Part 2 of this series will now address How To Erase the Deficit.
Before we begin, we want to point out a new development that took place since the 2/12 board meeting that may make the district's financial crisis even worse than what was projected. In an attempt to deal with Illinois' fiscal crisis, Governor Rauner has proposed shifting teacher pension costs to suburban school districts. This might save the state money, but will it would increase expenditures for districts such as D181 by millions of dollars. (Source: http://www.chicagotribune.com/news/local/politics/ct-met-bruce-rauner-illinois-budget-20180213-story.html
Over the last several years the D181 BOE has discussed the possibility of this happening, however, each time, the administration kicked the can down the road and failed to take any proactive steps to "save for this rainy day" by levying to the maximum allowed by law and growing our reserves. Case in point: back in February 2016, when the BOE was discussing the proposed $65 million HMS referendum, a couple of board members voiced concerns that we wrote about in our 2/8/16 Blog Post
. Despite the concerns raised about possible future liabilities, the majority of the board charged ahead to build an expensive new school without including funds for improvements needed at other schools. We now know that the board was kept in the dark about the true conditions of the other buildings in D181 and the $10+ million that needs to be spent over the next five years. If Rauner's pension reform goes through and it finally does "rain," D181 is not prepared to handle the increased budget deficit.
In light of the state of the district, and the possibility that State legislation will make the deficit worse, what should be done to balance the budget? The following are our opinions. We encourage ALL readers to sound off and make your opinions known to the Board of Education before they cast their deciding votes on what to slash and what to keep.
To begin, we are not going to opine on the specifics of the cuts that the BOE has already indicated it supports. Rather, we are going to focus on the possible cuts the administration is still discussing and has asked the adminsitration for more information on. Per the Board Meeting Summary, the board already agreed to trim the deficit by correcting inefficiencies, and were supportive of eliminating the SELAS consultant and middle school Content Leaders, reducing summertime professional development, eliminating the Central Offic reception position, eliminating one TOSA (Teacher on assignment), reducing the cost of the Community Relations position, changing hiring practices in an effort to improve the balance of new graduates and veteran teachers, managing art teachers' time more efficiently, starting orchestra in 5th grade rather than 4th and finding a new location for the District office. (Source: Summary of 2/12/18 board meeting
Unfortunately, these combined cost reductions will not erase the deficit.
The board asked for more information and will continue discussion on the following possible cuts:
-- Reduction of PE classes to 3 times per week from 5 times per week
-- changing the school times in order to achieve transporation efficiencies
-- increasing transporation eligibility to 1/5 miles (from the current 1.0 miles)
-- an administartive salary freeze
-- a teacher salary freeze.
(Source: (Source: Summary of 2/12/18 board meeting
As discuss below, in our opinion, the board should only pay for things that are legally required and approve these cuts and freezes. This will position the district to permanently erase the budget deficit, allow the disrtrict to pay the $10 million in needed capital iimprovements at 8 schools over the next five years, as well as absorb a possible shift in pension liability from the state to the district.
PART 2: HOW TO ERASE THE DEFICIT
1. $690,000 of the deficit will be erased with the "efficiencies" that Mr. Dada has identified, none of which impact our students. (Source: 2/8/18 proposed cut list
.) The BOE has already agreed to those cuts. One can only wonder why these efficiencies were not identified sooner, and how much smaller the deficit would be if they had been implemented three years ago. Remember, Mr. Surma was hired into a brand new position, created especially for him by Dr. White. Dr. White identified what Surma's role would be when he told the press:
"White added that Surma will also be looking for ways to save the district money. His duties could include bidding out contracts to find less expensive alternative business, or finding ways to save on transportation costs, according to White. He will also analyze technology purchases inside and outside of the classrooms, as well as facility needs. White said the goal is for Surma to improve the district all areas.
" (Source: 7/15/14 Suburban Life Article
Excuse us while we cry FOUL!!!! Did any of these promised things actually take place? We think not and would urge all community members to storm the next board meeting and ASK WHITE WHY NOT!
