Cary School District 26 Responds to Community Questions

Cary School District 26 has seen many changes within the last year, ranging from staff reductions, school closing, a referendum passing and facing more cuts in the near future.

With all the finances going in and out, some community members have asked for clarification and comparisons between the fiscal 2010 budget, fiscal 2011 budget and the newly 2011 amended budget.

At the April 11 finance committee meeting, T. Ferrier, director of finance and operations presented the community questions and answered them accordingly.

Q. Is the fiscal year 2011 amended budget a balanced budget?

A. Yes. Page 1 of the State of Illinois Budget form (which is available on the district's Web site), in the upper right hand corner, the form summarizes "Balanced Budget, no deficit reduction plan is required."

Q. Why does it seem like there is a $400,000 deficit?

A. The extra expense is refinancing costs that were rolled up into the loan. Due to state reporting requirements, however, it must be presented as follows:

Revenue

$34,734,698

$4,242,413

$38,977,111

Expenses

$(34,726,394)

($4,663,486)

$(39,389,990)

Difference

$8,304

($421,073)

($412,769)

Referendum Revenue

$14,739,717

$3,283,135

$18,022,852

FY 11 Budget Surplus

$14,748,021

$2,862,062

$17,610,083

Q. What is the Illinois State Board of Education position on the amended budget?

A. In a email from Mark S. Anderson, Regional Financial Consultant of Illinois State Board of Education, he said, You are correct in identifying that in determining if a budget is considered balanced by ISBE the operating activities of the Operating Funds is the basic criteria. Your response should clarify that your budget is thereby balanced.

Q. Could you provide full detail of what was spent in Fiscal year 2010 compared to what was budgeted in the first 2011 budget compared to what is in the amended 2011 budget in a line by line basis?

A. The administration is happy to answer questions and meet with community members to assist with their understanding of district finances. The administration creates documents and performs analysis at the direction of the Board of Education, which represents the community. Having the administration create documents and do analysis would need to be a directive the board determines.

With the scope and magnitude of this type of project and the limited staff resources available, other district priorities would need to be put on hold to complete this work.

Q. Why are you asking for $2.5 million in concessions as part of $2.1 million in cuts? In Tier 1?

A. Regarding Tier 1 and Tier 2 budget reductions: $2.1 million is the projected minimum necessary in order to balance the fiscal year 2012 budget. The projected budget reductions required to maintain a balanced budget through fiscal year 2015 totals $5.5 million. $2.5 million of concessions would assist the district in reaching the $5.5 million of projected reductions.

Q. What were the reconciliations for the bond payments?

A. July, 2010 projected cost: $52.8 million. January 2011 final cost: $53.8 million.

The $1 million increase is due to several factors including the deterioration of the bond market, the devaluation of State of Illinois bonds, and Moody's rating of the district.

Tax anticipation warrants were going to cost the district $290,000 this year and were projected to significantly increase over the coming years. The expenses associated with the warrants have been eliminated as a result of the successful referendum.

Mark Anderson, who was the overseer of the bonds, provided extensive reports to the board and community on Jan. 20 and Feb. 22 that addressed these questions. He also took time to answer board and community questions. These power points can be provided at any time.

Q. What are the administration explanations for the $1.8 million overruns in the expenditure side of the amended budget? ($400,000 in bond costs vs. $0 in the original budget)

A. The original budget was placed on display in July 2010 and was adopted by the Board in August 2010. It was unknown at that time of the referendum would pass. Bond income/expenses became a reality when the referendum passed in November 2010.

Now that the referendum has passed, the associated expenses and revenue have to be included in the amended budget.

Q. What are the administration explanations for the $1.8 million overruns in the expenditure side of the amended budget? (Over $300,000 in Board of Education costs)

A. The potential layoffs in all employee groups associated with Tier 2 cuts have warranted a $300,000 increase in unemployment costs in fiscal year 2011. The increase is directly related to anticipated unemployment expenses.

Q. What are the administration explanations for the $1.8 million overruns in the expenditure side of the amended budget? (Transportation overruns of over $1.8 million, after the administration assured us that there would be no transportation cost overruns due to Maplewood closing) 

A. Fund 40's expenditures were increased as a direct result of unanticipated expenditures such as: special education, student transportation needs, increased fuel costs, repairs of an aging fleet, etc..

It is important to keep in mind that a budget is a budget and not year-end results. The district needs to be conservative and plan for scenarios based upon the best information it has at the time, with an ultimate goal of ending the year with a balanced budget.

Q. What are the administration explanations for the $1.8 million overruns in the expenditure side of the amended budget? (What are the other $900,000 in overruns on amended vs. original?)

A. All increases were due to anticipated expenditures and were offset by increased revenues. One example would be an increase of $100,000 for Tier 1 Grant revenue and the associated increase expenditures for that grant.

The board gave a directive to Administration that the end result of operations was to be a balanced budget. Revenues increased, as did expenditures. Summaries of the changes were addressed in many finance committee meetings. Following the directive, the district began fiscal year 2011 with a balanced budget and has maintained a balanced amended fiscal year 2011 budget.

Q. How do you reconcile the fact that we are using a modified accrual accounting and the Woodstock budget is cash accounting?

A. The basis of accounting has nothing to do with the meritorious budget formant and is not something that can be changed from year to year. In Fiscal year 2005, the district converted from cash to the modified accrual basis of accounting.

Q. What is the explanation that the district uses "Other" on their summary of cash transactions? (Other counties don't do it) 

A. The changes in the "other" section of the budget again reflect the revenue/expenses associated with the successful results of the referendum. To my knowledge, no other district in the county passed working cash bond referendum in November, therefore, would not be utilizing the "other" section.

The auditors confirmed the correct placement of referendum expenses/revenues in the "other" section of the amended budget, which has also been reviewed by the state.

Q. What is the timeline for getting the prescribed format by the Illinois Association of School Business Officials international Meritorious Award accomplished?

A. The benefits of the meritorious budget are numerous. It is document that serves many functions. It is a financial plan, a policy guide, an operations guide and a communications tool. It explains what is happening in the district through narrative and charts/graphs and predicts what will happen with the school system over the next year.

Districts must submit their application to ASBO no later than 90 days after the budget's legal approval and also are required to pay a fee. Due to budget reductions, the district is not a member of ASBO and therefore the fee will be more extensive.

There is an 11-page checklist of criteria to be covered and the resulting document can be several hundred pages long. The extensive time it takes to establish the meritorious budget format has limited administrators’ ability to complete this task. Updating the document from year to year can take anywhere from 100 to 150 staff hours.

The Meritorious budget document is not generally completed as part of the district's adopted budget. It is generally completed and submitted during the three months after the budget has been adopted by the Board of Education.

Therefore, completion of the document usually occurs around mid to late December.