Could District 200’s large fund balance be doing more harm than good to Oak Park and River Forest High School in the long run?
It could be, in terms of the next likely referendum the high school might run within the next decade, according to Jeff Weissglass, a D200 school board member who also chairs the district’s ad hoc Finance Advisory Committee.
Building up the fund balance, which is currently around $118 million, was a deliberate move by previous boards, in part to push a referendum far into the future. The last property tax referendum was approved by voters in 2002 and the next possible referendum won’t come until perhaps 2020.
The ad hoc finance committee, made up of both school and community members, has looked at the school fund balance and referendum history. The district revenues and expenses will hit a crossroads within the next five years with the district going into deficit spending, according to D200 projections.
Under that circumstance, pushing a referendum out too far could impact how much the district will choose to seek in the next referendum. Once the school hits deficit spending, reserves will dwindle quickly, according to the projections.
Starting from a very high fund balance, what we”ve looked at is that, in fact, a high fund balance puts you in some danger, said Weissglass, who updated his fellow school board members of the ad hoc group’s work at the board Oct. 24 regular meeting.
And the danger is that if you go out too far and your expenses are growing faster than your revenues and you get into too large of a differential, when you start spending down your fund balance you”re spending it down very fast, Weissglass said. When you get to the point where you have a cash flow problem, the referendum that you”ll have to run at that point would be so large that it would be politically unviable.
The explanation was in response to a question posed by D200 board member Sharon Patchak-Layman, who not on the ad hoc committee but has attended every one of its meetings since July. The committee so far, she said, has not looked into when the school district should seek a referendum and why. Weissglass said he expects that to be the topic in the group remaining meetings through December, when it will make recommendations to the D200 board on how to manage its fund balance.
To me, Patchak-Layman said, the question of when and how often communities should have referendums is pertinent to this discussion because it gives an idea of: are we trying to make it last for another 15 years because we only want to have a referendum when the expenses and revenues are at a crossroads? Or, are we looking at when you should have a referendum and then trying to figure out: say we think there should be one every 10 years. At that point then, what does the fund balance tell us about what we have now. And the conversations I”ve heard haven”t addressed what best for the community and who should be paying for the kind of education you want?
The committee, Weissglass said, has focused on the financial rather than the political reasons behind seeking a tax hike referendum.
If you look at a lower level (fund balance) which depends on cash-flow and other needs, and you understand your cost structure and the change, the cycle sort of rights itself and doesn”t need a political overlay to it, he said.
The committee, Weissglass said, is trying to balance educational interest, community interest and school financial stability.
There a pretty strong sense around the table that there will be a sort of short-term recommendation, sort of more immediate, which is going to be around (paying down) debt. The second is a discussion of the levy,” he said. I expect the committee to come up with at least a preliminary recommendation about the upcoming levy at the next meeting so that the board can, hopefully, have something to chew on.
The next finance committee meeting is Monday Nov. 4, a week before the school board considers its preliminary property tax levy for next year.
I think there will be a robust discussion, I”m sure, Weissglass said, but several people are leaning towards a less than full increase of the levy, so that question will certainly come up and we”re going to have to grapple with it pretty soon.