October 31, 2002
Finance Committee Meeting Summary

October 30, 2002
5:00 p.m. in the Board Conference Room

In Attendance:      
Board Members-Bob Moore, Dean Bacon, Larry Brees
Administrative Members-Perry Soldwedel, Matt Wilkinson
Association Members-Stan Mendenhall, Debbie Denning

A motion was made by Board member Moore to begin the meeting at 5:03 p.m.
Revised committee membership list (see attached).

Finance Committee Charge
The committee reviewed and discussed its charge that included the following:

1)      Develop levy scenarios for 2002 levy
2)      Monitor budget quarterly
3)      Project revenue/expenditures for 2003-2004
4)      Balance revenue/expenditures for 2003-2004
5)      Influence legislative decisions
6)      Prepare long-range financial plan per 2002-2003 target

Long-range Financial Plan
Reviewed and discussed the action plan for the development of the District’s long-range financial plan to address the impact of declining enrollment, legislative actions, and the Property Tax Extension Limitation Law (PTELL) (see attached).  The committee was asked to review the action plan and provide feedback.  The committee will use this plan to achieve its goals for this school year.

Quarterly Budget Report
The committee reviewed the first quarter budget report presented to the Board of Education at the October Board meeting.  When reported, the District had completed  25% of this fiscal year.  Overall revenue recorded equaled $8,061,213 or 27% of the $29,880,115 budgeted.  Overall expenditures recorded equaled $6,205,681 or 21% of the $29,049,102 budgeted.  

2002 District Levy
Issues effecting the 2002 levy decision include:

• Contract requirements (2002 negotiations)
• Maintain comprehensive program
• Taxpayer ability to pay (impacted through PTELL)
• Reduction of Consumer Price Index (CPI) from 3.4% to 1.6%
• EAV and new growth construction estimates
• Reassessment of property taxes in Tazewell County
• Closing of TIF II
• Bond Debt falling off in December 2002
• No abatement

Determination of Need:
Since the District’s levy is limited by PTELL to the rate of inflation or 5 percent, whichever is less and any new growth construction in the first year, the District will be recommending a levy increase of 4.99%.  Because the Equalized Assessed Valuation (EAV) and new growth construction numbers are crucial in determining levy amounts and are only estimates, and final numbers will not be received until after December, the strategy will be to request the 4.99%, allowing the District to maximize available dollars without filing a Truth-in-Taxation Notice.  Any levy request beyond 5% requires a notice and public hearing.

Based on the $383 million EAV and $6.2 million new growth estimates received by the Assessor’s Office, the District will recommend the 4.99% increase (see attachment No. 1).  However, due to PTELL the District is expected to be cut back to 3.26% with a tax rate of $2.60 per $100 equalized assessed valuation (see attachment No. 2).  The committee discussed the closing out TIF II Auto Row (Tax Increment Financing) and the reassessment of property taxes in Tazewell County.  The City of Pekin is holding a public hearing on December 9^th at 5:30 for the closure of TIF II and redistributing funds back to the taxing bodies, including District 108.  In October 2001, the District was told it could potentially receive approximately $39,036.  It is uncertain at this time how the reassessment of Tazewell County property taxes will impact the levy, however, a scenario was developed to determine how much new growth would be needed to increase the levy beyond 4.99% (see attachment No.3).  In 2001, the District had $6.2 million in new growth construction.  In order for this year’s levy to exceed 4.99%, new growth construction would need to increase beyond $12.4 million.  This is very unlikely to occur from the proceeds of the closing of TIF II and the property tax reassessments.           

Based on the 4.99% scenario, the District’s tax rate is projected to continue to decline from $2.74 to $2.60, a $0.14 reduction.  This is primarily due to the reduction of the CPI and the District’s bond and interest obligation 

The progress made by the Finance Committee and the proposed levy extension increase will be reported to the Board at the November 18^th meeting.  The recommendation to the Board will be a 4.99% levy increase with the possibility that if new information is received regarding the EAV and new growth construction estimates, TIF II, or property tax reassessments, we may increase the levy beyond 5%, which would require a Truth-in-Taxation notice and hearing. 

The Board will be asked to take action on the levy at the December 16^th meeting.

The next Finance Committee meeting is scheduled for Monday, December 9, 2002 at 6:30 p.m. in the Board Conference Room.  The committee will discuss the framework and philosophy for the preparation of the District’s long-range financial plan.

The Finance Committee meeting concluded at 5:50 p.m.

Matt Wilkinson
Business Manager