District 204 official sounds alarm on potential inflation impact on district finances

The top budget official in Indian Prairie Unit District 204 is sounding the alarm on the potential effects of inflation on district finances.

Chief School Business Official Matt Shipley delivered his latest budget update to the IPSD 204 school board, telling board members on Monday that the latest annual inflation rate of 8.3% will have an impact on the 2022-23 budget year. If a recession follows, Shipley said, there would be further ramifications.

District 204, the state's fourth-largest school district, serves 26,000 students in Aurora, Bolingbrook, Naperville and Plainfield.

"We're in a situation where depending on who you listen to or depending on what day it is, people are either forecasting inflation trends to continue for several years, or they're predicting this inflation followed quickly by a recession," Shipley said. "We're in a little bit of a transition period where there's a lot of uncertainty, and we will continue to follow that."

In terms of the 2022-23 budget year, Shipley said, the focus is on dealing with inflation. Even though inflation may be above 8%, the district is limited to a 5% tax rate based on the consumer price index. While the CPI for the 2021 tax levy is 1.4%, it'll be capped at 5% for 2022.

"There's obviously been a lot of change over the past several months as far as general economic data and information that's come out," Shipley said.

With expenditures, Shipley warned about the ability to hire and retain staff in an environment of higher inflation. He also projected unpredictability in construction costs and the availability of materials.

If a recession were to hit, declining property values, limited new property growth and increases in health insurance costs and usage would be among the many concerns.

Shipley said district revenue is expected to climb from $379 million in 2022 to $426 million in 2025, with 77% of that money coming from property taxes. Expenses are anticipated to rise from $378 million in 2022 to $429 million in 2025 - creating a deficit of about $3 million - with 76% going toward salaries and benefits.

"Similar to on the inflationary side where we can see costs rise quicker than revenues," Shipley said, "on the recessionary side, we can see revenues decline faster than expenditures."