July 9, 2013
Proposed budget holds property tax levy flat and prepares for State’s uncertain fiscal outlook
(CHICAGO) In an analysis released today, the Civic Federation supports the City Colleges of Chicago’s proposed FY2014 budget of $657.0 million which continues the District’s exemplary work to improve its financial and operational health. The full 44-page report is available at www.civicfed.org.
“Under the leadership of Chancellor Cheryl Hyman and her team, City Colleges has consistently shown commendable fiscal restraint and a commitment to implementing strong financial management practices,” said Civic Federation President Laurence Msall. The FY2014 proposed budget holds the property tax levy flat for the fourth consecutive year and reduces the unrestricted operating portion of the budget, the portion over which the District has the most control, by 6.9% or $21.1 million. The District also negotiated a new agreement with its labor unions in FY2013 to curb the rising personnel-related costs that make up 69.0% of the City Colleges budget.
The Civic Federation commends City Colleges for prudently addressing uncertainties related to the State of Illinois’ financial distress. The District’s expenditure forecasts incorporate a proposed phased-in shift of the normal cost of employee pension benefits from the State of Illinois to City Colleges. The proposed legislation to shift pension costs for community colleges and state universities was approved by the Illinois House of Representatives but was not agreed to by the Senate before the spring legislative session ended in May 2013. If the bill were to go into effect, the District estimates that its employer pension contribution in FY2015 would be approximately $1.0 million. City Colleges has also maintained a strong fund balance for the last five years, with an FY2012 unrestricted fund balance equal to approximately 20.6% of operating expenses. A healthy fund balance for contingencies, such as unexpected revenue shortfalls, is particularly important at a time when the State of Illinois’ finances are precarious and its scheduled payments to the District are delayed.
City Colleges is in the middle stages of its multi-year Reinvention reorganization effort to improve student outcomes and the financial health of the colleges system. With financial and operational efficiencies such as zero-base budgeting, the District has redirected $51 million in administrative costs toward the classroom. “Although far from fully implemented, Reinvention’s focus on efficiency will continue to assist the District as it addresses its financial challenges,” said Msall.
The full analysis includes recommendations to enhance the District’s sound fiscal health including formalizing a comprehensive long-term financial plan. The Federation also urges the State to change the community college equalization formula that results in disproportionately low funding to City Colleges and other community colleges located in counties subject to the Property Tax Extension Limitation Law.