Stakeholder Letter 01-12-2017

Stakeholder Letter 01-12-2017
Posted on 01/12/2017

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January 12, 2017

Dear District Stakeholders:

As I am sure you know, the Galesburg CUSD #205, Board of Education approved a 2016 tax levy that will increase local property taxes by .25 cents per $100 of Equalized Assessed Valuation beginning with the tax bill you will receive in 2017. While no one wants to pay more in property taxes, please know how much your investment in the students of District 205 is appreciated. The reasons for this tax increase are many. Please consider the following:

  • General State Aid proration for the last 7 years has cost District 205 $8.6 million dollars in revenue earned but not paid to District 205.

  • The five various TIF Districts currently in existence in Galesburg have cost District 205 $1.8 million dollars in lost local property tax revenue. This money has been diverted into the TIF fund and not district funds. I am supportive of this type of incentive as an economic development tool because when the community is strong economically, school districts typically thrive.

  • Over the course of the last several years, certain funds (mainly the permissive funds) have been under-levied in order to put more money into the Operation and Maintenance fund to pay for Operation Rebuild and to keep the tax rate as low as possible. As a result, the balances in those permissive funds have been allowed to dwindle down to a precarious level. It is now time to pay for that significant underfunding.

  • New salary and benefit increases for the district for FY17 were approximately $1.2 million dollars and are anticipated to be at least that much in FY18. The majority of these dollars go to teachers because teachers make up the majority of our staff. The District cannot sustain the current teacher salary schedule because there is not enough new money coming into the district each year to cover the cost of the raises.

  • Our student enrollment continues to decline. Our enrollment has declined over 10% over the last eleven years. As a result, we should expect a decrease going forward of General State Aid and in other grants that are tied to enrollment. As students leave the District, so too does General State Aid.

  • The Illinois Legislators did not approve a budget for the remainder of FY17. Although there is a budget in place that authorizes the payment of General State Aid for all of FY17, there is no such spending authorization for all other revenues we receive from the state. We are most notably concerned that the state will not make their four payments to districts for categorical payments or for grant funded programs like our District Pre-K program due to us in FY17. For District 205, this means we could lose approximately $1,800,000 of revenue already budgeted in the FY17 District Budget. If the district does not receive these reimbursements, the loss of this revenue will decrease our anticipated fund balances on June 30, 2017, by a corresponding amount. This will accelerate the continued spending of our reserve balances.

  • I still believe that the Board must adopt a Balanced Budget philosophy for FY18. Failure to do so will require continued spending of district reserves and those reserves will be completely depleted very soon. Once those reserves are gone, the Board will be faced with even tougher decisions than they have made to this point. In my opinion, in a best case scenario, if the budget is not balanced and the district continues spending at a deficit rate of $2,000,000 per year, the district has approximately three years of reserve spending left with very little bonding authority left to borrow money for continued operating expenses.

  • There is still no resolution from the Illinois Legislators on the much discussed Property Tax Freeze legislation or the legislation that has been discussed to shift the states burden for Teacher Retirement System (TRS) pensions to local school districts. In the event that one or both of these things happen (and I have no idea if or when they might) there will be significant additional financial burdens placed on District 205.

  • At some point, the Board MUST attempt to put some money back in the “rainy” day fund. This district has survived 7 years of continued deficit spending because previous Board’s had the foresight to put money away for times like the ones we are in currently. I have strongly suggested this Board begin to consider doing so as well.

At the Board meeting on Monday, January 9, 2017, I presented to the Board information on additional budget reductions that I believe the Board should consider as they continue to work toward adopting a balanced budget. The Board was presented with potential budget cuts of approximately $1.9 million dollars. The recommendations are designed to reduce expenditures while at the same time, reallocating district resources in order to better meet the needs of our students. Also at that meeting District Architect Bill Phillips presented the results of the recently completed building study. I have asked Mr. Phillips to study the efficiency of our buildings and to look at how we can deliver a better educational system more efficiently. Finally, I presented to the Board an update to the District Revitalization Plan that I first presented to them in January, 2016.

We have made progress on dealing with our financial difficulties over the past 18 months. The District 205 Board of Education has made some very difficult decisions during that time and will be confronted with many more such decisions going forward. We appreciate the sacrifice that our stakeholders are making in terms of paying more in local property taxes. We hope the State of Illinois can get their fiscal house in order and to begin to pay their bills on time and in full. In order to survive this financial storm, everyone must contribute.

Our financial challenges are significant, as they are for virtually every school district in the state of Illinois. We do not make recommendations concerning additional budget reductions or increasing the local property tax rate lightly. We do this because we feel it is in the overall best interest of our students and of the district for the long term.

I would be happy to visit with any district stakeholder or groups of district stakeholders about these topics at any time. Please contact my office at (309) 973-2000 if you wish to discuss these topics with me. Please become familiar about the financial difficulties that the State of Illinois is having and the effects of that difficulty on local units of government. Please educate yourself on the steps that we have taken over the last 18 months to deal with this situation prior to asking for more taxes from our local property owners. I also want to encourage everyone to contact our local legislators and implore them to take care of business and pass a state budget that will allow them to pay their bills on time and in full.

Thank you for taking time to read this letter and for your continued support of District 205.

Our goal of Right Sizing the district continues to be our primary goal. We have made significant steps toward full implementation of the plan that I provided to the Board of Education in January of 2016. We will continue down that path in order to keep this district thriving and viable for the foreseeable future.


Ralph Grimm, Superintendent

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