Difficult Days Ahead for Oswego School District 308 Finances
Jan 23, 2017 11:27PM ● Published by Steven Jack
School District 308 officials continued to paint a bleak picture of the district’s financial future Monday night.
Ali Mehanti, the district's assistant superintendent for Business and Operations, provided an overview of the district's financial picture at the School Board's public forum at Thompson Junior High.
He repeated his warning that if the state doesn't change its education funding formula and district staffing costs continue to increase by about 5 percent annually, the district will be out of money by 2020.
"State funding is very unreliable, and this is really hurting our cash flow," Mehanit said.
According to Mehanit, in the past five years the state has shorted District 308 about $21 million in funding. Without that funding, the district has been forced to turn to its reserves. In 2011, the district had about $31 million in reserves, and today that total is about $25 million.
The district entered the current fiscal year with about a $6 million budget deficit. While administrators were able to make about $3.2 million in cuts, the remainder has been shored up by those reserve fund balances.
Should the district continue to use its reserves to plug budget deficits, that remaining $25 million will be spent by 2020, Mehanit said. As the district approaches its fiscal year, a deficit of another $7.4 million is projected. The following year, a $13 million deficit is possible.
"If we don’t see a change from the state of Illinois, we’re going to be looking at a reduction and elimination of programs," Mehanti said.
It's not just the last five years' state shortage that's put District 308 in a difficult financial spot, Mehanti said. The state never paid $49 million in capital building grants promised in 2004 when the district was in the midst of rapid expansion.
Add that on top of the most recent shortfalls, and district has missed about $76 million in state funding in the past 12 years.
"That's $76 million that could have been used to help pay for a lot of things," Mehanti said.
So, what can be done to help the district stabilize its finances if state funding remains the same? Mehanti said because 84 percent of the district's expenditures annually are earmarked for staffing costs, a reduction in staff likely will be necessary for next year.
"Reducing staffing will have to be done," he said. "… Cutting paper and pencils is not going to do it. We have to look at that 84 percent of our expenditures."
Another option, Mehanit said, would be an operating fund referendum that would allow the district to increase property taxes collected from property owners. Voters last approved such a referendum in 2005.
Short of additional funding, a reduction in student and extra-curricular programs are a real possibility for the future.
"We will have to look at everything," said School Board member Danielle Paul.