Just as the House always wins in Vegas, school districts can’t lose when it comes to collecting property taxes.  

If your neighbor's home goes into foreclosure, the bank continues to pay the taxes. If a homeowner or business appeals their assessment and receives a reduction, the rest of the taxpayers make up the difference. 

It doesn’t matter if home values are decreasing, school districts always get an increase year over year – although small at times. Property tax revenue never goes down and it represents 80 percent of Community Consolidated School District 15’s funding.

Then why did the district deficit spend $4 million dollars this year? Why is it forecasting increasingly larger deficits over the next five years?

It’s those controllable yet uncontrollable expenses. 

“As we look at our budget going forward, we project that expenditures will continue to be more than our revenues. Which means the fund balance will continue to go down, down, down - and we know that is something we can’t continue to do,” said District 15 Assistant Superintendent for Business Michael Adamczyk at last week’s Navigate15 community engagement session. 

School districts are a people-centered business. Eighty percent of District 15’s expenditures are for salaries and benefits. Benefits alone were $22 million this year – and insurance costs keep rising. 

Did you know the district pays an amount equivalent to the premium cost for single coverage for every full-time employee – for its medical, dental and vision plans?  Employees who elect to take family coverage pay 50 percent of the dependent premium. Life and long term disability insurance also is provided at no cost to the employee.

And the total cost for family coverage as well as the employee portion of pension contributions are included in some administrators’ compensation package.

Salaries are another controllable expense. 

The vast majority of district employees belong to a union – teachers, program assistants, secretaries, custodians and as of last year – so do the bus drivers. 

Salary increases have been negotiated and approved by previous Boards of Education. Although only two board members remain of those who approved the last few union contracts – all seven must work together to change the district’s financial future.

The one and only critical question discussed among the 50 plus attendees at the Navigate15 session was what "surprised" or "concerned" you most about the distirct's current financial position? And they had a long list of questions for the panel of experts that evening.  

(Note: The entire list of questions and audio from the panel discussion will be posted on the district's Navigate15 webpage.)

What is the district doing to control costs?
Answer: They are in the planning stages. A five-year forecast is a starting point.  Plans and adjustments will have to be made with the Board of Education. 

But is the forecast realistic? It calls for revenue increases of 2.5 percent yet the Consumer Price Index (CPI) is increasing by only 1.5 percent for fiscal year 2012. It also assumes no increase in base salaries for teachers once their contract expires next July. 

And it still projects a $5 million deficit for the upcoming school year. 

What would a bare bones budget look like to put District 15 in line with revenues?  Answer: Prioritize. First cut everything out that is not mandated by the federal or state government – or negotiated contracts. Then start adding programs back until expenditures equal projected revenues.  

Optional district programs include library resources, curriculum and technology updates, class size and fine arts. 

“Obviously when you have to cut significant dollars and eighty percent of your budget comes from salary and benefits . . . it comes two ways either through negotiations . . or from reducing staff,” said school financial consultant Robert Grossi.

How much of an impact would a one year freeze on salaries – no base, no step and no lane increases – have on the forecast? 

Answer: About $4 million dollars – not enough to close the budget gap.  

But it must be closed and the sooner the better for all involved.

So what will it be - negotiations or cuts in District 15?

Next week - What's on the legislative horizon for school finances?