While economists predict the national housing slump will affect the economy in a serious and sustained way, District 202 officials say they believe ETHS’ budget will remain unaffected.
District Chief Financial Officer Bill Stafford said the school district would only have cause for concern in the long term, if housing prices went down in a sustained spiral.
“The housing prices aren’t going to affect (the district),” Stafford said.
Property taxes, which stand to take a hit from falling housing prices, make up 80 percent of the district’s funding, Stafford said. That funding depends on property taxes, which are contingent on property values, which are going down fast across the nation.
“It’s not a major concern if the values go down,” he said, adding that the school district will likely get a relatively stable amount of money from the city in the short term.
In 2010, Evanston Township High School is expected to received between $1 and $2 million from the expiration of a tax-increment finance district, or TIF.
Tax-increment financing is a technique municipal governments use to fund public projects and schools. In TIF districts like the one ETHS will benefit from, property tax revenue is frozen for a certain amount of time, impervious to the ups and downs of the housing market.
When the TIF expires, the money that has been collected is given to a beneficiary, like a school, while property taxes in the district revert back to their normal fluctuations.
Housing prices and property taxes in Evanston have defied the national trend, actually rising in every category from 2006 to 2007. But some economists are projecting a deep recession, or a “systematic financial crisis,” in the words of New York University economist Nouriel Roubini, who was quoted in a Jan. 12 New York Times article titled “No Quick Fix to Downturn.”
District 202 Board of Education member Jane Colleton said the board had not discussed the possible repercussions of the housing slump.
District 202, which consists of Evanston Township High School, had a small surplus in its budget for the 2006-07 school year, and Stafford said he predicts that the 07-08 budget will be balanced. A deficit is predicted for next year, but Stafford is certain his department will submit a balanced budget for board approval in the fall.
According to Colleton, surpluses are “always accidental,” as costs to the district are always rising.
“They describe it as uncontrollable, these increases every year,” she said. “It’s frustrating because it’s hard to control … It’s hard to manage.”
Stafford said salaries and benefits rise annually and make up three-quarters of the district’s expenses.
He added he believes the school will receive more money when it goes back to being funded by property taxes in 2009. When the TIF expires, the city plans to devote more property taxes to schools, giving the high school its “fair share.”
Stafford and his department will work on a budget for the 2008-09 school year starting at the end of the month, and a final version must be approved by the school board by September.
Reach Megan Crepeau at [email protected].
