Channahon School Board mulls future finances

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Updated: March 21, 2012 8:04AM

CHANNAHON — Grade school board members are taking a long hard look at the district’s five-year financial forecast and are considering how to continue operations while easing the burden of probable property tax increases as much as possible.

The district is holding strong on finances, administrators told board members at a recent meeting. Channahon’s financial profile puts it at 4.0, which is the highest category, but the outlook shows revenue continuing to decline with the decrease in equalized assessed property valuations.

Essentially, as residents’ property declines in value, they pay less to the school district.

“We are assuming a negative EAV change such as we’ve seen in the past two years” Finance and Transportation Director Michael Schroeder told the board. “I’m pretty sure 2011-2012 will hit negative 3 percent.”

And when the EAV goes down and fewer tax dollars come in as revenue for the school, the district raises tax rates to make up the difference, he said.

The district receives 88 percent of its revenues from property taxes; 6.5 percent from the state; 5 percent from such local sources as student fees and school lunches; and less than 1 percent from the federal government.

The school’s tax rate is forecast to rise from $2.67 per $100 of equalized assessed valuation in 2011; to 2.85 in 2012; 3.04 in 2013; 2.99 in 2014; and ranging from 2.84 and 2.94 through 2017.

That’s assuming a Consumer Price Index of 2.5 percent for the next five years and new property growth of $3 million and $5 million over the next five years.

“We used very modest assumptions,” Schroeder said.

The school board’s dilemma was whether to plan to file for the full tax levy the next few years or to “abate” tax rates by requesting less than what it could. The district has a current budget surplus of around $2 million, which is expected to grow in the next two years, then eventually return to $2 million in 2017.

Tax or abate?

School board member Pat Clower was in favor of lowering the tax rate through abatements, at least for the upcoming year. It’s a huge burden on residents during this economy, she said, to increase their taxes.

Administrators cautioned about abatements, saying it could result in deficit spending.

If the district were to hold the tax rate flat for a while and not levy to the maximum amount they are able, Schroeder said he thought the district would have a deficit of around $1.4 million by 2017.

“We could go into deficit spending, and that would be cumulative,” he said. “We would be going out for a referendum by 2014.”

Although no decisions were made at the meeting, board members George McCoy, Joan Ferguson and Julie Bankes said they favored letting the tax rate rise this year with no abatement, then considering the issue again next year.