U-46 projects $53.5 million deficit

Elgin Area School District U-46 is in its deepest hole in recent memory.

Chief Financial and Operations Officer Ronald Ally told the school board Monday that he projects U-46's deficit to be $53.5 million by June 30.

"Let me repeat that again. We have a $53.5 million hole to fill," he said gravely.

That sum breaks down into a $28.9 shortfall from last school year, plus $19.7 million carried over from previous school years and $4.9 million expected this year.

The deficit came from three sources, Ally said.

The economic downturn hit U-46 much faster than officials expected, he said. The district saw local, state and federal revenues come in last year at $20 million less than budgeted. At the same time, salary and benefit costs increased beyond what was projected.

Budget cuts last year, including eliminating the equivalent of 350 full-time positions, have helped U-46 to manage its overall deficit, Ally said. Another phase now has begun.

The district announced it will not purchase new school buses this year, or allow employees to combine part-time positions in order to get benefits. The daily pay for substitute teachers has been reduced, and all third-party contracts are being reviewed.

More is yet to come.

So the deficit doesn't grow even larger, U-46 aims to reduce this year's expenditures by $4.9 million.

With approximately 75 percent of expenses coming from salary and benefit costs, "these types of holes will not be filled without impacting people," Ally said.

A $434 million budget, drawn up over the summer and approved last week, must now be tweaked, Superintendent Jose Torres said.

An amended budget will come to the board early this winter.

Ally said the district will establish a budget advisory task force made up of administrators, principals, teachers union members and other union groups, as well as advisory councils. It will be charged with finding ways to balance the 2011 budget and reduce the overall deficit by $25 million.

Former Chief Financial Officer John Prince, who left in June, helped lead U-46 out of the $40.1 million hole it found itself in at the end of 2003 within three years.

Ally, who came to the district from McHenry County College, is credited with increasing the college's general fund reserves and restructuring its long-term debt.

Still, board members made no effort to mask their fears Monday.

"We find ourselves in pretty dire circumstances," board member Joyce Fountain said. "-The reality of our circumstances is students will be impacted. How do we make those choices and establish those priorities that do the least amount of damage to our students? These are really tough decisions that have to be made."

Deficit: 'We find ourselves in pretty dire circumstances,' board member says