D135 Talks Investment Strategies, Capital Projects, Next Five Years

The following topics were discussed on Monday between Orland School District 135 staff and board members. Most of these issues are still at a committee level and will not come up for board approval for several months. They were intended to provoke conversation and solicit feedback.

Board president Tom Cunningham was unable to attend the meeting.

Here’s the roundup.

Five Year Projections

Assistant superintendent for business services John Reiniche presented board members with a picture of District 135’s finances over the next five years to see where the strengths and weaknesses lay.

The usual culprit can be blamed for gaps in transportation funding, which is expected to drop 40 percent. To make up the difference, Reiniche suggested talking with Consolidated High School District 230 about “staggering” bus schedules. By keeping buses within the same areas, he said, this makes better use of the buses without actually mixing students from different districts on the same ride.

Superintendent Paul Howell agreed it was worth looking into, but reminded Reiniche that the district staggered bus routes with District 230 in the past and quit because the system became “exhausted.”

Other possibilities to close the gap include increasing the distance of bus stops from one block to two blocks, causing students to walk further to hitch a ride. As it stands, for safety reasons, the district allows only 44 children on a bus with a carrying of 72. Reiniche spoke of perhaps raising that number to 54.

Of the $5.3 million in general state aid that Illinois owes District 135 for the 2010-2011 school year, only $1,663 has been paid.

“These are challenging times,” said board member John Carmody, chair of the finance/facilities committee.

Responding to a joke by one board member to drive to the state's capital, Carmody added, “How do you argue for something when they don’t have it? There’s nothing there. They’re $20 billion in the hole as it is. They’re shoveling dirt into a well.”

On the bright side, the state has not cut aid for Special Education transportation, assistant superintendent of student services Colleen Schultz said.

On the expenditures side, Reiniche has budgeted a 2-percent salary increase per year for all staff and most teachers. Pay was frozen this school year for administrators.

Currently, 12 teachers within the district make more than $100,000 and another 50-plus make approximately that amount. Within the next several years, dozens of these veteran teachers are scheduled to retire. Cheap new hires will save the district at least $1 million a year, according to the assistant superintendent's projections.

Investment Strategies

Reiniche said he’s considering purchasing Tax Anticipation Warrants (TAW) from any school district in need of quick, short-term cash. TAWs act like municipal bonds: in exchange for the money to pay immediate bills, the buying district gets a claim over an equivalent portion, plus interest, of the selling district’s property taxes when they arrived from the county.

So, the buying district uses excess funds to earn more interest than it would if it bought, say, a CD from a bank. The selling district pays less interest than it would if it took out a loan from a bank.

In other words, the school districts get what they need for a better price, and the banks lose.

Reiniche said he will also speak with District 230 about splitting the purchase cost of the "Bloomberg Terminal." The computer system helps cut middle men—again, banks, as well as brokers—out of the purchase of investments, directly connecting buyers and sellers in real-time financial markets.

Split with District 230, the system would cost District 135 about $24,000 a year but could end up making the district the same amount. According to Reiniche, banks take up to 15 basis-points from the interest earned on investments.

Capital Projects

A total of $5,963,775 has been budgeted for capital projects over the next four school years, including this current one, which began July 1. Notable improvements include the replacement of the entire Century Junior High roof during 2011-2012 for approximately $250,000.

Reiniche said the school district made a schedule in which the roofs most in need of repair, and those with expiring warranties will be deal with first. He estimated Century’s roof—as well as the carpet, also in need of replacement—is between 15 and 20 years old.

Lunch room tables at Centennial School and the “music shell” at Jerling Junior High will likely be replaced during the same school year. Reiniche described the purchase of a new $25,000 shell, which sits behind band and choir students and helps amplify sound, as "imperative." Though not necessarily old, it’s heavy and poses a risk sitting behind so many students, Reiniche said, noting that the last one was donated from another school district.

“When we think about budget and allocation, safety is our number one concern,” Carmody said. “Any student that enters the building is going to be in a safe environment. If anybody was hurt because we were looking to save money, it would be a tragedy.”

Insurance

Reiniche said he will soon ask Scott Baldwin, an insurance consultant, to solicit insurance quotes. Coverage with the district’s current provider, Blue Cross Blue Shield, ends on June 30. Any change in insurance must first be discussed with the board and, more importantly, the district’s insurance committee, which represents employees.

The district pays approximately $8 million a year in claims, with another $4 million set aside in reserves, Reiniche said. The approval of civil unions in Illinois may cause the district to pay more in benefits, he said.

AED Grant

Board secretary Lynne Donegan said she has applied for a portion of the $100,000 matching grant that the Illinois Department of Public Health has set aside for the purchase of Automated External Defibrillators (AED).

Last year that AEDs be placed within 300 feet of all outdoor school and recreation facilities, but provided no source of funding until now. AEDs cost about $480 each, Reiniche said.

ARRA Funds

In April 2009 District 135 was awarded $1.2 million in an American Recovery and Reinvestment Act (ARRA) grant to be used for general education and special education needs. About $600,000 of it has already been used to replace old computers and install equipment and software.

Per the rules of the grant, District 135 must share $39,000 with a neighboring private or parochial school. Staff has chosen Catholic School, who plans to use it mostly on supplies, maintenance and software, according to a spreadsheet compiled by Schultz.

Most notably, District 135 is looking to purchase sound-field amplification systems, with grant money. The systems are microphones and speakers used to equally distribute a teacher’s voice throughout the classroom for those students with attention deficit disorders, learning difficulties and hearing problems. The technology will cost upwards of $122,000, depending on how many classrooms the board decides to fill.

All of the funds must be obligated by May and spent by the end of September. A little more than $240,000—which may be used for handicap-accessible playground equipment—remains.