Construction projects costing about $3.9 million leave Flossmoor School District 161 with a projected deficit of about $3.3 million for fiscal year 2019 despite an operating budget surplus of nearly $700,000.
The Flossmoor School Board on Monday heard a preliminary budget report as well as an update on three construction projects that were supposed to be completed before the beginning of the school year.
Associate Superintendent Fran LaBella said she expects the district to see about $35.8 million in revenue and $35.2 million in expenses for the upcoming fiscal year, leaving an operating budget surplus of $669,456.
Though summer 2018 construction costs are projected to create a deficit, the operating surplus means cash reserves will not have to be tapped for ongoing operations, she said.
“You have $23.4 million in the bank for those operating funds, so you don’t have to file a deficit-reduction plan (with the state),” LaBella said. “For us it would be simple. We’re not doing any more construction projects if that were the case.”
The state requires a deficit-reduction plan if a school district does not have enough in reserves to cover at least three times the amount of the deficit, she said.
Construction projects include installing air conditioning at Parker Junior High and Heather Hill and building a new STEAM (science, technology, engineering, art and math) lab at Serena Hills. Serena Hills School alumnus Allan DiCastro contributed substantially to the cost of the STEAM lab.
Construction of the lab is the only project that has been completed so far.
LaBella said the district has placed Kee Construction on notice that their contract will be reduced by $1,000 per day for every day that substantial completion has not been met since Aug. 10.
State funding is expected to come in at about $6.5 million, an increase of $89,522 from fiscal year 2018, LaBella said.
The largest funding source projected in the fiscal year 2019 budget comes from about $24 million in property taxes, which includes the second installment from the 2017 levy and the first installment of the 2018 levy, LaBella said.
Board members agreed Monday to discuss how much property taxes are needed to maintain the district’s reserves before they vote on a new levy in December.
Board member Merle Huckabee said she is concerned that the board has not spent enough time talking about how much money the district really needs in its reserves.
“We’re not a poor district, but (the fact that) we’re continuing to have to levy in order to maintain a healthy reserve is very troubling to me,” Huckabee said.
LaBella said she estimates a bottom line for reserves would be about $17 million.
Board member John Simmons said defining an absolute dollar amount for reserves could be dangerous considering that school districts might have to pick up the tab for state-funded retirement benefits in the future.
“That day is close upon us, so we should be thinking about it more along the lines of a number of months of operating funds, something like eight or nine months,” Simmons said.
Simmons also said federal and state funding cannot be relied upon indefinitely, so the local tax levy will inevitably have to increase.
“We don’t know what the future will hold exactly, so I think it’s prudent to be slightly on the conservative side, which I think we are,” he said.
Huckabee added that she sometimes feels like her back is up against the wall when it comes to discussing the tax levy in December, which is why she would like the matter explored more thoroughly.
“I just want us to levy responsibly, and I know that we believe that we have over the years, but I just want to make sure we have those discussions,” she said. “We’re doing this (levy) for the next year; we can’t go back.”
LaBella said she normally brings a tentative levy to the board in October, but members may want to start their talks as early as September.
The board is scheduled to have a public hearing and take action on the fiscal year 2019 budget during its next meeting at 7 p.m. Sept. 10 in the Normandy Villa Administrative Offices, 41 E. Elmwood Drive in Chicago Heights.
During its Dec. 10 meeting, the board will take action on a property tax levy that will go toward funding the district’s fiscal year 2020 budget.