Online Staff Report
The Rockford Board of Education is reviewing year-end financial results from FY14, which ran July 1, 2013, to June 30, 2014. For the first time in three years, the district is facing a deficit. The deficit is $8.8 million, less than a 3 percent variance from the adopted budget. It will not result in program cuts or reprimands from the state, which is important to note for RPS 205 staff, parents and taxpayers. The deficit is also unrelated to the district’s capital/facilities plan. The school board heard the results at its meeting Nov. 25. The board approved a balanced budget in June, and district leaders are committed to ending the year in the black. They’re also focusing on improved budget management at the administrative level.
“We’re not happy with these results,” said Rockford Public Schools Superintendent Ehren Jarrett. “A measure of my success as superintendent is operating within a balanced budget. We have corrected our shortcomings for the current budget cycle, and we are committed to a balanced budget in FY15.”
Administrators initially forecasted a $3.2 million surplus, but ended with an $8.8 million deficit. Here’s a breakdown of what led to the budget variance and deficit:
• Salary forecasts were off by 1 percent, or $1.7 million, because 52 hourly FTEs (full-time equivalent staff) were omitted from the salary projection. The report was corrected before FY15 budget development. Additionally, negotiations were under way at the time the FY14 budget was approved, and the approved increase with AFSCME units exceeded the original budget placeholder for FY14. Salary forecasts have been adjusted for FY15:
• An additional $3.7 million was spent on supplies and equipment. The district was on target in its revenue forecast before the new auditors (hired this year) required an adjustment. This will be a $3.7 million benefit in FY15.
• Residential tuition for special needs students exceeded the budget by $1.6 million, in spite of additional appropriations over the FY13 budget. For FY15, the district has allocated additional tuition funding.
• A $100 million bond sell in spring 2013 resulted in an additional $2.6 million expenditure. Because of the timing of the first interest payment, the adopted budget did not include an appropriation for the first interest payment, though ample reserves existed in the Debt Service fund to make the payment.
• The auditors also recommended that RPS 205 be less conservative in fully capturing forecasted cost in unemployment and workers’ compensation liability. That yielded a reduction to total expenditures of $800,000.
As noted above, revenue and expenditure forecasts have already been adjusted for FY15, which ends June 30, 2015. The school board approved a balanced budget in June, and district leaders are committed to ending the year in the black.
Since FY07, RPS has run a surplus every year but one. In FY10, the state cut back on its payment schedule to districts statewide, and RPS was shorted $11 million.
The district’s unaudited reserve balance remains at approximately $105.2 million for all operating funds — above the school board’s designated 25 percent. RPS is still in an enviable fiscal position considering the school board’s move to provide tax relief and seed a Capital Fund with $50 million of existing surplus reserves. The $50 million Capital Fund is separate from the $105.2 million in operating reserves. The reserve position remains at 3 percentage points above the school board policy on reserves.
Board approves flat levy
At its Tuesday, Nov. 25, meeting, the school board agreed to keep its tax levy flat for the upcoming taxing cycle. In addition, for the third consecutive year, the Rockford Public Schools will not take revenue that districts are entitled to under state law. That revenue is tied to the Consumer Price Index, or CPI.
The CPI decision represents $2.1 million in revenue the district will not realize. In combination with the money returned to taxpayers from the 58-cent “Kids Win” referendum, RPS 205 has given back $22.8 million to the community since 2012.
“This demonstrates a continued commitment from the board and the administration to improving student outcomes while attempting to minimize the burden on local taxpayers,” Jarrett said.
The board-approved levy is what drives tax revenue collection in the spring and fall of 2015. The $2.1 million in foregone revenue from CPI will have a $1.05 million impact during the 2014-15 school year and another $1.05 million during the 2015-16 school year.
Despite the board holding the line on the levy, the tax rate is still expected to increase because of declining local property values. The tax rate is $7.23 now; it is projected to increase to $7.65 for 2014. It would have risen to $7.75 if the board had taken the CPI increase.
Not taking the CPI increase saves the owner of a $100,000 home about $29.
Of the eight unit districts in the region, RPS 205 is in the middle of the pack in tax rates — lower than Harlem at $7.81 and higher than Belvidere at $6.36.
RPS 205 appoints chief Human Resources officer
The appointment of a new chief Human Resources officer was also approved at the Nov. 25 school board meeting. Linda Lumpkin has 26 years of experience as an HR professional, including 11 years at Dr. Pepper Snapple Group — formerly Dr. Pepper/Seven-Up Bottling Group and American Bottling Company in Plano, Texas. She was selected following a rigorous national search.
Lumpkin’s role is to provide strategic leadership to all human resource functions, which will include recruitment, development and retention process throughout the district. Her duties will include developing a Leadership Academy for all district employees and enhancing a customer service strategy.
“Linda has a strong vision for where she wants to take our Human Resources department. That vision is grounded in years of practical, strategic experience in improving Human Resources,” Jarrett said. “She has plans to develop our staff, which will have a positive effect on classroom teaching and learning. That’s our bottom line.”
District leaders started the search for a new CHRO in June and hired Lori Burke of Burke Consulting Group as interim chief Human Resources officer to assist in the search and help in the transition. Burke’s consulting contract will extend through June 30, 2015, and she will work with RPS 205 on a limited basis. Lumpkin will start Dec. 1 and earn a base salary of $150,000.
Former CHRO Angel Contreras left his role in RPS 205 to rejoin GE Aviation in a leadership role in Mississippi.
Posted Nov. 26, 2014