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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.

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4 Comments

  1. Ted, sorry to change the subject, but I needed to pass on some good news for our neighbors, north of the border.

    Supreme Court reinstates collective bargaining law

    Madison – Acting with unusual speed, the state Supreme Court on Tuesday reinstated Gov. Scott Walker’s plan to all but end collective bargaining for tens of thousands of public workers.

    The court found a committee of lawmakers was not subject to the state’s open meetings law, and so did not violate that law when they hastily approved the measure and made it possible for the Senate to take it up. In doing so, the Supreme Court overruled a Dane County judge who had struck down the legislation, ending one challenge to the law even as new challenges are likely to emerge.

    The majority opinion was by Justices Michael Gableman, David Prosser, Patience Roggensack and Annette Ziegler. The other three justices – Chief Justice Shirley Abrahamson and Justices Ann Walsh Bradley and N. Patrick Crooks – concurred in part and dissented in part.

    Read the rest at: http://www.jsonline.com/news/statepolitics/123859034.html

    This news ought to make the Leftist rabble on Applesauce blow a gasket or two.

  2. Ted Biondo

    No problem – Maybe I will do a post on this great news!

  3. Denny Wallace

    I’ve been asking, questioning (and ranting) about the reporting that 240+ Teachers of the 579 that were laid off have been rehired….

    Oh grand pooba of budgeting…. How in the heck are we paying for these rehired teachers? By my novice amateur calculations… By hiring the Teachers we eliminated at least $16+ million in proposed Budget Cuts…

    You got a better handle on what is going on with the rehiring of Teachers? I believe once they are rehired… We are stuck paying them even if we don’t have a real need for their Teaching efforts…

    What say you?

  4. Ted Biondo

    Denny,

    The district still has 90 days cash invested from previous budget balances, but it is being depleted each year by overspending the incoming revenue.

    If the district is correct, the budget balance at the end of 2012 will be at $65M down from over $100M last year. The more people rehired the lower it will go.

    Before you say, well they still have a surplus, borrowing to make payroll is not the way to go, and even the state, which has their own financial problems, frowns on municipalities who follow the state’s lead!

    Eventually, the state can take over the financial aspects of any district and force taxpayers to pay what the state deems necessary without referendum. If you want to see people move out of Rockford, just stick around for that. The state has already established Financial Oversight in 8 school dsitricts.

    You are correct, once the teachers are rehired after April 28th, I believe this year, by contract, we will have to find something for them even if enrollment drops, because we will be paying them all year!

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