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District 7’s Financial Outlook

Posted: September 23, 2014

The Board of Education approved the 2014-2015 budget. However, as has been the case for the past five years, the Board must continue to seek ways to find additional revenue sources or be faced with significant operating expenditure reductions.
  
Highlights of the 2014-2015 Budget
The District estimates total revenues, across all funds, at approximately $71.3 million.

Total revenue is divided as follows:

  • Local Revenue: $55.9 million (78%)
  • State revenue: $11.9 million (17%)
  • Federal revenue: $3.5 million (5%)


Total Expenditures in the Education Fund are budgeted at $49.3 million; including $43.6 million for employee salaries and benefits, or approximately 88.5% of the Education Fund budget. Sixty-six percent (66%) of the District’s 2014-2015 Education Fund budget will be spent on direct student instruction (classroom teachers) and thirty-two percent (32%) on student support services; such as, social workers, nurses, psychologists, speech pathologists, guidance counselors, building administration, food service and information systems. The District will again spend approximately $9,100 per student for the 2014-2015 school year.

The State of Illinois continues to wrestle with its financial struggles anticipating a $553 million shortfall in General State Aid (GSA) funding to Illinois schools and will again pro-rate GSA at an 89% funding level or an approximate $800,000 decrease to District 7.
 
In order to balance the 2013-2014 budget, the District transferred approximately $2.6 million from the Working Cash and Transportation Funds.

The District is projecting a budget deficit in excess of $3.8 million for the 2014-2015 school year. This deficit is due to the following: declining revenue from the State; continued proration of State funding in Transportation, Special Education, and General State Aid; stagnation of EAV (property tax revenues); increases in employee salary and benefits; and additional personnel needed to maintain class size.

During the 2013-2014 school year, the Board approved a short-term, stop-gap action plan to address the District’s overall financial condition. This plan included:

  1. Refinancing $5 million of outstanding debt and extending the District’s existing debt by one year to 2027
  2. Issuing Working Cash bonds in the amount of $9 million

The District concluded the 2013-2014 school year with approximately $7.2 million in working cash reserves. It is expected that the District’s working cash reserves will be reduced to approximately $3.9 million by the end of the 2014-2015 school year.
Looking towards the 2015-2016 school year, the Board will need to begin developing financial strategies to keep the District afloat due to the following assumptions and projections:

  • State’s financial picture will not improve
  • Local economy will continue to be stagnant
  • Reserves will be depleted
  • Employee contracts will be open for negotiations
  • Additional personnel will be needed to address class size
  • Overall operational expenditures will continue to increase


District 7’s Equalized Assessed Valuation (EAV) Continues to be Stagnant

District 7 is a “bedroom” community and is reliant primarily on property taxes to fund its school operations. More than 80% of the District’s total EAV is from residential property, with only 17% from corporate/commercial assessments. District 7 does not have large commercial industry or malls, such as we see in other communities.

During the past five years, the District has experienced a major decline in its annual EAV growth rate. For example, during a ten-year period from 1999-2008, the District’s average annual EAV growth rate was 9.34%, or between $2 and $3 million in new property tax revenues annually which enabled the District to achieve many of its goals that it currently cannot accomplish.

District 7’s EAV has remained stagnant over the past four years: 2010 – 0.69% decline; 2011 – 0.66% decline; 2012 – 0.23% decline; and 2013 – 0.2% increase. The decline or stagnation in EAV is mainly due to a reduction in the state multiplier which is approved annually by the Department of Revenue for each township. The multiplier assigned in 2012 and 2013 to the Edwardsville Township (Edwardsville and Glen Carbon) was reduced from over 1.0 to less than 1.0 which has resulted in reduced assessments and less money for District 7. For example, a multiplier of 0.98 would reduce all assessments by 2% and would result in a loss of approximately $320,000 in property tax revenues each year.

In addition to the decrease in the multiplier, there are three other factors that can impact the District’s total EAV: residential property reassessments to a lower market value, actual home sales which have been down the past four to five years due to the woeful economy, and the quadrennial reassessment on properties in Madison County which is conducted in each township every four years to review assessments on homes to determine if assessment value is comparable to market value.

The decrease in the multiplier and the decline in the housing market due to the woeful economy have stagnated EAV growth and impacted the District’s ability to maintain funding at a level needed to support the overall operations of the District. There has been only a marginal impact on the District’s EAV as a result of commercial development. For example, in 2010 commercial EAV dropped but has grown slightly in 2012 and 2013.

During the past four years, the District has witnessed more residential and commercial tax appeals. However, the District reviews appeals whether residential or commercial that we believe could be harmful to the District and intervenes before the Board of Review for reassessment claims over $100,000.

While there is some new housing development, there is not enough to significantly impact the District’s EAV growth rate which is currently flat or near 0%.

Due to the continued financial woes experienced at the State level and the stagnant local EAV, the outlook for District 7 is concerning. The Board will need to continue grappling with finding additional revenues or reducing operating expenditures.  

Previous News

Chuck Fruit Aquatic Center Dedication Set for Sunday, September 14

Posted: September 12, 2014

The Chuck Fruit Aquatic Center will be dedicated at 1:00 p.m. on Sunday, September 14 on the grounds of the District 7 Sports Complex. The Center was built as a result of a $4 million donation by Mrs. Sharon Fruit, President of the Charles & Sharon Fruit Foundation and a 1965 graduate of Edwardsville High School, and $1.3 million in donations from other community donors. [More Info]

Start times won't change for EHS students

Posted: September 11, 2014

Edwardsville District 7 Superintendent Ed Hightower announced at the Edwardsville District 7 Board of Education meeting Monday night that there would be no change to the start times of Edwardsville High School. [More Info]


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 Edwardsville School District #7 • 708 St. Louis St • Edwardsville • IL • 62025 • 618-656-1182
 Last updated on: September 23, 2014 at 12:02 PM
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