District 233 school board members got a financial projection Tuesday, Oct. 21, that will help them make tough decisions for Homewood-Flossmoor High School as state support declines and the district’s reserve fund drops.
In presenting his report, financial consultant Bob Grossi told the board, “The next 10 years are going to be significantly more challenging than the last,” but he believes the district is positioned to meet these challenges.
State funding for schools has pumped an additional $15 million into the district the last eight years, and the state gave Property Tax Relief Grants that has allowed the school board to abate taxes for property tax relief.
But Grossi’s future financial picture didn’t look rosy. State law restricts school districts from raising taxes more than 5% or the Consumer Price Index, whichever is less. The outlook is for low inflation. CPI is 2.9% this tax levy, and projected at 2.6% in 2026 and 2.4% in 2027. H-F has a $49 million budget with 56% raised from property taxes and 33% from state support.
This year the state paused the Property Tax Relief Grant, a program that pumped another $34.6 million into the district since 2018. Grossi doesn’t know that the legislature will revive the program.
“The Property Tax Relief Grant was adding between $2 million and $3 million annually to the budget, but this year the budget will likely grow by only $200,000,” Grossi said. “So, next year revenues will grow by only 1.9% compared to 4.4% growth in 2017.”
Grossi said when budgeting the board also needs to consider salary increases, health insurance cost increases, $1 million allocated annually for building maintenance, and $1 million for on non-capital expenses, such as technology updates.
The board’s task is how to keep the district perpetually solvent with just 2% revenue growth, he said.
Board members appreciated hearing his assessment and words of caution.
Member Pam Jackson said the board has a wish list of projects, including remodeling space in the South Building, but “we need to take a really hard look” before making any decisions.
Member Chris Riedel, chair of the board’s Finance Committee, said his fellow board members “do want to be good stewards of this community.” He said they will be deliberate in making decisions that will protect H-F now and for the future.
The district has had a strong financial position because since 2017 its state revenues have been increasing on average by 4.4% yearly and its expenditures have been around 4.1%. The funding difference allowed the district to move money into its reserve fund that paid for the Fine Arts addition, work in the North Building’s culinary program, and various other work around campus.
District 233 had been maintaining a 10-month reserve fund for years, in part as a buffer from the state’s underfunding schools and threatening to shift the state’s support of teacher retirement onto school districts. Past District 233 school boards wanted to protect the district by having money on-hand to cover salaries and expenses for a school year.
This school board agreed to reduce reserves to six months. Grossi said over the last eight years the district spent $57 million on capital projects. Of that, $38.6 million came from reserves and $18.4 million was taken on as debt. Grossi noted as of June 30 the reserve fund is down to eight months.
