Edwardsville District 7 considers layoffs, fee hikes, property tax increases

Edwardsville School District 7 may be looking at layoffs, higher fees and budget cuts even before the school board considers a property tax referendum in the fall.

District 7 was among the school districts identified for the state’s financial watch list this year, but that wasn’t new; the district has been on the watch list since 2009, due to property value growth slowing down significantly and the district’s reliance on cash reserves. While most districts had to make hard choices right away when the economy crashed, Edwardsville was able to rely on a healthy reserve in its working cash fund and targeted budget cuts to survive reductions in state funding and property values without major layoffs.

But the working cash is gone. Now, the district has a deficit in its education fund and the Illinois State Board of Education wants financial documents outlining its plan to resolve the problem.

Primarily that request is to make sure that the local district is aware of its situation, according to District 7 finance director Dave Courtney. “I’ve provided the information, and they said if they needed anything else, they’d get back to us,” Courtney said. “It’s more to give themselves a sense of comfort that the district is aware of the situation… They wanted more history and projections of three to four years out.”

The financial plan became the focus of the school board’s recent finance committee meeting and will be presented and potentially voted on at the board meeting Monday . It includes staff reductions, higher fees for families and may eventually include a property tax increase.

“It is the hope of the board of education that through the successful implementation of its financial plan, the district will return to financial stability with a balanced budget that includes restoring cash reserves and ends repeated short-term borrowing,” said Superintendent Lynda Andre.

Among the cuts proposed are:

▪  Laying off one pre-K teacher, eliminating eight certified elementary positions, not replacing four teachers who are resigning or retired, and moving two existing teacher salaries to be funded by a Preschool for All Grant;

▪  Laying off two middle school teachers and not replacing one retiring teacher;

▪  Laying off one high school teacher and not replacing a retiring counselor;

▪  Replacing two vacant certified school nurse positions with RNs;

▪  Not replacing two psychologists, a physical therapist, speech therapist, and English Language Learner translator;

▪  Eliminating one administrative position and one performing arts teacher;

▪  Reducing 10 high school athletic stipend positions and four elementary stipends;

▪  Eliminating or reducing more software licenses;

▪  Reduce curriculum and staff development budgets;

▪  Use administrative interns to conduct summer placement tests for new students;

▪  Reduce the number of early-bird buses and consolidate more bus stops for Hamel, Midway and Worden elementary schools;

▪  Reduce elementary field trip budgets;

▪  Reduce the cost of charter buses for athletic competitions;

▪  Reduce paper mailings to parents and consider all-electronic report cards and progress reports;

▪  Reduce the costs of cleaning and maintenance products, supply costs and overtime or substitute costs for building and grounds workers.

That’s a total of approximately 25 positions eliminated, of which approximately 14 will be laid off.

In addition, the district will consider increasing fees:

▪  School lunches would go from $2.40 to $2.70 per day, with breakfasts from $1.10 to $1.25. Prices for a la carte and catering would also increase.

▪  High school parking fees would be increased from $150 to $175.

▪  Summer school fees would increase from $130 to $160.

▪  High school activity fees would go from $100 per activity to $125, and $50 to $75 for middle school. Activity fees are capped after two activities.

The total budget cuts could save $1.79 million, and fee increases are expected to earn back $216,450. That will cut the education fund deficit from $4.5 million to about $2.5 million, according to projections presented to the school board finance committee.

But in order to make up all the lost revenue with budget cuts alone, Courtney has estimated that 80 teachers would have to be laid off, which is not a consideration, he said.

District 7 receives revenue of about $72 million per year. Of that, 78.4 percent comes from local property taxes. Andre said “bedroom” communities like Edwardsville and Glen Carbon generally have a higher reliance on property values for funding schools, due to a lack of industries and factories that could provide alternate sources of revenue. She acknowledged that it places “an enormous burden” on homeowners, since the majority of property taxes in the area come from homes; only about 16 percent comes from businesses and commercial enterprises in District 7.

