A budget approved by the Community Unit School District 7 Board of Education on Monday night calls for more than $755,000 in deficit spending largely due to the effects of the COVID-19 pandemic on both expenditures and revenue for the current fiscal year. The board approved the budget on a motion by Jenni Alepra following a public hearing required by law during which Supt. Shane Owsley discussed the details of the budget document.
In other action, the board also unanimously approved a resolution to submit to a plan for state approval calling for the district to use remote learning in leu of emergency days, commonly referred to as “snow days.”
“One of the things I learned from (former superintendent) Mr. (Joe) Tieman is that the budget is a plan,” Owsley told the board during the budget hearing, “and we know from this year that anything that is planned can go awry. This is just a plan. This could go a hundred different ways before the end of the year.”
In addition to the effects of the continuing pandemic, Owsley said the budget could be affected by potential reductions in state funding and by whether or not the Illinois Fair Tax constitutional amendment is approved by voters in November. The budget covers expected revenue and anticipated expenditures for the fiscal year that began July 1. If there are no surprises in the next 10 months, the budget projects revenues of $15,232,150 with expenditures estimated at $15,987,723. Deficit spending for the year would amount to $755,573, but Owsley pointed out that a substantial part of that deficit can be attributed to the construction of a new vocational education building expansion, revenue for which was received last fiscal year. Also contributing to the deficit are anticipated revenue shortfalls and increases in expenditures related to the COVID-19 pandemic. Revenue from the County School Facilities Sales Tax, for example, is expected to fall by 25 percent due to lackluster retail sales this year linked to store closures early this spring.
The deficit is limited to two specific funds—Education and Operations, Maintenance and Building. The budget projects a deficit of $624,665 at the end of the fiscal year, and the year-end deficit for OMB is expected to total $240,394. Owsley called budget deficits “temporary,” noting the shortfall will be covered with existing positive balances in district funds. If the budget plays out as outlined, the district will end the year with $7,436,145 cash on hand, compared with $8,191,718 at the beginning of the fiscal year, as a result of dipping into reserves to cover the deficit.
“These are one-time deficits; the money is actually there from the previous year,” Owsley said. “All the other funds are in the black but just barely.”
The lion’s share of the budget is devoted to the Education Fund, accounting for $11,766,481 in projected revenue and $12,391,146 in anticipated spending, resulting in a deficit of $624,665. Owsley said the district is “heavily reliant” on state funding, noting that state funds account for 68 percent of the Education Fund revenue in the new budget. The state’s Evidence-Based Funding formula boosted the amount of state funding the district received last year and the district was expecting an increase of $475,000 in state aid this fiscal year. Because of the COVID-19 pandemic and its impact on state tax revenues, however, Owsley said Evidence-Based Funding is frozen for this fiscal year. The $8,319,063 in state money for the Education Fund, Owsley said, “is exactly the same as last year.”
Federal funding for the Education Fund also comes with several caveats. The $1,967,143 in federal funds the district expects to receive includes grant program money for Title I and Title II and federal lunch assistance, but also includes COVID-19-related funding under the CARES Act, IDEA and vocational education funding that are one-time payments that will not be available a year from now.
Even the local funding component of Education Fund revenue is subject to speculation. Revenue generated from local property taxes is stable, Owsley noted, but local funding generated from lunch fees, book rental and admission fees paid for sporting events are likely to be less because of the district’s response to COVID-19.
Anticipated expenditures from the Education Fund include $7,697,793 for teacher salaries and related instructional costs, $3,264,654 for support services, and $3,500 for community services. The expenditure side of the equation also includes $1,425,199 in payments to other districts for students who attend classes not offered by CUSD 7 or travel to other districts for services not offered locally.
The Operation, Maintenance and Building Fund is the other source of deficit spending in the budget, expected to rack up a deficit at the end of the year of $240,394. The expected $653,677 in revenue is projected to come from $373,673 in local property tax revenue and $280,004 in Evidence-Based state funding. OMB expenditures are expected to total $894,071, including the expected $530,000 cost of the vocational education building expansion. One reason the OMB portion of the budget appears unbalanced, Owsley said, is because $50,000 in matching grant funds is being used to build the expansion was received last fiscal year even though the construction costs are reflected in the current year’s budget.
Owsley identified a number of what he called “outliers” that have had an impact on the current fiscal year’s budget. Those factors include COVID-19-related impacts on sales tax collections that are expected to limit the district’s share of School Facilities Sales Tax revenue to about 75 percent of last year’s receipt. Additionally, the school district expects to receive fewer payments from the state for transportation than it received last year. A vocational grant that will help pay for the vocational building expansion is a one-time revenue, Owsley noted, as are CARES Act payments and other relief money.
Apart from the Education Fund and the OMB Fund, other funds the district uses are balanced for the fiscal year, assuming there are no major changes or disruptions. The fund for Debt Service is expected to have $1,183,899 in revenue and $1,181,858 in expenditures, ending the year $2,041 in the black. Revenue for the Transportation Fund is projected at $557,065 with expenditures estimated at $547,934. The IMRF/Social Security Fund is expected to have $389,770 in revenue and $388,541 in expenditures. The Working Cash Fund, which can be used to shore up flagging funds with temporary funds during the year, is expected to have $34,834 in revenue with no anticipated expenditures. The Tort Fund which covers legal expenses is expected to have $181,233 in revenue with expenditures estimated at $125,000. The Capital Projects Fund is expected to have $465,191 in revenue and expenditures of $459,173.
