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Fiscal outlook for D-428 not pretty

Published: Thursday, Feb. 7, 2013 5:30 a.m. CST

DeKALB – Parents of DeKalb School District 428 students could be paying higher fees in the future as the district tries to reverse its fiscal outlook.

Board President Tom Matya mentioned the fee-raising as a possibility after district officials learned they will have an operating deficit hovering around $2 million every year going into the 2017-18 school year. The district’s budget for the 2012-13 school year includes a $2.3 million deficit.

Matya did not offer any specifics on what fees could be raised.

“We will not touch our class sizes,” Matya said. “Our class sizes are at the maximum of what we want in this district, so we will have to look at other sources. Possibly fee structures ... we have to look at everything.”

Unless the state allocates more money to schools – and district officials aren’t holding their breath – the district’s budget deficits will erode their overall fund balance, said Michael Frances, a senior financial adviser at PMA Financial Network, who prepared the financial projections for the district.

Both Frances and Andrea Gorla, the district’s assistant superintendent of business and finance, stressed that the long-term fiscal outlook made assumptions about state aid, inflation and other factors that could change.

The projections assume the state will further reduce aid to local school districts. This school year, the state is providing 89 percent of what it owes schools, at a loss of $1.6 million to the district.

Frances and Gorla are projecting that the state will further prorate payments to 83 percent for next school year, while the foundation level set by the General Assembly will stay at $6,119 a student.

The school district would still incur some deficits if the state paid its full share of aid. But those deficits would be smaller – $430,000 in 2013-14 and $113,000 in 2017-18.

State and federal grants are expected to remain flat; however, Frances said this does not include sequestration – a massive cut in federal government spending that could occur March 1. Frances said if federal spending is cut by 8 percent, the district would lose $275,000 in grants.

District costs, in terms of salaries, health benefits, supplies and purchases of services, are projected to rise, Frances said.

One potential wild card is future state pension reform. Frances and Gorla’s projections did not include the possibility of the school district picking up part of the state’s contributions to teacher pensions. Several state lawmakers have voiced support for this option, although nothing concrete has materialized so far.

The model also assumes that property values will recover in the future.

“We don’t know what it’s going to be, but we’ll constantly analyze it as we get closer,” Frances said.

Financial pitfalls

Projected budget deficits for District 428 for the next five school years, assuming continued cuts in state funding and property value growth starting in 2015, among other factors:

2012-2013: $2.3 million

2013-2014: $2.8 million

2014-2015: $1.8 million

2015-2016: $2.4 million

2016-2017: $1.9 million

2017-2018: $2.6 million

Source: District 428

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