Still, Edwardsville continued to see growth in property values for several years after other districts were losing EAV — estimated assessed value of property within the district. From 1990 to 2008, property values grew at an average rate of 8 percent per year, with a high point of 14.15 percent in 2005. Even during the crash in 2008, property values continued to grow, but at a slower rate of about 3 percent instead of 11 to 14 percent.

But even that tapered off, with a slight decline of less than 1 percent in 2011, rebounding to grow by 1.5 percent in 2014. Courtney estimates EAV growth of about 1.5 percent this year and 2-3 percent for the next few years.

Andre said they don’t have any projections that would indicate the high-growth years of the early 2000s are coming back, at least not for the entire school district. “The district is 185 square miles, with a lot of unincorporated land,” she said. “We don’t see any reason for a jump in (that EAV).”

So even as the EAV growth slowed to a crawl, the state funding was affected for all K-12 school districts. Annual state funding to District 7 was $16.7 million per year in 2008, and has dropped to $9.5 million, for a total loss of nearly $40 million in state funding over the last eight years, according to Courtney.

In addition, the state’s decision to pay only 89 percent of the funds it owes schools — called “proration” — has lost another $2 million per year for the district, Courtney said.

In response, Andre said, District 7 cut operating expenditures by $12 million, refinanced debt and eventually issued $9 million in working cash bonds and used its cash reserves to avoid more cuts. But the education fund is 69 percent of the district’s total expenditures, and of that, 71 percent is salaries, making cutting expenditures without eliminating people difficult.

As of now, the district’s budget has a projected deficit of $4.5 million. First, the board voted not to fill some empty positions, reduced software subscriptions, reduced the number of substitutes hired for state-required testing, and reduced custodial staff for facility rentals.

In December, the school board considered issuing $10 million in bonds as needed over the next few years. But a group of residents filed a petition last fall to force the bond sale to go to the voters, which would mean that even if successful, the district would not receive the money until next year. The board then opted not to borrow the working cash after all, and is considering instead a permanent property tax increase for the November ballot.

The leader of that citizens group was Mike Firsching, a former school board member and Congressional candidate. He said his group has not met since they filed the petition on the working cash bonds but will take an interest in any potential property tax referendum.

“November seems a long ways away,” Firsching said. “I wish to explore patterns in expenditures compared to revenue. It seems obvious to me that the school board has been spending money it does not have, making promises to employees they cannot pay for, and neglecting to address the district’s debt… There has to be a better argument than, ‘It is for education and we need the money.’”

Andre said the board has not voted whether to pursue the tax referendum or how much to ask from the voters. The cuts and fee increases will be discussed at the April meeting, but the referendum will be voted in August, she said.

“We are committed to this district, and committed to maintaining the schools the children in this district deserve,” Andre said. “We are doing everything we can to make a good case to the community for this referendum.”

In the meantime, Andre has been issuing weekly statements and web videos called “Focus on Finance,” which are hosted on the district’s website and go into detail about each aspect of District 7’s budget.

“Our Focus on Finance series is intended to educate people on the revenue and the services we offer, some of which are mandated,” Andre said. “What do we offer, what does it cost us and why do we believe them to be important? … Those questions are the driving force behind the educational series.”

Currently, District 7’s education fund tax rate is $2.15 per $100 of equalized assessed value, with a total district tax rate of $4.15 per $100. The education fund tax rate was last increased in 1977.

If successful on the November ballot, the higher tax rate would go into effect for the 2017 property tax bills, and the earliest District 7 would receive the increased funds would be the 2017-18 school year. Without the ability to issue the working cash bonds, the district likely will have to issue tax anticipation warrants — essentially short-term loans borrowing against future tax receipts — as early as this fiscal year, Andre said.　

This story was originally published April 10, 2016 at 8:36 AM with the headline "Edwardsville District 7 considers layoffs, fee hikes, property tax increases."