District savings push back deficit spending by a full year

November 8, 2012

Despite facing a significant increase in enrollment by the end of the decade, Oak Park and River Forest High School nevertheless has been able to implement significant cost-containment measures this year, which has pushed back the timeline for deficit spending in the Educational Fund by a full year, from 2016 to 2017.

That information was shared earlier this week as part of a presentation to the District’s Strategic Planning Steering Committee, which is in the early stages of creating a five-year strategic plan. Initial committee meetings are focused on examining data on achievement, finances, and school climate in order to develop an understanding of the District’s current state.

At this week’s meeting, Cheryl Witham, Assistant Superintendent for Finance and Operations, presented an overview of District finances. The District’s recent work around finances has been shaped by the creation of the Advisory Leadership Team (ALT), a move that has helped create a financial model of shared leadership and transparency about District finances.

As part of this shared leadership, ALT analyzed the District’s financial gaps and made a variety of cost-containment recommendations to the Superintendent. Among the fiscal realities that went into the equation was a demographics study that projected enrollment will increase from the current 3,220 students to 3,890 students by 2022.

The District depends on local sources of revenue, primarily property taxes, for 93% of its budget—yet property tax revenue does not increase as enrollment goes up. Furthermore, tax caps in Illinois limit the District’s annual levy increase to 5% or the Consumer Price Index for all Urban Consumers (CPI-U), whichever is less. The CPI-U is based on a specific list of goods consumers typically purchase—such as cigarettes, televisions, pet products, etc.—not the bigger-ticket items a school district must pay for, such as health-care insurance for employees, which can increase annually by as much as 10%. In comparison, the 2011 District 200 levy increase was 1.5%.

This structural imbalance in Illinois school funding means that sooner or later, districts cannot avoid going into deficit spending and depleting their reserves. Districts then must ask the community to either pass a referendum or face significant cuts that can affect the quality of education.

Last January, the ALT recommended that the District work within a number of parameters in planning the current 2012-2013 budget. These included creating cost-savings initiatives, taking a long-term approach to cost containment, and setting a target rate of growth in annual spending increases that more closely reflects the rate of growth in revenues.

Using this model, the District created a budget that realized an overall savings of $594,885. The savings was achieved primarily through:

  • Negotiating a two-year faculty contract that included a hard freeze in salaries during the first year and a soft freeze during the second.
  • Lowering the cost of health insurance renewal.
  • Implementing $220,000 in cost-saving measures, such as reducing the number of copiers and printers, and reducing the amount of contract services.

Additionally the District has realized significant savings in the Maintenance and Operations funds by installing energy-efficient boilers, climate controls, and lights.

Cost-savings targets have been set through 2022. Over this period of time, the District projects a cumulative savings of $24.1 million. Both ALT and the District leadership have already begun meeting to plan the 2013-2014 budget, and will meet later this fall to discuss cost-saving ideas.