U-46 might have to dip into reserves should state funding fall short
Leaders at the state's second-largest school district said this week the state budget impasse could force officials to draw down reserves to fund operations next year.
Elgin Area School District U-46 relies on roughly $10 million monthly from the state to operate its 53 schools serving more than 40,000 students in preschool through 12th grade across Kane, Cook and DuPage counties.
"About 30 percent of our total revenue is from the state so it's a pretty big chunk," said Dale Burnidge, U-46 director of financial operations.
Officials said they might have to dip into the district's savings and use about $4.2 million of $88 million in reserves - and consider other funding options - if the state budget crisis remains unresolved.
"Certainly, I think the pressure that they are feeling in Springfield to ensure that we have a budget in place for K-12 education has to be at the top of their minds because they know so many school districts will have difficulty opening and keeping their doors open past November, should they not have a budget," CEO Tony Sanders told the school board Monday.
The school board reviewed a tentative $513 million total budget for the 2016-17 school year, which represents an increase of $5.6 million over the previous year's budget.
Burnidge said the district's operating funds are in much better shape than a few years ago.
In 2011, the district's operations and maintenance and transportation funds had negative balances with an overall fund balance of $5.4 million, or about 1.5 percent of expenditures. By comparison, last year's total fund balance was $87.9 million, about 22 percent of expenditures.
Burnidge said several unknown factors could affect property tax revenues heading into next fiscal year, including the possibility of tax-freeze legislation being adopted.
Officials also won't know about any general state aid proration until the end of July. For this fiscal year, which ends June 30, the district has received only 92 percent of what it was owed.
If the governor's budget is approved, general state aid would not be prorated for next fiscal year, which begins July 1. It could amount to roughly $5.3 million more in revenue next year.
State funding for categorical payments, which include reimbursement for transportation, also is up in the air. For now, officials are anticipating receiving all four quarterly categorical payments for fiscal year 2017, which could mean an increase of roughly $9.7 million in revenue from this year.
Pension reform is another variable. If a cost shift occurs, it could cost the district up to $18 million yearly, Burnidge said.
U-46 did not increase its property tax levy for 2015-16, but a levy increase might be in the offing for next fiscal year, which will be determined in December.
Salaries also are expected to increase next year due to contractual obligations and the potential hiring of 54 positions for full-day kindergarten teachers, social workers and administrative support personnel at the larger elementary schools. Health insurance benefits are expected to increase by 5 percent, and pension costs also will increase.
Officials said they will monitor what legislators do this month for the impact on next year's budget. The school board's finance committee will review any changes to the tentative budget Aug. 1. A final budget will be presented at the Aug. 15 board meeting.