With declining state aid and possible changes to transportation and pension funding ahead, the New Lenox school board got an updated financial forecast that administrators said is "bad, but not horrendous."
The five-year financial forecast is provided to administrators and board members twice a year, once in the winter and again in the summer, to provide context to the decisions they make. You can view the entire document, which is attached to this article as a PDF.
"When we met in January, things were looking good," business manager Harold Huang said. "We sounded rosy. Well, since January, I think it just went like this," he said, motioning his hand downward.
The reasons, explained by Howard Crouse of the PMA Financial Network, which gave the presentation, result from a number of factors:
- The state is still behind two catagorical payments. Earlier this year, Huang said the district could possibly receive one or two additional payments, which are about $1.1 million each. Now, receiving even one might not happen.
- General state aid will continue its decline, and the district will get less than originally thought because of the way the state has prorated it.
- There are ongoing discussions in Springfield that could put of a burden on local districts when it comes to pensions and transportation, which has already dropped significantly.
- Slight declines in the projected equalized assessed value in the district and an "overly optimistic" projection of foundation levels had the January forecast a bit brighter than Wednesday's.
The district actually , which helped cover a projected budget deficit for the current fiscal year. Looking ahead to next year, though, there are uncertainties as to what the state will decide.
"Last year governor took money away from transportation," Crouse said. "There’s this risk that the governor will again play with the legislative dollars when it gets to his desk. There’s no indication he will except for past practice."
Crouse said the district has done a nice job keeping its expenditures down, most notably with its health care costs. After projecting an 8 percent increase to costs in January, the district's costs didn't even increase half of that, at 3.82 percent.
Still, according to Crouse's presentation, "the district will need to use FY13 to review expenditures with an eye toward significant reductions." Huang and Supt. Mike Sass were confident the district could do that, saying the financial forecast has helped provide important insight in the past.
"We saw a picture like this four years ago, so we’re now in the same situation where we’re saying, 'This is bad, but it’s not horrendous,'" Huang said. We can take care of this. It’s what we always do. It’s why we do this every six months."
The board has also looked at a capital improvements plan to upgrade its existing infrastructure, something Sass said is a priority for the district. With the most recent projections, though, he presented the board with various options that could help the district in the future.
"When the state fails to make their obligations, our board has done what it's needed to," Sass said.
This year, he said the district will closely review the budget and some of the options, which include:
- Receiving a fifth categorical payment from the state in each of the next two fiscal years.
- Selling land. The district owns land near Silver Cross Hospital, at Francis and Schoolhouse Roads and at Industry Drive. Sass said the land is definitely an asset to help the district in the future.
- Increasing class sizes by two students. The district is currently under its class size targets.
The other options that would "make the future look much brighter," Sass said, involve combinations of the three.
Other topics discussed during the school board's strategic plan meeting included facility planning, program updates and board member initiatives. Look for stories in the coming days for more from the meeting.