A Note from the Superintendent’s Desk – Financial Challenges for OTHS

Many school districts across Illinois are facing difficult times.   OTHS is among them.  With a projected deficit in the operating funds for the current year of $1.7 million and for next year of $2.3 million, school officials are considering options to reduce its deficit spending.  If no action is taken, OTHS’s reserves (or savings) will likely be exhausted in 4 years, and OTHS will not have sufficient funds to operate in 2021.

Why is OTHS experiencing deficit spending?  In order for stakeholders to understand OTHS’s current financial condition, it is important to reflect on the changes to the financial landscape that occurred during the past 8 to 9 years.

Revenues

  • With the onset of the national financial crisis in 2008-09, growth in our communities came to an abrupt halt.  In recent years, the assessed valuation in our communities actually decreased, thus reducing the amount of local revenues available to operate OTHS.
  • The state pro-rated (or cut) levels of statutorily obligated general-state-aid funding to schools during 5 of the past 8 years. The state never reimbursed schools for all the funding that was lost due to proration over the years.
  • The state failed to adjust the per pupil general-state-aid foundation level to support the additional mandates imposed on districts. The per pupil foundation level of funding provided by the state is nearly a decade old.
  • In 2009 and prior OTHS received nearly $100,000 in textbook support, a program that is no longer funded by the state.
  • The safety block grant provided OTHS with nearly $90,000 annually is also no longer funded.
  • State maintenance grants to support school facility needs are no longer available.
  • Federal funding to support the needs of at-risk students has been reduced.
  • OTHS received nearly $1.2 million less in total revenues to operate this past school year than it did to operate during the 2007-08 school year.
  • For the current school year and beyond, the recently legislated disabled veterans’ property tax exemption will create additional financial hardship for OTHS.  This legislation was unexpected and was not included in prior financial projections for the district. For property tax years 2015 and 2016, OTHS is estimating additional losses in revenues of $1.2 million.

Expenditures 

The biggest factor influencing educational costs are state imposed mandates that create additional requirements on schools.

  • State Mandates – In 2007-08, special education class sizes in Illinois were aligned to federal legislation.  Schools were required to cap special education classes at 12 students.  In 2009-10, the state of Illinois decided the federal mandate governing other states was insufficient, and therefore changed the special education class size cap in Illinois to 8 students per class.  This means that a school in Missouri (under the federal mandate) with 24 special education students can provide education for them in 2 classrooms with 2 teachers.  In Illinois with its 2009 mandate, the costs would be increased 50% for the same 24 students, thus requiring 3 classrooms and 3 teachers.  The impact of this mandate alone to a school the size of OTHS is significant.
  • Other state mandates include implementation of Common Core curriculum, PARCC and Science testing, enhanced technology requirements, increase in professional development and training, expanded reporting requirements, additional health office procedures and protocols, extended health life safety requirements, additional graduation requirements etc.

OTHS’s Past Deficit Reductions

  • 2009-10 – $1.5 million
  • 2010-11 – $1.4 million
  • 2011-12 – $360,000
  • 2016-17 – $550,000

While these efforts have allowed the district to preserve its fund balances through 2015-16, they are not sufficient for OTHS to operate in the black this year or moving forward.

The factors mentioned above result in the need for OTHS school leaders to consider future deficit reduction initiatives.  OTHS is considering a 40-50% reduction in deficit spending or a little over $1 million in budget cuts this year.   It is important for stakeholders to recognize that in order to reduce deficit spending, some academic and/or extracurricular opportunities for students may be reduced or eliminated.  Support services for student may also be affected.  Fees may be increased.  School leaders will continue to evaluate all options available to address OTHS’s deficit spending, while making every effort to maintain its high quality of education and opportunities for students.  Thank you in advance for your input, understanding, and support during these very challenging financial times.