Oak Park’s District 97 elementary schools will have an operating surplus this year but an overall deficit budget according to the tentative budget presented at the Aug. 11 school board meeting. The $5 million in capital improvements, much of it spent on new roofs put on this summer at Percy Julian and Gwendolyn Brooks middle schools and partial roof replacement at Beye and Irving schools, will result in a projected overall budget deficit of $3,161,000 this year despite an operating surplus of $1,839,000.
“Your deficit spending is intentional,” D97’s financial advisor Robert Grossi told the school board. “It’s definitely related to the capital projects that we’ve planned for.”
Overall D97 projects spending $137,423,000 in the current fiscal year and projects revenues of $134,262,000. About $5 million of that spending will come from the capital projects fund.
The district is projected to end the year with just over $51.7 million in cash reserves which is equivalent to 138 days of operating expenses. The school board has a policy of keeping reserves at between 90 to 180 days of operating expenses. Citing persistent late distribution of property tax revenue by Cook County due to the late issuance of tax bills, and uncertainties in state and federal funding Grossi said he would like the district to increase its cash reserves.
“We anticipate challenges going forward so we’d like to build that fund balance reserve,” Grossi said.
In previous years Grossi said D97 was often able to fund facilities work from structural operating surpluses but that is no longer the case.
“If we continue with the volume of expenditure we’re going to start draining fund balances,” Grossi said.
Grossi said revenues are likely to increase by only around 2 to 2.5% longer term which will make balanced budgets a greater challenge. He said the goal is to present balanced budgets in the future but that could require some cuts in spending.
“It’s going to be hard to maintain balanced budgets without making adjustments to the expense side,” Grossi said.
D97 is considering issuing working cash or life safety bonds to fund future facility improvements. These types of bonds typically do not require a referendum.
The tentative budget will be put on public display for 30 days on Aug. 22. At the school board’s Sept. 22 meeting a public hearing will be held on the budget and then later in that meeting the school board will vote to approve the budget.
Revenue is projected to increase by 5% this year. Property tax revenue is projected to increase by 5.8% while revenue from the Illinois corporate and personal property replacement tax, which is levied on businesses, is projected to decrease by 1.6%. State funding is expected to increase by about 1.5% while federal funding is projected to increase by 3.3%.
Just under 85% of D97’s revenue comes from local sources, mostly real estate taxes while 12.1% comes from the state and 3.3% comes from the federal government.
Operating expenditures are projected to increase by 3.6% this year. Salaries account for 64.1% of expenditures while employee benefits account for 14.4% of expenditures. The total cost for salaries is projected to increase by 3.1% this year while the costs of employee benefits, primarily health insurance, are expected to increase by 10.3%. Purchased services are projected to account for 11.6% of expenses. Grossi said that D97, like most school districts, is spending more on tuition at specialized schools for students with special needs who can’t be properly served within the district.
Capital spending is way up this year rising to $5 million from just $15,000 last year.
Later this year, solar panels are expected to be installed on the new roofs at Brooks and Julian and at some other schools. In addition to the roof work this summer, nine of the district’s 10 schools saw state mandated “life safety’ improvements this summer such as new doors. A new elevator was installed at Brooks Middle School and a new gym floor was put in at Mann School.