RSD205 budget gap still remains elusive as next year’s school budget is planned

As reported in Monday’s Rockford Register Star the Illinois Association of School Business Officials recommends that school districts take a conservative approach with financial planning for the next few years.

The state organization is echoing statements made by Cedric Lewis, Chief financial Officer of the Rockford School District last year concerning the 2012 budget, including the one time federal stimulus funding that lapses after this school year. Interfund transfers on both the revenue and expenditure sides of a balanced budget equation cancel out.

Mr Lewis is still predicting that the state funds will be cut by 10% or $7M, but has raised the estimate on the Corporate Personal Property Replacement tax to $16M from past estimates of $12.6M, while earnings on investments will drop $500,000 due to the economy.

There are 500 fewer salaries and benefits, if all the faculty laid off remain out of school, but the remaining teachers will receive 2.6% lane and step increases. There were some concessions from unions toward health care savings. However, the revenue is projected to be $356.9M, with expenditures projected to be $371.5M, a $14.6M deficit budget.

If there are no further cuts, the deficit will be paid out of reserves cutting the balance to $65M, or less than 2 months cash on hand. This is why contract negotiations with the Rockford Education Association are important.

The paper also reported that interim superintendent Robert Willis was comfortable with Lewis’ conservative 2012 budget estimates. “There’s so much that’s still unknown – and it’s nearly impossible to plan.” but Willis wouldn’t rule out spending the district’s cash reserves to help balance the budget but he doesn’t want the practice to become habit.”

Willis was reported to say, “Reserves are meant for emergencies, you don’t build your budget utilizing reserves every year,” without impeding the district’s ability to earn interest. Mr. Willis the interest is only 0.3% of the district revenues!

The current situation is not yet an emergency – there are plenty of expenditures that need to be considered before concessions to spending the reserves, not the least of which is contract negotiations.

The Rockford School District has been in a financial emergency for all but five years in the last two decades! Taxpayers do not want to go back to the hat in hand borrowing modus operandi, state watch lists and the liklihood of the state takeover of the district and the possibility of raising taxes without referendum to pay the bills, which state law permits.