Urbana school board OKs deficit budget

Urbana school board OKs deficit budget

URBANA – The Urbana school board approved a deficit budget at its Tuesday meeting, but will wait for more information about what's happening in various areas of school finance before it will talk about taking action.

“The reason the Urbana school board hasn't been in discussions about significant cost reductions is because we have to let the dust settle a bit ,” said board President John Dimit, “so we don't unduly harm our budget and then find out we took too actions that were too drastic.”

Dimit said in the next couple of months, the school board will look at both income and expenses.

The budget the board approved has about a $6 million deficit. About $4.5 million of that is money the school district had on hand to pay for construction projects, and part reflects the fact that the school district won't receive about $1.5 million in this budget year in property tax money from Carle Foundation Hospital.

A state law passed last year made Illinois health centers exempt from property taxes if they could show their "charity care" exceeded their tax payments.

Carle Foundation Hospital was exempted from paying property taxes for the 2012 tax year.

Federal sequestration also means that the school district is paying for some things that were previously paid for with federal money, Baker said.

That includes about $150,000 for teacher aides who were previously paid by federal special education grants, about $235,000 for Title I teachers .

Sequestration also means about a 9 percent reduction in interest rebates the school district receives from the federal government on bonds it sold for construction.

The bonds are alternative revenue bonds, which means they're paid for with money from the school facilities sales tax. That reduction means the school district will have to use its sales tax money to pay about $56,000 more in interest annually.

However, the school district is expecting about a $270,000 increase in general state aid this year, even if it's pro-rated at 89 percent, which means the state only pays school districts 89 percent of the amount it owes.

The school district is also expecting more property tax money from properties within a tax increment financing district that's expiring this year. The school district is expecting a total of about $1.1 million from the properties in the expired district, but will only receive half of that amount during this budget year, said Chief Financial Officer Carol Baker.

However, Presence Covenant Medical Center makes up about 61 percent of the assessed valuation of the properties in that expiring district, Baker said.

Presence has not filed for a property tax exemption as far as Baker knows, she told the board.

Superintendent Don Owen told the board he knows the school district has gone through tough financial issues while “providing outstanding schools in an outstanding community.”

It has received property tax money from Carle that it continues to hold in escrow (about $10.8 million), which also hurt the district in state aid, which takes into account how much money the district receives in property taxes.

“However, we continued to endure and we continued to do great things,” Owen said. “I do not know how long these issues will be in front of us but I do know we will continue to work through them.”

Also Tuesday, the board approved spending about $617,000 in school facilities sales tax money to finish paying for the renovation of the auditorium at Urbana High School. Bids for that project came in about $1 million over estimates, Baker said.

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