District 228 Discusses Three Hot Budget Topics

Red and black ink were flowing at the Bremen School District 228 Board of Education meeting on Tuesday, Aug. 16, as the board discussed the district's finances in preparation for a budget presentation that will come next month.

As Assistant Superintendent Tom O'Malley painted a picture of the district's financial future, the members listened intently to all the ups and downs 228 has seen, and what the future holds.

“I say this every year and each year I continue to say it over the last several years, it continues to hold true,” O'Malley said. “That is, we're in the worst financial times that we've faced in history."

During his approximately 45-minute presentation, O'Malley went over three items which he said were key to understanding the district's finances: the State's grant funding, the district's deficit and the district's outstanding debt services.

Starting with the State's grant funding, which he called a “shell game,” O'Malley showed how the State has used creative bookkeeping to say it paid all its fiscal year 2010 payments, but really paid several items during the 2011 fiscal year.

“I don't know if it's trickery or gamesmanship and play on the numbers … [the State is] constantly manipulating those numbers and not painting the full picture,” he said.

While he did say the State had fulfilled its payments, he noted that late payments could lead to later and later payments, or no payments at all in years to come. If payments cease from the State, it will mean that programs will need to be eliminated from the budget, either through State mandate or district cuts.

The district's deficit, O'Malley's second talking point, showed that should revenues and expenditures continue at their current pace, by 2015 the district could have a negative operating fund balance. If there is a negative fund balance, the district could dip into its reserves to cover costs.

“Our expenditures, we've got a handle on our expenditures are increasing steadily at about two, two-and-a-half percent annually,” O'Malley said. “The problem is our revenues are not keeping pace with our expenditures.”

Though there are concerns, he said that the district does have plans in place to assure this does not happen.

Finally, the assistant superintendent went into the district's outstanding debt services. He said that thanks to the board and the administration at the schools within the district, 228 has always maintained fiscal responsibility. Through that responsibility, he said that the district has avoided cuts to programs and athletics for the district's “customers.”

“Who are are 'customers?'” he said. “Our customer, our main primary customer, is our students and we have to do everything we can to provide them all the opportunities that we can [for them].”

He added that the district is being very careful and utilizing its ability to borrow to maintain a manageable deficit. He then showed a schedule of the debt services for the coming fiscal year and projections through 2016. O'Malley said that after 2016, the district could be debt-free, something that is almost unheard of.

O'Malley said this could be possible through two options: a tax referendum or the district's borrowing power. He said the ideal would be the referendum, because it would have no fees associated with it. While borrowing would incur fees that the district would have to pay back.

“If we can get the community members to buy into a tax rate increases like we did in 1995, in '95 we said that [increase] would last us six to eight years,” he said. “We'll we've come a long way, we're 16 years later from '95, and we're still doing pretty darn good.”

As the board and the district continue to maintain a watchful eye on the finances for 228, O'Malley said that when the final budget is presented next month decisions need to be made soon to solidify the murky areas. He said that once the district has hard numbers, the plan is to have a five-year projection in place later this year.

“We're going to be financially stable in district 228 for years to come,” O'Malley said.