Dr. Hentze's High Finance
Illinois Is Still Shorting the District on Scheduled Aid Payments
In a fiscal year, the State of Illinois is supposed to make four (4) quarterly payments to school for General States Aid (GSA). In the past, the state has failed to make this obligation. Through the FY2015, the State of Illinois still owes District 201 $3.65 million in GSA. In order to mitigate the problem of nonpayment, District 201 only budgets using an anticipated three GSA payments instead of four. This reduces the impact of nonpayment and allows the district to make a fiscally responsible budget. However, it is now a possibility that the State of Illinois will only make two of these quarterly payments instead of three this year as a result of the budget impasse. This pro-rated amount is in addition to the lack of full payment for mandated Special Education expenses by the State of Illinois. At this point in the FY, the district is $4.8 million in expenses over revenue for Special Education in order to meet state and federal mandates.
There are several ways that the district is working to alleviate this potential shortfall. First, there will be a slight increase in the Transportation Fund which can be applied to the Education Fund. Second, the district will sell new bonds using referendum-approved payment. This will allow the district to raise income rates without raising the tax rate for constituents. It is hoped that the sale of these bonds will cover the difference in GSA payments that is expected. Third, the district is anticipating a brief uptick in the equalized assessed value (EAV) from 1.2% to 1.4% for the local quotient. Under the proposed state tax cap bill, this would most likely be the dollar amount that district can levy at in the future.
In the meantime, the state budget crisis is still currently stalled. There is some movement on both sides to propose some substantive reforms to the budget process. It is hoped that these reforms will end the gridlock and begin moving the budget process forward. Currently the General Assembly needs a supermajority to override the governor's veto, but in January this drops to a majority, thus promoting more compromise on both sides.
Cheaper Insurance Plans on the Horizon
In insurance news, the Egyptian Trust has agreed to offer a added plan option to districts. Called the Mark to Market Plan, this new plan will allow the district to offer the exact same coverage to employees but with lower premiums and lower deductible. The new plan will not require employees to make any changes in their insurance, it simply provides a more efficient means of structuring district insurance. The revised insurance plan must be approved by the Union before it can go into effect. These meetings will happen in the next few weeks, and, if approved, the new plan would begin in January.
Regularly Scheduled Budget Audit Is Underway
Finally, the district is undergoing the regular state budget audit by the ISBE. The audit process takes about ten (10) days to complete and includes a review of the ADA by hour and name for student attendance in September, October, and December; a mile by mile list of travel expenses; all of the Special Education outlays (including the $800,000 for out of district programs for students); and all Title I and Title II funds. The district was notified only 8 days prior to the audit and the central office staff has been working diligently to prepare the needed paperwork.
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Proud alumnus, union member, and educator in District #201 since 2006.
Dr. Hentze is the author of High Finance with Hentze, a monthly blog that provides news about District 201's current financial state.