2. Since correcting the inefficiencies and making the cuts that the full board has agreed to will not wipe out the deficit, in our opinion, the next thing to keep in mind is that D181 is a PUBLIC school district. Expenditures are paid for primarily with tax dollars and tax dollars are dependent on the tax levy rates set each December for the following year. Public schools are regulated by state laws that define specific programs that must be provided. If required, the public schools must pay for those programs. If they are not required, then public schools need only offer what they can afford. Continuing to pay for wants that are not required by law should be suspended if to continue them will drive the district into financial ruin.
3. The third thing to keep in mind is that taxing laws allow taxing bodies to increase taxes annually to a MAXIMUM amount -- the lesser of CPI or 5%. D181 has had years where the tax increase was virtually flat due to very lower CPI rates. However, as we pointed out, for several years, the BOE has also not levied to the maximum allowed by law and as a result, revenues that could have lowered a future deficit were never collected (and now cannot be recouped). It is, in our opinion, unconscionable that the administration didn't do the work needed to properly identify the capital needs (to the tune of over $10 million) and build those expenses into the recommended tax levy rates. But once the truth was told, it was the obligation of the Board to levy the maximum amount in order to allow the district's programs to be funded and not put in jeopardy.
4. Last December 18th, after the Chief Financial Officer finally did the work that had been neglected and explained the true state of the district's budget, 6 members voted to finally LEVY to the MAX for the upcoming year. One did not -- Marty Turek. (Source: See roll call vote summary at bottom of Agenda page describing 2017 Tax Levy resolution
on Board Docs for 12/18/17 BOE meeting.)
5. We were shocked then at Mr. Turek's blatant act of irresponsibility in voting NO -- a vote that reflected a complete disregard of the NEEDS facing D181, but we were even more shocked to listen to the delusional suggestions he made at the 2/12/18 Board Meeting. Rather than acknowledging that perhaps his vote had been a mistake last December, he continued ignoring the District's NEEDS and financial condition. He suggested that the Capital NEEDS at 8 of our schools that Mr. Dada said were critical and must be addressed immediately should be DELAYED. That's right folks -- delayed.
6. In our opinion, until the deficit is erased, the BOE must levy to the maximum allowed by law EVERY YEAR going forward. The community may not like it, but if anyone leaves money on the table they are hypocrites to also suggest NOT cutting programs or other budget line items that the district cannot afford any longer and ignore capital needs. If Mr. Turek is unwilling to raise taxes to fund NEEDS, then he should resign! And anyone unwilling to levy to the max to help erase the deficit should not consider running for the BOE in the next election cycle.
7. As if Mr. Turek's refusal to levy to the max last December wasn't bad enough, at the 2/12/18 BOE meeting, he suggested that the deficit be handled by dipping into reserves. He claimed that he was concurring with Board Member Giltner's suggestion about using reserves. Take the time to listen to the Podcast because you will first hear Mr. Dada's explanation of why the district CANNOT AFFORD to use ANY of the district's reserves to lower the deficit. Then you will hear Mr. Giltner AGREE with Mr. Dada. Next you will hear Mr. Turek -- who either wasn't listening or doesn't have the mental capacity to comprehend what the grown ups at the board table were discussing -- claim to "agree" with Mr. Giltner and then suggest that the deficit be handled with reserves. If you listen to this part of the discussion, you may conclude, as we have, that Mr. Turek is delusional. (Fortunately Mr. Giltner was quick to correct him and inform "smarty" Marty (our words not his) that he had said the exact opposite of what Turek was representing.
8. In our opinion Mr. Turek was pandering to the crowd of teachers who attended the 2/12 meeting since during public comment they also suggested that reserves be spent down. We are baffled by Mr. Turek's conduct, since his suggestion is not in the long term interests of the taxpayers and district.
9. We believe that a
nyone who suggests that reserves should be used to offset the deficit should be criticized as irresponsible and unwilling to face REALITY! Even Dr. White publicly
acknowledged that the deficit cannot be fixed by spending reserves.
