DIXON – The condition of the school district’s finances is a point of contention in contract negotiations between the teachers union and the school board.
Teachers say the money is there to accomodate some or all of their proposals, pointing to the district’s built-up surplus of about $4.2 million in the education fund at the end of the 2012 fiscal year.
The board believes that surplus is on the decline.
In its last published offer, the union estimates its proposals would cost the district about $2 million a year over the 5-year contract.
But the union made a new offer Thursday.
While the trend shows the education fund has grown about $250,000 a year in the past 5 years, the district projects a $1.6 million deficit for this year – potentially leaving the education fund with about $2.6 million at year’s end.
That projection does not include any proposals that may be negotiated through the teachers contract.
Last year, the district received almost $2 million less in the education fund, and this year it is projected to lose an additional $1 million in revenue.
Superintendent Michael Juenger points to a decline in general state aid and a decrease in property values as the top causes for the deficit. About 21 percent of the district’s revenue comes from state aid, and 66 percent from local tax dollars.
In 2011, when the district received 100 percent of its general state aid, it produced a surplus of nearly $1.6 million. At that time, the state funded $6,119 per student.
Last year, with funding at 95 percent, the district ended the year with a $37,000 surplus.
This year, with funding at 89 percent, it projects a $1.6 million deficit. Now, the state is funding $5,455 per student.
And next year, the Illinois Association of School Boards has told administrators, funding could be at 80 percent, meaning even less revenue.
Local property taxes also tapered off about $200,000 last year.
“The question I have always asked is, Where is the money going to come from?” Juenger said.
With most of the education fund expenses covering staff salaries, Juenger said, the district will have to examine staff cuts to reduce expenses.
The union does not buy Juenger’s numbers, saying the education fund had been budgeted to a $1.1 million deficit last year and a $873,754 deficit in 2011, only to result in surpluses.
“How can the district, just about every year, project deficit spending and at the end of the year end up with a positive surplus every year?” asked Dolph Ricks, union negotiator and teacher at Reagan Middle School.
Teachers were asking for 11 to 14 more teachers and 24 more paraprofessionals, mostly to bridge gaps they say the district has in special education needs.
The union also asked for a 4-percent salary increase to its current schedule.
It estimates these salary requests come at an additional $1.7 million spanning the 5-year contract.
The board, on the other hand, is asking teachers to take a salary freeze.
While the district might have a $10.2 million surplus in its operating funds, the education fund is the only fund the district can use to pay teachers’ salaries.
However, money may be transferred from one fund to another, Juenger said, after the board conducts a public hearing and votes to transfer those funds.
James Fritts, author of Essentials of Illinois School Finance, says an unbalanced budget is less troublesome if cash balances are high, but says other warning signs have to be considered.
Those pertinent to Dixon include employee contracts with built-in increases in salary and benefit expenditures that exceed foreseeable increases in revenues, as well as one or more major sources of revenue, other than property taxes but including general state aid, showing a trend of major decreases.
“These events are warning signs, not indicators of financial doom,” Fritts said. “Districts in financial distress normally get that way over a number of years. While they may budget and spend with restraint, revenues do not keep up with even modest spending increases. Deficit spending is not uncommon; even the most well-managed district will probably experience a deficit at some time.”