Financial Projections for U-46

FINANCIAL PROJECTIONS FOR SCHOOL

DISTRICT U-46 RELEASED

School District U-46 released an analysis by an outside financial consultant that shows a potential shortfall of $15 million next school year based on the current level of expenditures and estimated levels of revenue from local property taxes, and state and federal funding.

“These projections are very conservative,” said Ron Ally, Chief Financial and Operations Officer for U-46. “What they demonstrate is that U-46, like other Illinois school districts and units of local government, is facing a flattening of revenue at a time when expenses – especially benefit costs – continue to rise.”

The projections assume that local property tax revenues will remain relatively flat, that the level of state per-pupil funding will decrease by $100, and that all other state funds will be frozen at the current levels. “With the financial condition of the State of Illinois, this may be optimistic,” Ally said.

For expenditures, the financial consultant assumed:

No salary increases for employee groups that do not have a contract in place for the 2010/2011 school year, including all administrators and employees covered by the Elgin Teachers Association.
A nine percent increase in health insurance costs.
Increasing employer-paid contribution rates for pensions.
All other non-personnel costs increasing at the rate of inflation.

The projections for future years demonstrate a continuing trend of expenditures growing faster than increases in revenue. Based on current expenditure levels, the financial consultant estimates shortfalls in funding for the next five fiscal years.

“This is why we must continue to look for additional revenue and continue to reduce our expenses,” according to Ally. “This is a revenue problem. We cannot hold out and hope for increased funding from the State of Illinois,” he added. “We must live within the resources we are provided, while working towards eliminating the accumulated deficit.”

Currently, the District’s overall deficit is $48.6 million which includes $28.9 million from Fiscal Year 2009 and another $19.7 million that was revealed by changing accounting methods. In December, the District announced reductions totaling $4.9 million to balance this year’s budget.

“The goal for next year is to balance the budget and reduce the deficit from prior years,” Ally said. “If we do not make reductions, the current $48.6 million deficit would be increased by another $15 million.”

In October, Ron Ally established a Budget Advisory Task Force that has been charged with developing recommendations to balance next year’s budget and contribute to the deficit. The Task Force, which has reviewed every single suggestion that has been received through our online suggestion box, is expected to make their recommendations at the end of January.

Click to view the Financial Information Page