Budget Deficit Threatens Rockford, Ill., District
To say that the Rockford, Ill., district is in a financial jam is to put things mildly.
Looking at a budget shortfall of some $61 million over the next two years, Rockford's school board may close schools, eliminate sports programs, and ask residents to raise property taxes to make ends meet.
It's tough medicine for a school district that has been embroiled in litigation since 1989, when a group of residents sued the district over discrimination against black and Hispanic children.
For a variety of reasons, the road map out of the mess is as complex as it is uncertain. As Tom Hoffman, the director of the district's finances, summed it up: "It's like a tangled spider web."
The 27,000-student district has spent an estimated $250 million on remedies since it agreed with a federal court more than a decade ago to address its discriminatory practices. The district, which came under a federal desegregation order in 1996, was found by a court to be operating a school system that provided inferior educational opportunities to minority students.
This past October, the state supreme court ruled that a significant portion of the money spent on remedies was collected through taxes that were illegal because voters had not approved them.
The school board now must replace $9 million that had been anticipated from those taxes to pay for court-mandated desegregation remedies in the current fiscal year, which ends June 30. These include extra administrators, magnet schools, and after-school programs.
If that isn't enough to make a budget director grim, consider the rest of the story.
The Rockford district, which has a history of overspending, is carrying a $22 million deficit in the current fiscal year in its general fund, which covers teacher pay and other essential costs. The district's budget for this fiscal year is $250 million.
In the next fiscal year, the district must come up with an additional $15 million for the mandated desegregation costs. It projects an additional $15 million general-fund deficit.
Then there's this potential clincher: Because of last fall's court decision, the district may have to repay taxpayers for illegally collected taxes dating back to 1991. Estimates on that price tag vary from $18 million to $30 million, depending who eventually is ruled eligible by the courts for repayment.
'All at Once'
"The district has overspent its income for several years," said Superintendent Alan Brown, who came to the district last July and is the former schools chief in Milwaukee. "It's all come home right here, at once."
To begin working its way out of the fiscal stranglehold, the nine-member board has been studying plans that would trim district spending while asking taxpayers to raise their property taxes in an April referendum.
Board members, many of whom ran on anti-tax platforms, have been at odds, however, over how much to ask from voters and the length of the levy. In recent years, Rockford's property-tax rates have been among the highest in Illinois.
Mr. Brown backs a referendum seeking to raise the current general-fund levy for six years by 88 cents per $100 of assessed property value, to the state maximum of $4. The least costly option under consideration would raise the rate by 68 cents for three years.
"One consideration by the board in asking for the top rate is whether that would be too much of a hardship, given that [taxpayers have] been paying the levies we already had," said Gloria Cardenas Cudia, the school board president. "We want to balance the budget, but what will the community back?"
Regardless of which referendum option the board chooses, Mr. Brown said, the district will have to make cuts.
He recently gave the board a list of $32 million in possible cuts. Some of the options and estimated savings were: close two elementary schools, $1.2 million; go from a seven-period day to a six-period-day in the middle and high schools, $3.2 million; freeze salaries, $4.6 million; eliminate sports, $800,000.
Ms. Cudia would not speculate on what direction the board would take. "Anything is possible, let me put it that way," she said.
Superintendent Brown warned that the threat of state intervention in district finances, meanwhile, is looming. "Illinois has guidelines for state oversight," he said. "If the referendum is not passed, we'd near those guidelines very quickly."
The district is facing other uncertainties as well. It is seeking to be released from federal court oversight in the desegregation case by 2002, which would free it from the millions of dollars in remedies that the oversight costs.
Last fall, U.S. Magistrate P. Michael Mahoney ruled that the district should remain under the court's watch until 2006.
And the district must begin negotiating a new contract with its teachers by April to replace the current contract, which expires June 30.
To many in Rockford, the horizon looks troubled. "People are awfully nervous. I get calls all the time," said Venita Hervey, a Rockford lawyer who represented the plaintiffs in the original discrimination case.
"I think this makes it extremely difficult to recruit teachers and administrators," she said. "You are talking about fallout for years to come."
Vol. 20, Issue 18, Page 3