By Deepa SeetharamanThe Daily Northwestern
Despite predictions of budget surpluses, Evanston Township High School will see only a slight increase in revenue in the 2007-08 school year before falling back into a deficit the following year, school financial advisers said during a school board meeting Monday.
“It’s a matter of expenditure increasing at a faster rate than revenue,” said Stephen W. Miller, senior financial adviser for PMA Financial Network, Inc. The financial consulting company, which advises many Illinois public schools, presented a financial projection report to the board during the meeting held at ETHS, 1600 Dodge Ave.
Advisers projected next year’s budget would be balanced and even include a slight surplus. Miller praised ETHS for its sharp cost-cutting measures until this point.
But the 2008-09 school year will see deficits again, the report showed. Health insurance costs are set to rise 12 percent each year, and these increases will have the largest impact on the budget of any single item. Salaries and benefits make up about 75 percent of the school’s $59 million budget, or more than $44 million.
The insurance cost increases will offset gains from increased property tax revenue from newly developed areas and the 2009 expiration of a local tax-increment finance district.
TIF districts are special areas of Evanston where revenues from property taxes are frozen, regardless of property tax increases. When the TIF district expires, the school will receive $100 million in revenue.
ETHS won’t see the money until 2011, and the revenue will be a “one-time infusion” into the budget, Miller said after his presentation.
Despite the increase, the 2011 budget will still have a deficit; the additional revenue will merely lower the deficit, Miller added.
Consumer price index projections, which property taxes are based on, are also set to fall in coming years, the report showed. The CPI, also known as the cost-of-living index, measures the change in the cost of a typical wage-earner’s purchases.
The current CPI is 3.4 percent but is expected to fall to 2.5 percent by 2011. If CPI decreases, the revenue ETHS receives from property taxes will also decrease.
One option for ETHS is to renegotiate employee health insurance packages, Miller said. The advisers also recommended an extracurricular fee, which would be paid by students, as another source of income. The possibility for such a fee will be reviewed later this fall.
Decreased school enrollment may also dent the school’s revenue. State funding is based on the student head count, and ETHS is expected to see a slight but consistent decrease in its number of students.
Total school enrollment fell slightly in the 2006-07 school year. School officials were expecting 3,120 students, but only 3,047 enrolled.
The decrease is marginal and could be a result of year-to-year enrollment fluctuation, said Judith Levinson, ETHS director of research, evaluation and assessment. Still, some board members saw the dip as cause for concern.
“Are they dropping out? Are they standing on the corner of Dodge and Church?” asked board member Mary Wilkerson. “Where are they?”
The board also unanimously approved the purchase of a $14,082 new radio system for the Safety Department to replace the older system. The new system will improve reception and replace broken walkie-talkies.
The next board meeting will be held Nov. 6 at ETHS.
Reach Deepa Seetharaman at [email protected].
