Dear Staff and Community Members,

Every year around this time tax bills go out and people begin to ask about the school’s role in their taxes. As you know, school districts in Illinois receive the largest amount of their funding from local tax dollars.  Therefore, the school district makes up the largest portion of an individual’s tax bill. Unfortunately, due to the less than intuitive way that the tax formula works, many individuals have questions, concerns, and even a few misconceptions.

Therefore, we have created a Q & A that might help to better understand the process and answer some of the more common questions.  As always, please let me know if you have any additional questions or concerns and I will be happy to find time to meet and spend a few minutes together.

How does the local funding for school really work?

Short answer– Schools are primarily funded by local tax dollars and when home values increase or drop the school system is only allowed to increase their budget by essentially the Consumer Price Index (CPI). (FY ‘2012 had a 3% CPI)

Long answer – The chart below shows the dynamics between a home’s value, the tax rate, and the actual taxes paid to the school district.  As the chart shows, the tax rate will adjust to the home value in order to produce the actual increase of 3% or the CPI.  Therefore, regardless of whether the home value or tax rate fluctuates, the school district only receives an increase of 3%.  

(The following numbers DO NOT represent actual tax rates and are being solely used for example purposes)

 

	Current Year	Following Year
		CPI at 3% Calculation: $7,000 * .03 = $210 + base = $7,210	Scenario #1 Home value goes up	Scenario #2 Home value goes down	Scenario #3 Home value stays the same
Home Value	$210,000		$270,000	$150,000	$210,000
EAV	$70,000		$90,000	$50,000	$70,000
Tax Rate	10%		8%	14%	10.3%
School Taxes	$7,000		$7,210*	$7,210*	$7,210*

* This reflects the aggregate for the community rather than a specific case.

So is the problem that the district spends too much money?

Short answer– While the district should continue to find ways to save money, we rank in the lowest one-third of operating expenses per pupil.  Therefore, our expenditures are not higher or even near the average when compared to other schools in the State. 

Long answer – If the Plano school district was amongst the highest operating expense per pupil, it would be reasonable to assume that more drastic cuts could be made in the school’s budget.  Yet, the following chart from the State of Illinois paints a very different picture.  Plano District 88 can obviously find ways to cut expenditures but it is unreasonable to suggest that the cuts could be substantial in light of the current rating of 285 out of 387 schools in the State.

	Highest Unit District (in the State)	Plano District 88	Lowest Unit District (in the State)
Rank	1	285	387
Operating Expense per Pupil (OEPP)	$16,982.72	$8,980.61 (Median = $9,607.93)	$6,061.04
Source: ISBE AFR FY12 (April 2013)

 

What about the revenue from the State of Illinois since the school does not receive a great deal of money from the federal government?

Short answer– The State government has continuously cut funding to schools for the past few years.  This year, the State is considering making even greater cuts in General State Aid and Transportation.  This would pass along an even greater burden to local school districts.

Long answer – While the State has continued to avoid funding schools at the level they established, schools continue to face more mandates and higher prices.  Plano School District receives State funding in a few areas but General State Aid (GSA) and Transportation make up a large portion of the revenue.  Unfortunately, the State has been using a concept called proration to maintain the foundation level but pay a lower level amount to the schools.  Therefore, schools across the state have lost millions in state funding over the last few years and are projecting to lose even more!  In Plano, the lack of State funding has resulted in a substantial loss in revenue. 

Example – The foundation level is equal to $6,119 per student

	2010	2011	2012	2013
Actual funding percentage by the State of Illinois	100%	100%	95%	89%
Loss of revenue in  2013 to Plano				Over $600,000

 

What is the school district doing to share in the financial pinch that we are all feeling?

Short answer – In order to maintain our programs, we must continuously scrutinize our budget and find creative ways to save money in salaries and overall efficiency.  At the same time, the State of Illinois continuously cuts funding to our school.  This year alone, the State prorated our General State Aid resulting in a loss of over $600,000.

Long answer – While our school district continues to see cuts in funding from the State and Federal government, we have managed to be fiscally responsible by maintaining a balanced budget every year (this year is no exception) and are looking for opportunities to be even more fiscally conservative next year.  As we start to develop a budget for next year, we have tried to ‘tighten our belt’ in almost every area. 

 

For example: FY 2014 Budget

1.     All school budgets are being reduced by a minimum of 3% (Saving = $100,000+)

2.     Administrative vacancies were filled with lower salary administrators. (Savings = $20,000+)

(Any new vacancy would be filled with the goal in mind of not reducing the current saving that has been projected.)

3.     Even after a shift in teaching positions, the overall number of teachers dropped.  (Savings = $180,000)  Yet, our class average in grades K-6 will not exceed an average of 23 students and 7-12 will not exceed an average of 25 students.

4.     No increase in school fees despite higher cost in such areas as services and health care.

5.    We are still looking to be more efficient in other areas before a formal budget is presented in the next few months!

 

 

- Posted by Kathy B on 5/21/13

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