Dist. 204 may end up with $3 million deficit

Early indications show Indian Prairie Unit District 204 officials may be faced with approving a deficit budget of $3 million unless the state's education funding level becomes more certain before the district's Sept. 22 deadline.

Dave Holm, assistant superintendent for business, presented board members Monday with a first draft of the budget, showing the district spending about $3.27 million more than the $266.3 million. Holm said the increased costs are attributed to the district's plan to offer full-day kindergarten in August and the one-year lag in general state aid revenues that come with implementing the program.

"It's anticipated. We knew we were going to experience this due to the all-day kindergarten and that one-year delay in revenues," Holm told trustees. "But this is better than what we forecasted. It's about a million dollars better than what we were looking at earlier this year."

Final cost figures will fall just below the original cost estimates, which projected that the district will need to hire 61 new teachers at a cost of about $5 million a year in addition to just under $1 million in start-up costs. Because the district's attendance will increase, so will its state funding. State sources are expected to provide an additional $7 million a year starting the year after the program begins. The kindergarten program, Holm explained, will actually generate more general state aid revenue than the expenditures involved in running the program but that process will take about three years before the program "begins to pay for itself."

Holm said the district has entered a cycle, similar to other "fast-growth districts" where as enrollment goes up and the cost to educate those students goes up, revenues tend not to keep pace.

"You reach a point where you start to lose ground and enter a deficit situation but this deficit isn't really at that point yet. It's an artificial deficit at this point because of the all-day kindergarten situation," he said. "Do I think we'll eventually get back to a deficit situation? Probably. Then we have to figure out how to bring our revenues back in line."

The district expected to be in that situation in 2009, nine years after its last operating fund tax increase was approved by voters but Holm said the cycle has begun to slow down.

"Right now, the forecast suggests we can probably wait until as long as 2012 before we need another referendum," he said. "But the proof is in the pudding so we'll have to see how the next few years go."

He warned against those who will review the budget and see a cumulative balance of $88.4 million and not see the need for another tax increase in the future. That number is inflated, he said, by the first installment of next year's tax revenue.

"It's more fair to look at my fund balance in May when it is at about $15 million for all of our operations funds," he said. "That's about where it should be."

Board members will receive a second draft of the budget in August before a Sept. 22 hearing and final approval.