The Commercial-News, Danville, IL

Local News

March 5, 2013

Denman outlines proposed cuts

D118 needs to save $3M

(Continued)

DANVILLE —

Even if the proposed cuts and cost savings measures are approved by the school board, Denman said, “This doesn’t mean we’ll have a balanced budget next year.

“We’ve been told there will be three to four more years of very challenging times,” he said.

“The problem we have is not with expenditures. The problem we have is with revenue,” he added.

The state of the district’s finances also was recapped at the meeting.

The district started out this fiscal year’s budget on July 1, 2012, with a total fund balance of $20.2 million but projects an ending fund balance of $17.8 million by June 30. That would amount to deficit spending of $2.4 million.

Business Director Heather McKiernan said much of the $17.8 million fund balance “is reserved for certain things” and cannot be used elsewhere.

The district’s biggest concern is the steady decline in state funding. The state currently owes the district $1.7 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 get $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.

“Just this year we’ve had a loss of $3 million in state aid,” Denman said. “Those are catastrophic numbers.”

District officials are concerned the level of state funding could drop further 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 over 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, and are paid late.

Local revenue also has been on the decline, with the district’s equalized assessed valuation decreasing every year since 2009, amounting to a compounded loss of $3 million since the 2009-2010 school year. The district is expecting to lose an additional $713,000 to $981,000 in the 2013-2014 school year.

Denman said he doesn’t quite know yet how the federal sequestration is going to impact the district.

“Things are confusing out there,” he said.

A cut of 5.4 percent in federal funding in the 2013-2014 school year would amount to a loss of $311,449 spread over four grants.

Another unknown is whether the state will shift pension responsibility on to the local school districts to fund.

If the pension shift is done in increments, it would cost the district an additional $256,000 for every 1 percent that is shifted away from the state.

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