Elmhurst Unit District 205 is facing a budget deficit of $1.7 million for next fiscal year. But after much discussion Tuesday, School Board members decided not to lay off any teachers to bridge the gap. It will be the first time in several years teachers have not been let go.
That does not mean, however, that the district's budget problems are improving or that reductions in force won't be needed the following year, board member said. Basically, they are buying time—12 to 18 months—so they can go out into the community and talk to stakeholders about how they should structurally change the district for long-term sustainability. These will be significant changes, board members said, not stopgap measures year to year.
What is causing the deficits? Read Difficult Budget Realities: District 205 Looks at Five-year Projections
The decision came down to the wire Tuesday; administrators needed to know by the next meeting whether staff positions would be eliminated for next year.
Layoffs are very damaging to morale, board President Jim Collins said.
"The best way to lower morale is to lay off people year after year after year," he said. "It would do the staff a world of good to have a reprieve of staff reductions for one year."
But the money to fill that $1.7 million budget gap has to come from somewhere, and the district has two, one-time options to do that this year. They can spend the entire $1 million payout of tax increment financing surplus from the city's TIF 2, and they can draw down the district's health insurance reserves by $700,000.
The caveat is that the School Board must immediately take on the enormous task of explaining the district's financial needs to the community and solicit input on long-term solutions, whether that ends up being program cuts, referendum or some other means of balancing the budget.
School Board members Susan DeRonne and Maria Hirsch were not comfortable using one-time revenues to close the fiscal year 2014 budget gap.
DeRonne said she felt there was no assurance the School Board would get the $1 million in TIF 2 surplus.
"What assurance do we have that we're going to get that $1 million?" she asked. "Either we wrap up (negotiations with the city immediately) or we have to RIF in April. We have no alternatives. We need more certainty."
The School Board has been in discussion with the city for many months over the wording of the intergovernmental agreement regarding TIF, but Collins assured the board the holdup has nothing to do with the $1 million the city promised to pay from TIF 2. The $1 million will be paid out as soon as an agreement is signed, he said.
The sticking point with the city has to do with $6 million in future money promised to the School Board for capital improvements at Conrad Fischer Elementary and Churchville Middle schools, which are located in the new TIF 4.
"The only thing we're still talking about is putting in writing under what conditions the schools in the TIF would receive (the $6 million). That's the only point we're still negotiating," Collins said.
The latest proposal from the School Board is before the city now, and representatives of the two entities are meeting Wednesday afternoon, he said.
The board theoretically doesn't need the $1 million until May 31, 2014, Collins said. At that point, if an agreement hasn't been reached, the board could decide to sign the intergovernmental agreement without the desired wording for Churchville and Conrad Fischer and still receive the $1 million on the spot.
"At some point, the board may decide that's the best we're going to get, but we're going to try for better, first," he said.
Board member Maria Hirsch said once this year's budget is passed, she worries any discussions of future budgets will "fall off the radar." It's happened before, she said.
"I know we say it can't, but it does," she said.
She also is concerned that the 12 to 18 months available to talk to the community is not enough time.
"If you want to get a referendum passed, then you'll need a longer ramp. We'll need to do some serious planning," she said, emphasizing that she's not advocating for a referendum.
Board member and Finance Committee Chairman Chris Blum said he would never agree to the one-time funding if it weren't for a promise to fix the problem long-term with the help of the community.
"I wouldn't do this if we didn't agree to have a conversation right now about that fiscal year 2015 number," he said. "We all have to be committed to that if we agree to no cuts. We're not going to sit here and watch this happen. We did that last year. I'm not going to make that mistake again."
As for the time frame for discussion, he said he believes it can be done in 12 to 18 months. The discussion will center on how the district got here, how money is spent, what expenditures are non-discretionary and what the priorities are going forward. Capital expenditures for the district's aging buildings will likely play a big role in the discussions, board members said.
"We owe it to the community to tell them what they are spending money on," he said. "We owe it to them to put a sustainable model together.
"This is not going to be easy. Nobody is going to be thrilled, but we have two options. In 2015, if we don't have more revenue or reorganization, we'll have to make drastic cuts."
This is an opportunity to show the community "what kind of board we are" with regard to transparency, board member Shannon Ebner said.
"We are up for this task," she said. "It's going to be a tough year, but we want full involvement and decision making with our staff and community."
Board member Karen Stuefen agreed.
"This is the path we have to take, so I'm in," she said. "It's the responsible thing to do."
Neither DeRonne nor Hirsch are running for re-election in April. DeRonne ultimately said she was opposed to the plan. Hirsch said she was uncomfortable making decisions like this when she is not going to be on the board to help see it through. She grudgingly agreed to no cuts this year, saying it's "a very complex question."
"It's not about how much work we're willing to do, it's about what the community is willing to invest," she said. "I'm not going to be around to own that decision, but I have to weigh in on this. I'm very concerned about the amount of time (allotted) ... but I'm not going to keep you from going for it. I'll say OK to the $1.7 million and I'll help as much as I can in the two months I'm around."
Collins reassured board members that in the worst-case scenario, they are simply delaying cuts for one year.
"We're not recklessly spending money," he said. "We have gone out of our way to be fiscally responsible to constituents. We do have a revenue problem but it's not up to us. If the answer is continue to cut, then we continue to cut."
The board committed to keeping the budget topic on the agenda of every School Board meeting until the problem is resolved.