He said so during the meeting. In light of his unwillingess to be fully transparent in the past, the situation must be really bad if he felt the need to actually be candid and open about this reality. As reported in the Doing's article:
"Several teachers, including Maura Fagan, a teacher at Monroe School and president of the Hinsdale-Clarendon Hills Teachers Association, suggested the district use its reserves to help offset the deficit.
If this was just a one-time occurrence, the district might consider using reserves, Superintendent Don White said. But an architect identified needed improvements that will cost $2 million to $2.5 million in each of the next five years. And the district should allocate about that much for the next 10 years to properly maintain its facilities." (Source: 2/13/18 Doings Article.)
Further, as reported in the Hinsdalean's article, "Superintendent Don
White said using the district’s reserve funds as
a remedy would be a
short-sighted approach for
a long-range issue.
“These are recurring
costs that we know we are
facing, so we’re going to
have to take action now to
balance the budget,” said
White, who also pointed
out numerous state-level unknowns that could
adversely affect funding the
district receives from the
state." (Source: See Page 5 of 2/15/18 Hinsdalean.)
10. We actually agree with Dr. White and in our opinion, the deficit cannot and must not be reduced by spending any of the district's reserves.
11. Before the BOE approves cutting any programs that impact our students, it must first stop the self-serving behavior of the administration and teachers. If you take the time to listen to the Podcast of the 2/6 Finance Committee or review the cut list presented to them for discussion, you will realize that the initial cut list prepared by the administration failed to include any suggestion of an Administrator or Teacher salary freeze. (Source: 2/2/18 Draft Cut List
.) During the finance meeting, it was finally disclosed that almost $1,000,000 can be saved by freezing salaries for just one year and those amounts have been added to the draft cut list presented to the full board on 2/12/18. (Source: 2/8/18 proposed cut list.) So why wasn't the suggestion of freezing salaries on the list of ways
to reduce the deficit? In our opinion, freezing salaries is a MUST before any cuts are made that will impact the classrooms and our students, especially, if as discussed below, teachers are unwilling to support cutting programs that are no longer required by law. The BOE must immediately begin discussions with the administrators and union leaders of both the teachers and support staff and get a commitment from them to reduce or freeze their salaries for one year in their next contract, if not sooner.
12. Salary freezes are a no-brainer in a district that pays its teachers the second highest salaries in the states and that has been giving administrators raises at a ridiculously high rate. More than 80% of the district's budget is used to pay salaries and benefits for the teachers and administrators. If you look at Slide 10
of a Power Point presented to the Finance commimttee, you will see that D181 teachers are the second highest paid of all comporable districts in the state. Their average salary is $30,000/year higher than neighboring Western Springs, and $14,000/year higher than Butler's district in Oak Brook. Teachers are fortunate to be locked into multi-year contracts that set their salaries and annual increases. But in past crisis, both D181 administrators and teachers have agreed to SACRIFICE and lowered their salary expectations. During the last national fiscal crisis almost 10 years ago, the administrators' salaries were frozen for one year (January 2010). (Source: Minutes of 1/11/2010 Board Meeting
). The teachers also agreed to a one year base salary freeze in a 3 year contract approved in October 2011. (Source: 10/24/2011 Joint Statement
13. Such sacrifices were applauded by our community and will be applauded if our highly paid employees agree to them again. Teachers and Administrators cannot simply expect the community to support spending cuts that will impact our students, or call for spending down reserves that are needed for future unexpected expenses, without being willing to be part of the solution, especially when a one year salary freeze in combination with the $690k in "efficiencies" identified by Mr. Dada would wipe out the deficit. If teachers are unwilling to agree to a freeze, we would urge them to consider lowering their salary increase expectations going into the next contract. The reality is that expenses have outpaced the revenues collected and since over 80% of the budget expenditures are for salaries and benefits, something has to give, especially if teachers' pension liability may be shifted to our district.
14. However, since it is unlikely that salary freezes or salary reductions will be agreed to before the next teachers' contract is negotiated, the BOE must still identify other means to lower the deficit. The remaining "big ticket" items are: changing the start times of school in order to allow efficiencies in bus transportation to realize over $300k in savings, changing the bus pickup eligibility from 1 mile to 1.5 and reducing PE from 5 days to 3.
