DANVILLE — When Danville schools officials look ahead to the upcoming fiscal year, they still see some big unknowns — the level of state funding, some local revenue and health insurance expenses, among other things.
What is known, they said Wednesday, is that some cuts will be necessary to offset funding losses and ensure the district's financial stability in the future.
"Right now, we're examining all our expenditures," said Superintendent Mark Denman, who along with Finance Director Heather McKiernan will present the district's financial outlook for the 2013-14 fiscal year at the Feb. 13 school board meeting.
"Yes, we are looking at reductions," Denman added, unless funding increases.
But officials are just starting to work on next year's budget and haven't identified any specific cuts yet. They plan to bring any necessary recommendations to the board in March.
During a preview, Denman said he anticipates another decrease in state funding, which makes up the majority — 49 percent — of the district's revenue.
According to McKiernan, the district has lost $4.7 million in general state aid over the last four fiscal years, including almost $3.16 million this year. While the level of general state aid hasn't been determined yet, it could be prorated to as low as 80 percent in 2013-14.
"I hope it won't go that low," Denman said, adding that Gov. Pat Quinn has proposed cutting education funding by $400 million. "If it does, we'd lose $5.8 million."
Funding for categoricals such as transportation and special education have been prorated since 2010-11, as well. That's been a difference of about $300,000 a year in transportation alone, according to McKiernan.
On top of that, payments have been late, with half of the money arriving the following fiscal year.
Local funding makes up 35 percent of the district's revenue.
McKiernan said the district has had a compounded loss of about $3 million in property tax revenue since 2009, when its equalized assessed valuation of property started declining. It's estimated to lose an additional $712,577 next year, which would bring the total compounded loss to $5.6 million.
In addition, the district's corporate replacement tax and interest income have been decreasing.
Meantime, expenses continue to move in the other direction, Denman said. For example, insurance expenses increased to almost $5.6 million in 2011-12, a 15.09 percent increase from the year before. So far, officials are seeing a 6.49 percent increase from 2011-12 to the current year.
"The figures aren't all in," Denman said.
While nothing has been decided on pension reform yet, Denman said there's a possibility that the responsibility could shift to local school districts. Officials estimate that would mean an extra $266,000 a year for every percent that the district would have to shoulder, or $2.3 million a year if the entire 8.77 percent is shifted over.
"That would be difficult," Denman said, adding that no one has talked about shifting it all over at once.
Associate Superintendent Dianna Kirk said the district is fortunate to have healthy fund balances. But PMA Financial has estimated if trends continue and the district doesn't reduce expenses, the total amount will go from about $20.3 million, not including bonds, to a nearly negative $5 million balance in 2017. It's expected to drop to $17.8 million by June 30.
"We have to be very careful about our fund balances," Denman said, adding the state's financial crisis isn't going to be solved any time soon.