Plainfield ’s financial advisers on Wednesday presented a bleak five-year outlook with a growing operating-fund deficit.
Decreased state funding, lack of new construction, declining property values, high foreclosures and a weak economy along with growing costs are among the many factors that are contributing to rising deficits, said Scott Smith, a senior financial adviser with PMA Financial Network.
According to projections, the district’s deficit could be about $1.56 million in 2013, $15.9 million by 2014, and $33.7 million by 2015. Actions the district takes this year will affect projections in the future years, Smith said.
The district is expected to be on the state’s financial watch list, the worst of four indictors of financial stability, from the years 2012 through 2017, according to PMA's report.
is not unique, Smith said. Whether a school district has a budget of $250 million or $25 million, districts across the state are struggling to make ends meet, especially as the state continues to lag in distributing revenues to school districts, to reduce its share of per-pupil funding and to decrease transportation reimbursements, he said.
“Everybody is going through the same situation,” Smith said. “The state situation is so dire any way you slice it.”
Key to the financial forecast are the district’s two labor contracts that are in negotiations, said John Prince, assistant superintendent for business and operations. Contract negotiations with unions representing the teachers and the support staff are still ongoing, he said.
Salaries and benefits combined make up about 78.4 percent of the district’s fiscal 2012 budget.
PMA projections assume that the district’s costs will continue to rise. Salaries are expected to increase as much as 3 percent, while health insurance may rise from 10 percent to 12 percent per year through fiscal 2017. Dental insurance also is expected to increase 5 percent a year, according to financial projections.
Revenue sources show that the district’s equalized assessed valuation dropped 6.8 percent in 2010, but may start to increase gradually starting in 2012 or 2013.
The district once saw about $162.2 million worth of new growth in 2007, but new growth dropped dramatically to about $10 million in 2011. New growth is projected to increase throughout the next five years.
“This area is still a magnet for people,” school board President Roger Bonuchi said.
Local revenue is important for the district as nearly 60 percent of the district’s revenue comes from property taxes and other local sources.
One bright spot for the district is that student enrollment is expected to remain stable through 2013, with only slight yearly increases through 2017, Prince said.
Enrollment which now stands at about 28,800 students is expected to grow to about 29,600 students by 2017.
Slow or no growth is financially beneficial for the district, because state funding per pupil is paid in arrears, Prince said.