The board of Cook County Schools has imposed some limitations on itself that could be difficult to follow.
On Monday, September 21, 2009, school board member Mary Sanders reported on the work of a newly formed finance committee comprised of herself and Bill Huggins; Beth Schwarz, Cindy Carpenter, and Lori Backlund of the superintendent’s office;and community members Mark Summers and Chris Hegg. She taped a chart to the wall that illustrated how the fund balance has decreased in recent years. In 2006, it was 19% of the annual budget; this year, it is down to 6.8% of the budget.
In light of the decreasing fund balance and a projected budget shortfall of $216,000 this year, the committee recommended that the school board adopt a policy that no additional expenditures be approved without documenting a plan that they will be funded either through additional revenues or spending reductions.
If they adopted the policy, Bill Huggins wondered, what would they do about curriculum requests or union negotiations? Such a policy would force the board to look carefully at what they need and what the outcome would be, Rod Wannebo said.
What if something like an interactive whiteboard was donated but would require installation? Sobanja asked. The policy could prevent them from accepting it, Superintendent Schwarz answered. “When the rubber hits the road,” Sobanja countered, “we’re going to give them the money.”
“No, we’re not,” school board member Rod Wannebo said, adding (somewhat lightheartedly) that funding something they didn’t have the money for was the “old way” of doing things.
The board voted to approve the policy.
Approval to bond
In order to meet the school’s obligation to pay health insurance costs for a limited number of retired district employees, the school board decided to use an option authorized by the state to issue a bond in the amount of $386,880, which will bring the district about $30,000 a year to work with over the next five years. The interest rate of the bond is low, according to Superintendent Schwarz, at under 3.8% and the bond will be paid off in fiveyears. Thecost of the financing will be $49,603.16.
According to Schwarz, the state realizes that paying health insurance for retired employees is hard on districts. Because of that, it authorized counties to bond without voter approval if the bonding was done before October. Schwarz said the state did not give the school board much time to make a decision on whether to bond.
The school’s other option would be to levy for the amount needed, according to Superintendent Schwarz. The state is expected to be likely to cap the amount districts would be able to levy, however, and that amount might not bring in what is needed. In addition, the state could further cap the levy amount at any time.
If the school levied, only 75% of the amount would be paid by all property owners, including part-time residents. Theother 25% would be paid solely by those residing full-time in the county.
The cost of bonding, however, will be distributed equally among all property owners, based on the value of their properties. The tax increase over the next five years for a residential homesteaded property with a value of $175,000 will be about $9.00. If the actual use by retired employees is less than the amount projected by actuarial calculations, the school district would be able to roll over the extra money into the general fund when the bonds are retired.
The school no longer promises to pay health insurance to employees after they retire.
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