All funds had positive reserve balances at the end of the last fiscal year and will end this fiscal year in the black. In total, the district expects to end the current fiscal year with $7,436,145 in cash reserves, compared with $8,191,718. The erosion in fund balances is attributed to the Education Fund and OMB fund, both of which are expected to experience deficit spending for the fiscal year.
In summary, the Education Fund began the fiscal year with $4,120,208 on hand and will end the year with $3,495,543. The OMB Fund began the year with $383,217 in reserve and will end the year with a positive balance of $142,823. Debt Service had $93,509 and will end the year virtually unchanged at $95,550. The Transportation Fund began with $188,113 and is expected to end the fiscal with $197,244 on hand. With $129,632 on hand at the beginning of the fiscal year, the IMRF/Social Security Fund is expected to end the year with a fund balance of $130,861. The district’s Capital Projects Fund had $544,918 at the beginning of the year and is expected to end the year with 550,936. With no anticipated expenditures, the Working Cash Fund is expected to grow from $2,519,637 at the beginning of the year to $2,554,471 at the end of the year. The Tort Fund, starting with a balance of $212,484, is expected to end the year with $268,717.
E-LEARNING IN LIEU OF SNOW DAYS
On a motion by Alepra, seconded by Becky Hatlee, the board voted unanimously to approve a resolution to authorize the district to use e-learning days in lieu of emergency days. Like the budget, the e-learning initiative was preceded by a public hearing prior to the board meeting. The action essentially means there will be no more “snow days” in CUSD 7.
During the hearing, Owsley told the board that the State Board of Education issued a letter in November 2018 allowing school district to implement e-learning in lieu of emergency days. At that time, CUSD 7 did not have the capacity to eliminate emergency days by using e-learning because not all students had computers and access to school resources for e-learning.
Teachers and the administrative team discussed the issue well before last spring’s school closure due to COVID-19.
“At that time, we didn’t have the capability,” Owsley said. “COVID forced our hand a little bit by giving us an opportunity we didn’t have before.” As of the start of the 2020-21 school year, all CUSD 7 students have been provided with Chromebook computers giving them access to online learning opportunities offered by the district. That capability allows the district to offer e-learning on emergency days.
Using e-learning in lieu of emergency days will prevent “snow days” from affecting the date for the last day of school, Owsley said. Additionally, it will mean the district can set a firm date for the start of summer school because the potential for a fluctuating last day of the school year will be eliminated. The plan also will enable teachers to maintain continuity by continuing instruction on days when students are precluded from attending class in person. Pragmatically, the measure will give administrators more latitude in determining when to call off in-person attendance because of weather conditions.
Under the state’s rules, the district is limited to using e-learning in lieu of emergency days to the number of emergency days built into the calendar. The school calendar for the current year identifies five emergency days.
Owsley said the district has met the prerequisites set by the State Board of Education for moving to an e-learning in lieu of emergency days plan. Those requirements include securing approval by the local teachers union, which concurred with the concept by a vote of about 70-20. The state also requires the district to file a copy of the plan with the Regional Office of Education. Owsley said the ROE Superintendent reviewed a preliminary plan and made a couple of minor recommendations which were incorporated into the final plan. The final plan approved Monday night will be filed with ROE.
The state requirements also require the district to meet minimum requirements regarding the number of hours of instructional time on emergency days and a system for reviewing and updating the plan as needed.
Owsley said the plan dovetails with the district’s efforts to provide remote learning opportunities during the COVID-19 pandemic and will help prepare students for higher learning, which is also likely to become more reliant on remote learning.
“I don’t think we will ever see education go back to what it was a year ago,” Owsley said, adding the proposal will help prepare students for increasingly digital life after school.
Board member Bill Carter asked about limitations on the number of days e-learning could be used in place of emergency days. In the past, if the school was forced to close for more days than were built into the calendar, the state deemed those days as “Act of God” days. Such “Act of God” days basically were forgiven and did not affect the date for the last day of school.
“The state will only allow you to have the same number of e-learning days as you have emergency days built into the calendar,” Owsley said. “The state is pushing toward this because those “Act of God” days are not made up in instruction days.”
Carter also asked about issues arising when a student fails to take home his or her Chromebook the night before an emergency day is declared. Owsley said teachers will have to make an effort to emphasize the importance of taking the devices home every night.
OTHER ACTION
In other action, following an executive session, the board voted unanimously to uphold the suspension of a district student. The student reportedly was suspended last year and the parents had appealed the decision to the administration and to the board. The suspension reportedly was completed last year and the student is again eligible to attend classes.
The board also voted unanimously to accept a Health and Life Safety Survey related to the high school/middle school complex. The report identifies specific life safety issues in need of remedy. The report is prepared by the school district’s architects and is filed with the Regional Office of Education. Owsley said the report identified only two issues to be corrected. One issue was a door that needs to swing open in the opposite direction to preclude interfering with the flow of foot traffic. The other recommendation called for the installation of carbon dioxide detectors in rooms equipped with rooftop heating units.
The board briefly discussed the sixth-day enrollment figures for the current school year. Owsley said the report showed some decline in enrollment—from 1,294 last year to 1,151 this year. Owsley attributed the decline to COVID-19 issues and a number of parents opting to homeschool their children. He predicted that enrollment will increase as the year progresses and ultimately will be at or near last year’s numbers.
Board members also voted unanimously to approve an Administrator and Teacher Salary and Benefits Report for the current school year. The report is available for public review online.