fuel has caused an increase of $600 thousand dollars in the gasoline fund. The district also is depleting the Life Safety Funds, so they increased expenditures for buildings by $2.5 million. Expenditures are expected to increase by $1.2 million in FY2012. In terms of salaries, the district added two IT salaries to support the new software that will be implemented. They also decreased the compensation given for unemployment by $2

million. This could be that fewer employees were laid off, or that prior unemployment has run out. There were also deductions made to supplies, food service supplies, maintenance and repairs, and pupil transportation due to decreasing patterns. Comparisons In comparing my projections with the tentative budget of the district it is clearly obvious which one makes more sense. Had the tentative budget been read prior- many of the unknowns would have been incorporated into the projected budget. One of the biggest differences is observable in the approach to the budget. In my proposal I tried to compensate for the deficit by eliminating expenditures. In the districts tentative budget they are moving around funds within the revenues to create more money- so that elements of education do not have to be taken away. I understand this methodology. With a better understanding and familiarity of the various funds that make up the district budget that can be a logistical approach to balancing the budget. Dale Burbidge had mentioned that each department works with an aspect of the budget and they all come together to communicate in terms of revenues and expenditures. It is overwhelming to be one person examining the entire budget to ensure that the right decision is made. It is no wonder that it is a team effort- more ideas to be generated and more minds to work through difficult problems. In terms of funds and numbers, the district was more in tune with trends and patterns. Components that did not even cross my mind were accounted for in their tentative budget. That just goes to show the extent of strenuous thinking and planning that goes into every last detail of the budget. The recent spike in gasoline and fuel costs is something that needs to be accounted for, otherwise districts will run into issues later on. It had also slipped my mind that in 2012 it will be a negotiation year for teacher contracts. This makes up a big portion of the budget and

could impact it in a variety of ways. It left me thinking- how does a district prepare their budget when a major variable, like teacher salaries, are left unknown? Personal Reflection It is one thing to explain why a district spends money the way they do, but it is quite another to write a budget for an entire district. I found this phase of the budget construction extremely difficult. Even though I had been reviewing the districts budget reports for a few weeks, I still could not help but feel like an outsider in terms of reading patterns and anticipating the next financial move. Whittling down the districts expenditures seemed much easier than predicting revenues. The district I work in is very large, so the numbers and details within each fund seemed to add to the anxiety of the assignment. My districts budget has also been in a severe deficit for as long as I have worked in the district. It was eye opening in that just when you think you come close to a balanced budget, you then remember to add in last years revolving negative balance. I think what keeps district leaders moving forward is the idea of an increase in the money flow will open more doors for educational success. My goal when working on my interpretation of the budget was to decrease the deficit and bring the number closer to zero. I did not reach zero, but I was able to shave off a bit from the total deficit. The phrase kick them while they are down came into mind while evaluating the budget for 2012. Had the state paid the school district- provided they had the resources, which would have cut the deficit amount in half. Had the ARRA stimulus not run out that would have put nine million towards relieving the deficit. Then that would leave three million remaining as the deficit; this number then becomes much more manageable with grants or cutting back on expenditures.
While examining the budget especially when trying to determine where parts of the expenditures can be saved, you cannot help but feel bad for the programs that are receiving less money or no money,

9 and especially those individuals that are losing their jobs. As a superintendent or any school leader for that matter, you are trying to do the right thing and keep the goal in sight, but it is easy to second guess oneself during this process. I often wondered if that was the right thing to do, or I would put a visual to a face or a name to a position that would be eliminated. In a district like mine that has had chronic issues with the budget, it is an all too familiar feeling. Conclusion In order to better understand the financial obligations of a school district a budget for School District U-46 was created. After the budget was created the tentative budget proposed by the district was observed and compared. Many differences were observed- the primary one being my amateur ability to create a budget. It is one thing to try to balance a budget, but when the district constantly carries a revolving negative balance from year to year- it makes observing that light at the end of the tunnel a bit obsolete. I tended to focus more on expenditures, while the district shifted around revenues. Many of the components of the budget had not even been considered in my proposal; which puts it even further off the mark. There were many situations that were out of the districts control that put them farther in the red. The end of a federal stimulus and an unpaid I OWE YOU from the state could have made the deficit within three million dollars of being balanced. The direct parallels between the economy and education leave a glimmer of hope, that with an improvement of the economy, educational systems can find success.

References

Burnbidge, D. (2011). Personal Interview.

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Finances. (2011). School District U-46. Retrieved from http://www.u46.org/spps/sitepage.cfm?catid=136