Finance Committee Meeting Summary
February 20, 2002

Finance Committee Meeting: February 19, 2002
4:30 p.m. in the Board Conference Room Washington School

Committee Members In Attendance: Board Members-Larry Brees, Dean Bacon, & Jeff Brooks
Administrative Members-Matt Wilkinson

The Finance Committee met to continue its discussion on the charges to project revenue and expenditures for the 2002-2003 school year while bringing about a balanced budget and influence and improve funding decisions in the General Assembly and U.S. Congress. The focus of the discussion were the factors that will impact the FY03 budget, local, state, and federal funding, and funding for the Ten Year Life Health Safety Resurvey.

FY03 BUDGET PROJECTIONS:
Preliminary projections indicate net revenue will increase by $243,000 while net expenditures will increase by $743,000, leaving a difference of $500,000. The District will use $300,000 from the reserves for the Washington window project, leaving $200,000 to be reduced from the budget. It appears that a majority of the $200,000 can be eliminated through attrition of staff and some minor trimming of the budget. We will have better information in the next month or so as employees submit their intentions to retire or leave the District. Also, contract negotiations with staff and contractors will begin in March and as final numbers develop, we will have a clearer picture of funding needs. Projections may need to be adjusted as the negotiation processes occur.

FUNDING:
Local funding is expected to increase 3.4% over last year plus any new growth, adding approximately $500,000 while lowering the tax rate from $2.79 to $2.74. The abatement of $878,587 remains the same as last year, but will be reviewed in March before finalizing. Interest income from investments will be lower because of lower interest rates due to the recession while most other local revenues will remain about the same.
State funding will decrease due to declining enrollments, and the District will lose approximately $500,000. State funding will be a major issue this spring in the General Assembly. Proposals in the General Assembly include increasing the foundation level $120 per student. There is also a proposal to change the method in which poverty grants are calculated to use Medicaid/food stamp counts instead of the currently used 1990 census. This change would result in further state funding decreases for the District. On February 18th, Governor Ryan announced he will propose a much larger increase in the foundation level, increasing it to a record level $5,000 per student from the current $4,560. The Governor also reiterated his pledge to devote 51% of new state revenue to education and workforce training. However, funding for the foundation level increase will be at the cost of 22 current grant programs. Cutting grants will offer schools more flexibility, they will get the money for programs without the administrative hassles of applying for grants. Governor Ryan will be addressing the General Assembly on February 20th with his budget message including these educational goals.

Federal funding is projected to increase by $1.7 billion in the State of Illinois as part of President Bush's "No Child Left Behind" program to improve overall student performance and close the achievement gap between rich and poor students.

We will continue to monitor the Elementary District Organization, Education Funding Advisory Board, ISBE, and the General Assembly.

TEN YEAR LIFE HEALTH SAFETY RESURVEY:
The Finance Committee was presented preliminary information about the funding needs for the Ten Year Life Health Safety Resurvey. The preliminary results indicate approximately $7 million in building violations of which approximately $1 million have been identified as urgent and needing to be completed within one year and $6 million as required improvements needing to be completed within five years. In addition to $2 million in additional bonds, in order to pay for the required improvements, the District has two options. First, the District could use $5 million in District funds, of which $515,712 would come from lowering the abatement amount and increasing the tax rate from $2.74 to $2.88 (an additional $29 for the $100,000 homeowner). Second, the District could increase the bonds by $500,000 for a total of $2.5 million and maintain the flexibility to control the tax rate and abatement. The Committee indicated that given the current climate of the economy, it would be best to keep the tax rate as low as possible and increase the bonds to pay for the necessary building improvements.

The next Finance Committee meeting has been scheduled for Tuesday, March 12th at 4:30 p.m. The committee will assess the final funding strategy for the Life Health Safety Resurvey and continue to review FY03 budget projections and funding information.

Matt Wilkinson
Business Manager