Minooka High red ink expected to continue
By Kris Stadalsky Correspondent December 24, 2012 2:52PM
Updated: January 26, 2013 6:03AM
No matter how you work the numbers, Minooka High School District’s finances likely will result in some sort of deficit over the next five years. But depending on which scenario actually proves true, the deficit could differ by $3 million.
That was the news the board of education received from senior financial adviser Doreen Linderman of PMA Financial Network last week.
Each year PMA presents three worst-case scenarios to the board, plugging in information such as the audited financial report, adopted budget, EAV figures, the levy, student enrollment and staffing costs.
The same three basic scenarios are used each year to provide an accurate historical picture and make projections for future finances.
By changing the assumptions in each case, PMA creates three different scenarios. In the worst of the worst-case scenarios, the certified staff ratio is maintained and a step increase is figured into salaries.
In the best of the worst-case scenarios, certified staff is increased a bit to accommodate increased student enrollment projections but no salary increase is factored in.
“It shows what the finances look like with these assumptions,” district Business Manager Todd Drafall said.
In one scenario, the district could have a deficit of $2.1 million by fiscal year 2014, which could grow to as much as $4 million in 2018.
When no salary increases are factored in, the deficit drops down to $1.9 million in 2018.
“(You can see) how much is additional staff and salary increases,” Linderman said.
The district spends 52.8 percent of its budget on salaries and 15.7 percent on benefits.
All three scenarios make the assumption that the district’s EAV will begin to slowly rise starting in fiscal year 2015 as property values catch up. The district relies on property taxes for 74.7 percent of its revenue.
State aid is projected to remain at about the same dollar level for the next five years, which is 3.6 percent of the district’s budget.
While the school district is entitled to more in state aid because of the decline in EAV over the last several years, the state is paying at a lesser rate, Linderman said.
“Eighty-seven percent (of the district’s entitlement) is expected for future years,” she said. “We hope it will continue.”
The five-year financial projection is a planning tool, Drafall said, and helps the district and the board have at least an idea of where they are going instead of shooting in the dark.
“(It shows the deficit) grows if we make no changes,” Linderman said.
The information also will be valuable when the teacher’s collective bargaining agreement expires next year.
“This information will be shared with them during negotiations,” Drafall said.