15. Changing school start times. In our opinion this is a no brainer if it will save $300,000 per year. We are frustrated that the community will have to go through a second start time change in 2 years and once again cry FOUL against an administration that was tasked with finding ways to reduce expenditures but instead implemented a change that raised expenses. To now have to reverse course does not seem fair to students, parents or teachers, but it is one change that will not have a direct impact on the services offered to students in the classroom.
16. Changing Bus Eligibilty. By law, D181 is only required to provide free transportation to students who live 1 1/2 miles or more from their school and to those living less than 1 1/2 miles from school but who must cross a designated hazardous crossing. It is our understanding that for years D181 has been offering free busing to students who live 1 mile or more from their school regardless of the hazardous crossing. Thus, the administration has recommended, as a possible cut, complying with the letter of the law and only providing free busing to students who live at least 1 1/2 miles from their school or those who must cross a hazardous crossing. This would generate $250k in savings. Again, since the district must live within its means, if something isn't required of a public school district, it should, in our opinion, only be offered if it can be afforded. Unless the district finds sufficient other cuts to erase the deficit, this transporation eligibility change will have less impact the on students and parents than cuts to classroom programs. The alternative is to charge these parents fees, but since no one likes to pay more for what they've previously gotten for free, we predict that most families would find alternate means to get their kids to school.
17. Reducing Daily PE to 3 days per week. Finally, the administration has proposed reducing daily PE to only 3 days per week, an action that would save $450k per year. Listening to public comments made at the 2/12 board meeting and following parent comments on social media, we understand that teachers and many parents are not supportive of this change. Studies have shown that daily PE is good for students. No one can dispute that. The problem is that a public school district should only offer what it can afford or raise the money needed to pay for it. Unfortunately, we now know that the district cannot afford to offer daily PE unless it finds other ways to erase the deficit. Teachers who are opposed to reducing PE to 3 days per week cannot have their cake and eat it too. In our opinion, if they really want to keep daily PE in place, they need to offer some concessions, such as reduction in their salaries or a future freeze in their salaries.
18. Some teachers and parents have suggested going to an operational referendum to raise moneys needed to balance the budget. We doubt that the D181 taxpayers would approve such a referendum at this time, unless all other cost reduction options were implemented and the district still found itself in financial trouble. With new federal tax laws no longer providing any property tax incentive beyond a $10,000/year deduction, school districts are going to have a much tougher road to travel in convincing people to raise their property taxes to bail out a district that has over extended itself. In our opinion, operational referendums will fail and should not even be proposed unless pension liability is shifted to the district, resulting in massive deficits that will require more money to be raised to keep our district's legally required programs in place.
19. D181 is in financial trouble. After years of overspending and not identifying millions in needed capital improvements, the BOE must make cuts that will be painful for someone. To do nothing, spend down reserves or ignore possible future legislation that will increase the deficit, serves NO ONE. There are districts that have dug such a big financial hole for themselves that the state must take over running them. This is not a road we, or anyone, should want D181 to go down. Corrective steps must be taken now that are permanent and will lead to a balanced budget that the district can afford to maintain.
20. Finally, we have not always praised the board, but after reviewing all the budget materials, we have concluded that this fiscal mess is NOT the BOE's fault and that almost all of them recognize the seriousness of the situation. They are our elected officials and as fiduciaries of our tax dollars, they are tasked with fixing the mess.
We wish the BOE luck in making their final decision on what will stay and what will go. Our expectation is that once the BOE figures out how to get D181 out of this mess, the board will not allow future administrations to turn a blind eye to the true needs of the district, and will demand that the district live within its means. It is unfair to provide "wants" when in the end, "needs" are not paid for. It is unfair for the public to be asked to simply bail out a district that has lived beyond its means by asking us to approve an operational referendum. What has happened is WRONG and the Board of Education must find a way to make things RIGHT.