Administration

MCHS FACING BUDGET DEFICIT

You have heard a lot in the news lately about the deficits school districts are facing. MCHS is experiencing similar concerns due to a significant drop in all revenue sources such as a decrease in property value, little new property, low interest rates, decreasing State funding and a drop in enrollment of 20 students per year.

Last year when school districts across the country were compiling their budgets for the 2009-2010 school year, a fairly common theme began to be heard: “This year is tough but next year will be much tougher.” This theme also applied to Marengo Community High School. The 2009-2010 final budget reflects a balance of $60,000 out of an $11,000,000 budget.

Since over 80% of our revenue comes from property taxes, let’s start with that revenue source. Under the current property tax model in Illinois, growth in property tax income is dependent upon two things: the Consumer Price Index (CPI) and new construction. The CPI for the 2010-2011 school year is 0.1% which will result in a total increase in property tax revenues of $60,000, compared to last year’s CPI of 4.1% which generated an additional $330,000 in property tax revenue for the district. Over the next several years property assessments will decline further due to the drop in property value.

The second largest revenue source is General State Aid (GSA). Given the financial condition of the State of Illinois, which is projecting a $12.8 billion deficit next year, any increase in income from this source is unlikely. It is more likely that it will decrease by several hundred thousand dollars.

The third largest revenue source is reimbursement for mandated categorical programs, primarily special education and transportation. It is projected that the district could face a reduction of at least 50% or over $175,000 from what it is due.

The district has some fund balances, which were earning interest rates of over 5% two years ago and are now earning less than 1%, resulting in a loss of several hundred thousand dollars in interest income.

All of this bleak revenue related information means the District will face significant cost increases with a significant loss in revenue. The deficit for the 2010-2011 school year is projected to be between $150,000 and $450,000 depending on the level of cuts by the state. The deficit is projected to grow each of the next three years to the point where in 2013-2014 the annual deficit would be over $1,500,000 per year.

The district is considering all options to control the deficit over the next few years until the current economic condition improves. The administration, staff and Board are considering cutting costs related to supplies, building and grounds, personnel, transportation and discretionary spending as well as raising student fees. The Board of Education will be considering their options in dealing with the deficit over the next month.