Financial Projections Show Potential for Deficit Spending, Legislative Impacts

A five-year financial forecast provided by the Citizens Finance Advisory Committee (CFAC) to the Board of Education on January 23 shows District 34 will move from a position of modest budget surpluses over the past three years to gradually increasing deficit spending, assuming there are no changes enacted by the Board of Education.
 
According to the projections, the district could see a $0.8 million deficit in 2017-2018, which would substantially remain going into the following 2018-2019 school year. This trend would continue into school year 2021-2022, with the district looking at a projected annual shortfall of $2.1 million, or about 2.8% of its operating budget, at that time.  Over the five-year forecast period, the district is projected to experience approximately $6.5 million in cumulative deficits.
 
“By providing the Board with a five-year financial outlook, the district can proactively introduce changes overtime to improve its financial trajectory. Although there continue to be many unknowns, particularly as we evaluate legislative changes, the work of CFAC is to bring awareness to the potential outcomes so the Board can evaluate how best to address these issues,” said CFAC Committee member Richard Kreutzfeldt.
 
It is important to note that the forecast does not take into account potential legislation in Springfield such as a revision to the state funding formula, pension cost shift and a tax freeze. Given the amount of uncertainty with these pieces of legislation, CFAC did not incorporate assumptions about those developments into its baseline forecast, but did provide an alternative scenario that demonstrates the possible adverse outcomes. This outcome shows the district would deficit spend close to $10 million in year 2021-2022.
 
“The five-year projections provided by CFAC are critical to maintaining our financial health as a district,” said Assistant Superintendent of Business Services Eric Miller. “These projections allow the district to pause, reflect and determine any potential next steps we need to take that are in the best interest of all stakeholders.”  

CFAC is comprised of staff members and residents with financial backgrounds. It was established in 2001 with the purpose of providing the Board of Education with financial recommendations and reports. The group has researched and reported on district spending and revenues since that time, as well as performed benchmarking analysis for various district metrics.

The committee has been meeting since October to review the current year budget and consider assumptions used to generate the five-year projections.