FINANCIAL OPTIONS

1
FINANCIAL OPTIONS

• Financial Advisory Committee
• September 14, 2006

2
FACILITY PLAN

• Created from input from
• OM staff
• Building Administrators with input from their
  staff
• ASC Administrators
• Report lists
• Priorities, Location, Project Description, Year,
  Estimated Costs
• Updated annually

3
TECHNOLOGY PLAN

• How Created
• Mandatory State of Illinois Technology Plan
  adopted by Board of Education in June 2004 (3
  year cycle)
• Administrators have annual input
• Input from District wide Technology Committee
• Report lists
• Technology Category, Estimated Costs, Number of
  items, Replacement cycle, Year to be purchased
• Updated annually

4
OPTION 1Status Quo Option

• Dont do anything
• No new revenue sources
• No new property taxes
• No new issues of bonds
• Do not solve our existing expenses issues
• Deficit budget
• Do not implement Technology Plan
• Do not implement Facilities Plan

5
OPTION 1Status Quo Option

• Pro
• Lower Taxes
• Not spending tax dollars on bond interest
• Avoids public relations issue
• Avoids timing issues

• Con
• Safety
• Postpones maintenance
• Spends down fund balance for emergency
  operations/roofs
• Replacement of technology will not occur
• Creates a need for an earlier referendum
• Possible future criticism by public for not
  responding to school district needs
• Lack of public input
• Future bond market
• Reactive vs. Proactive

6
OPTION 2Sell 15-Year Alternative Financing
BondsPrincipal 6,919,770 Interest
4,600,229

• Issue new debt
• Implement
• Portion of Technology Plan
• Portion of Facility Plan

7
OPTION 2Sell 15-Year Alternative Financing
BondsPrincipal 6,919,770 Interest
4,600,229

• Pro
• Receive some money up front
• Protects fund balance
• Voter approval is not required
• History of success
• Spreading debt over more taxpayers
• Current interest rates
• Bond tax rate is in a downward cycle
• Postpones immediate need for referendum

• Con
• Short term solution
• Only a five year plan for maintenance and
  technology
• Meets partial needs, only maintenance and
  technology
• Does not address educational issues
• Public perception of bond sale
• Not voted on by the people
• Bond interest payments

8
OPTION 3Sell 20-Year Alternative Financing
BondsPrincipal 8,824,542 Interest
7,535,457

• Issue new debt
• Implement
• Portion of Technology Plan
• Portion of Facility Plan

9
OPTION 3Sell 20-Year Alternative Financing
BondsPrincipal 8,824,542 Interest
7,535,457

• Pro
• Receive some money up front
• Protects fund balance
• Voter approval is not required
• History of success
• Spreading debt over more taxpayers
• Current interest rates
• Bond tax rate is in a downward cycle
• Postpones immediate need for referendum

• Con
• Short term solution
• Only a five year plan for maintenance and
  technology
• Meets partial needs, only maintenance and
  technology
• Does not address educational issues
• Public perception of bond sale
• Not voted on by the people
• Bond interest payments

10
OPTION 4Referendum for Roofs and Technology

• Property Tax Rate Increase in OM Fund
• Implement
• Technology Plan (portion or full Plan?)
• Facility Plan (portion or full Plan?)

11
OPTION 4Referendum for Roofs and Technology

• Pro
• Forever factor
• Requires voter approval
• Better track record for public approval
• More buying power
• Ability to plan better
• No interest payments
• Pay as you go
• Meets both short and long term needs better

• Con
• Referendum requires full support of Board
• Requires voter approval
• Ethics Act implications
• Determination of tax increase amount
• Timing cycle
• Anti-tax movement
• Current fund balance
• No lump sum up front (options 2 3)
• Forever factor
• Impact on an education fund referendum question
  in future
• Impact of the tax cap

12
OPTION 5Referendum for Education and
Alternative Financing

• Property Tax Rate Increase in Ed Fund
• Issue new debt
• Implement
• Impact on deficit ?
• Technology Plan (portion or full Plan?)
• Facility Plan (portion or full Plan?)

13
OPTION 5Referendum for Education and
Alternative Financing

• Pro
• Forever factor
• Requires voter approval
• Does not reduce fund balance for roofs
• More buying power
• Ability to plan better
• Addresses all needs
• Program competition

• Con
• Referendum requires full support of Board
• Requires voter approval
• Ethics Act implications
• Determination of tax increase amount
• Timing cycle
• Anti-tax movement
• Current fund balance
• Program competition
• Bond interest payments

14
OPTION 6Referendum for Education

• Property Tax Rate Increase in Ed Fund
• Implement
• Impact on deficit ?
• Technology Plan (portion or full Plan?)

15
OPTION 6Referendum for Education

• Pro
• Program improvement
• History of fiscal responsibility
• No bond interest
• Secured source of funding
• Requires voter approval

• Con
• Referendum requires full support of Board
• Requires voter approval
• Ethics Act implications
• Determination of tax increase amount
• Timing cycle
• Anti-tax movement
• Does not meet roofs, maintenance and tech needs
• Current fund balance
• Impact of the tax cap
• Wise use of referendums

16
OPTION 7Referendums for Education and OM

• Property Tax Rate Increase in Ed and OM Fund
• Implement
• Impact on deficit ?
• Technology Plan (portion or full Plan?)
• Facility Plan (portion or full Plan?)

17
OPTION 7Referendums for Education and OM

• Pro
• Community trust
• Flexibility
• Safety needs addressed
• Forever factor
• Secured source of funding
• Requires voter approval
• Addresses all needs
• No bond interest payments

• Con
• Referendum requires full support of Board
• Requires voter approval
• Ethics Act implications
• Determination of tax increase amount
• Anti-tax movement
• Current fund balance
• Impact of the tax cap
• Wise use of referendums

18
OPTION 8Balanced Budget

• No new revenue sources
• No new property taxes
• No new issues of bonds
• Balance the Budget through expense cuts
• Do not solve our existing expenses issues
• Do not implement Technology Plan
• Do not implement Facilities Plan

19
OPTION 8Balanced Budget

• Pro
• No new taxes
• Meeting some community members expectations
• Option of future referendums
• Could increase possibility of passing future
  referendums

• Con
• Requires full support of the Board
• Negative impact on kids
• Failure to be a kid friendly community
• Program deterioration
• Downward spiral
• Living in past rather than preparing kids for the
  future
• Roofs, maintenance, safety issues
• Not a long term solution

20
OPTION 8Balanced Budget - continued

• Con
• Staff insecurity
• Decreasing morale
• Recruitment and retention of staff
• Increase in class size
• Parent dissatisfaction
• Collective bargaining issues
• Decrease in desirability of District
• Decrease in property values
• Impact on businesses
• Lack of faith in community

21
Financial Summary
22
Financial Assumptions
23
Financial Assumptions-cont.
24
Financial Options

• Questions????
• Next Session Topic
• Tax Cap Legislation
• Understanding your tax bill
• Tax rate comparisons