If Riverside-Brookfield High School continues on its current path of revenues and spending it will be unable to pay all its bills in little more than three years. That was the grim forecast delivered to the District 208 school board last week by the consultant the board hired to examine the school’s financial situation.
“In 2015 you would be broke,” Howard Crouse of Naperville-based financial advisory firm PMA told the school board last Tuesday. Crouse cautioned that this estimate of going broke by 2015 was based on current spending and revenue patterns and was only a rough estimate based on projections.
He said that District 208 would have already gone broke if it hadn’t borrowed $4.9 million in working cash bonds in 2008. Those bonds must be repaid by 2013.
“You would have been broke in 2010 without the working cash bonds,” Crouse said.
Crouse, a former school superintendent, delivered a PowerPoint presentation on RB’s financial situation to the D208 school board on Nov. 22. His presentation is posted on the RB web site. PMA was paid $8,500 for the report and certain other advisory services.
Crouse said that he doesn’t believe that RB can count on significant revenue increases in the near future. “There’s very little you can do on the revenue side,” Crouse said. “We do not have an identifiable source of additional revenue built into the projection.”
Crouse said his report assumes that D208 will not be able to pass a tax referendum in the next few years. Last April a proposed tax increase for RB was overwhelmingly rejected with 76.76 percent of voters voting against the tax increase.
“Given the current economic climate it would be very difficult for any district to pass a referendum,” Crouse said. “I don’t see the political climate changing in the next three, four or five years to where it would be likely that you could make an easy case for a referendum increase.”
Crouse said the district cannot expect increased support from the state of Illinois or the federal government and noted that federal aid is likely to decrease in coming years. RB gets 87.5 percent of its revenue from local property taxes and 6.1 percent of its revenue from the state. It gets less than 1 percent of its revenue from the federal government.
Crouse’s revenue projections assume that D208’s tax levy will increase 1.5 percent next year and then increase at a 2 percent rate for the next five years. Tax cap laws limit the district’s property tax increase to the rate of inflation plus the value of new construction.
“The economic downturn, particularly with slowed new construction, limits the district’s revenue significantly,” Crouse said.
Given his expectation of little increase in revenue the district has no choice but to cut spending Crouse said. “Because there is no foreseeable increase in your revenue stream you’ve got to make some significant changes in your expenditures,” Crouse said. “The deficit that you have is not sustainable over a period of time. You have to do something.”
RB is currently projected to run an operating deficit of about $900,000 this year.
Crouse did not spell out any specific budget cuts that he thought RB should make. That frustrated board member Tim Walsh who asked Crouse for a list of specific cuts that would get District 208 to its goal of having a 20 percent operating fund balance.
But that was not Crouse’s job, D208 Superintendent Kevin Skinkis said. “The $8,500 we paid Howie didn’t include coming up with a magical solution.”
Skinkis said even after making cuts this year, including layoffs, eliminating many clubs and adding a pay-to-play fee for sports, RB must make further cuts next year.
He acknowledged that some RB teachers are concerned about their jobs and the future of the school. That’s why Crouse gave the same presentation to the staff on the afternoon of Nov. 29.
The district’s contract with its teachers runs until 2013. Like all school districts the vast majority of the district’s expenditures, 76.2 percent, go for salaries and benefits for district employees. “The district’s teachers’ contract is quite significant,” Crouse said.
District 208 school board President Matt Sinde praised the presentation. “This is excellent. I’ve never seen anything like this analysis.”
The next step, Skinkis said, is to have a dialogue with the community about the difficult choices that RB must make as it prepares its budget for the 2012-2013 school year. Public committee meetings will be held in January to discuss RB’s financial situation and the choices that lay ahead Skinkis said. “The goal would be to get community input,” Skinkis said.
“We have some things that we can control,” Skinkis said. “After 2013 we’ll be renegotiating contracts with our teaching staff. 2014 our second biggest purchased service contract with Aramark will be up. We can look at those services so we’ll have some things that can help us kind of more or less align expenditures with revenue.”
Board member Laura Hruska said that RB, just like her household and other households, must cut back on what she called luxuries such as stipends for coaching and supervising extracurricular activities.
“We have 26 sports,” Hruska said. “We have everything in this school and maybe we’re going to have to make some real hard decisions that we can’t have every luxury,” Hruska.
Walsh countered that sports and clubs are not luxuries.
But Hruska went on. “A club is a luxury, a sport is a luxury, a stipend is a luxury.”
Walsh responded that cutting every sport and club would not balance RB’s budget. “If you cut all the stipends you’ve still got to cut the staff by 40 or 30 percent,” Walsh said. “It’s a small piece.”
This article has been updated to correct the date when faculty members were presented with the district’s financial situation by Howard Crouse.