U-46 budget will have district holding line

After finding itself millions in the red last year, Elgin Area School District U-46 is looking at a bare bones 2009-10 budget.

The proposed $434 million spending plan is a $13 million, or roughly 3 percent, decrease from what was spent last year.

But with property tax revenues and state aid revenues expected to be flat at best, expenses are expected to exceed revenues by $6.3 million.

"The current 0.1 percent inflation rate has been a driving factor in local revenue, and it has an effect on general state aid to a degree. This is not a good sign," interim chief financial officer Mike Pehan said.

After cutting 350 full-time positions last spring, U-46 plans to spend $236.2 million on salaries - $6.6 million less than last year. While benefit costs, purchased services and supplies will all increase slightly, capital outlay will be reduced by $14.4 million to $6.5 million.

District spokesman Tony Sanders said the plan should have a minimal impact on the classroom. U-46 still plans on implementing lower student-teacher ratios and starting several new programs this fall, including a study-skills course for middle and high school students and world language courses for middle-schoolers.

Any more additions, Pehan advised the board, would not be sound.

"As you go into this fiscal year, you will have to be very cautious about adding programs that you can't pay for. ... It's going to be a very tight year," he said.

Pehan added that the district is not alone in dealing with budget problems.

According to the cash-basis method of accounting used by the district, U-46 had a $44 million deficit last year - the biggest since 2003.

"This was a revenue problem, not an expenditure problem," district spokesman Tony Sanders said.

The district was $11 million short in property taxes and nearly $12 million short in state aid as of June 30.

That deficit is not nearly as large according to the new accounting method - called a modified accrual method - the district is moving into. The new method allows U-46 to count funds marked for last year received through Aug. 31. It already has received $17 million in additional revenue and expects another $13 million.

Budget cuts last year helped the district to tighten its belt in a number of areas, spending nearly $1.5 million less on purchased services and another $3.5 million less on supplies.

But benefit costs, including medical insurance, were $7.5 million more than projected.

"That's certainly an area you will have to concentrate on as you move forward," Pehan said.

Final details for the budget still need to be worked through, Pehan said.

After a public hearing Sept. 14, the board will vote on the budget Sept. 28.

Spending: District still plans to lower student-teacher ratios