BY CAROL ROEHM
DANVILLE — The Danville District 118 school board Wednesday heard a presentation on the state of the district’s finances and what the future holds five years out if revenue doesn’t increase or expenditures aren’t cut.
The presentation paints a bleak financial picture for the district by the year 2017.
“We have financial turbulence,” business director Heather McKiernan told board members. “It’s not just within our district; it’s all over the state.
“It scares me,” she said.
The district started out this fiscal year’s budget on July 1, 2012, with a total fund balance of $20.3 million, but projects an ending fund balance of $17.8 million by June 30. That would amount to deficit spending of $2.4 million.
District officials are starting to work on next year’s budget and any cuts would be recommended in March.
The district’s biggest concern is the steady decline in state funding. McKiernan said the state owes the district $1.9 million.
Forty-nine percent of the district’s revenue comes from general state aid and reimbursement payments, another 35 percent comes from local property tax and the remaining 16 percent comes from the federal government.
The district was supposed to receive $29 million from the state this school year, but instead will receive about $26 million because the district is receiving only 89 percent of its total entitlement from the state.
District officials are concerned the level of state funding could drop farther to 80 percent in subsequent years, which would amount to a loss of $5.8 million each year.
The district has not received 100 percent of what it should receive in general state aid since 2008-2009, amounting to a total loss of $4.7 million in state funding. If the general state aid is funded at the 80 percent level — which would be a loss of another $5.8 million — the cumulative loss to the district during the last five years would be $10.5 million.
Categorical payments from the state, such as transportation and special education, have been prorated as well since 2010-2011, amounting to a loss of $300,000 per year in regular transportation alone.
Local revenue also has been on the decline, with the district’s equalized assessed property values decreasing since 2009, amounting to a compounded loss of $3 million since the 2009-2010 school year. The district is expecting to lose an additional $712,577 in the 2013-2014 school year, making the cumulative total loss $5.6 million during four years.
“The county assessor has told us the local economy is not going to recover for another three years. It’s going to be a downward trend,” McKiernan said.
She also said the district has lost about $400,000 in interest earnings during the last few years due to the low interest rates being paid on the district’s money.
In the meantime, expenses have been steadily increasing. Insurance costs have increased by 15.09 percent from 2011 to 2012, with an estimated increase of 18.85 percent in 2013. And while nothing has been decided on pensions, the district is aware of the possibility of a shift in pension responsibility from the state to the local school districts.
If the pension shift is done in increments, it would cost the district an additional $266,000 for every 1 percent that is shifted away from the state.
McKiernan added the district could see a cut of 15 percent in federal funding in the 2013-2014 school year.
She said a proposed cut to Title 1 funding could cost the school district $516,000 annually and an additional $515,000 if Title 1 funding is eliminated altogether.
“The only way to raise revenue is to increase property taxes,” McKiernan said.
But Superintendent Mark Denman said, “We don’t think that’s a good idea with the economic climate of the area.”
Denman said he is hopeful the new retail construction on North Vermilion Street will pump some money into the district’s coffers.
Also on Wednesday, school board members:
The club received a $1,300 grant to fund the trip, which will include visiting the Abraham Lincoln Museum and Library and possibly watching a legislative session, and will cover the remaining estimated expenses of $150.
The ISBE will recalculate the ISAT performance expectations so they align with the higher expectations for elementary and middle school students. Illinois’ previous expectations for third- through eighth-grade students did not align with the new Common Core State Standards.
The new scores are supposed to provide a more accurate indication of whether a student is on course for college and a career. The higher expectations of the new standards, however, will likely result in more students not meeting or exceeding standards.
The benchmark for high school students will not change because the standards for high school are already higher.
“We’re going to see much higher standards for children in third through eighth grade that are more in line with high school standards,” Denman told the board.
Under the proposed traditional calendar for 2014-2015, school would start a week earlier than this year and next year because the renovations at East Park Elementary will be completed, and the fall semester would end prior to Christmas break in 2014-2015.
Denman announced in July that he would retire in June 2014, but board president Bill Dobbles said board members have been in discussions since that time to persuade Denman to stay on and see the district through some major changes as new administrators are hired to replace retiring ones.
“Because of all the changes we’re having in the district, I would recommend that the board extend Mr. Denman’s contract for another year,” he said. “He’s done an excellent job.
“Ever since he announced his retirement, the board has been discussing with him to stay another year,” he added.
Denman said, “It would be an honor to accept the board’s recommendation. This is a very special place and it’s been home for many years.”
Kathy Houpt, human resources director; Diane Hampel, educational support services director; and Cheryl McIntire, Northeast Elementary Magnet School principal also will retire at the end of the school year.
Those remaining jobs have been posted with recommendations expected to be ready for the board’s approval by the March 13 meeting.
The raises would be retroactive to July 1, 2012. The kitchen managers and the two area supervisors also would start paying $10 a month toward insurance.
The roof’s trusses will be set in mid-March, and delivery of the school’s new windows and doors is expected in mid-March with installation starting March 18, according to Ron Henton, director of buildings and grounds.
District 118 school board members will meet at 6:30 p.m. Feb. 27 in the Jackson Building, 516 N. Jackson St.