School District 200 by the numbers

Opinion: Columns

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Barry Jay Epstein

The board of School District 200 (OPRF High School) is deliberating a property tax increase to finance one of the most lavishly funded and financially viable schools in the state, with a final vote on Dec. 20.

A review of audited financial statements for the past 10 years, and projections for the next five years, shows that funds from the 2002 levy were essentially never used, now sitting idle, earning little return. The projections show no need, under worst-case assumptions, for another increase. A tax increase would add to the cash hoard, and is thus unwarranted.

The ever-increasing cache of cash: Over 10 years, thanks to 2002's tax hike, liquid assets have grown from $23 million to over $123 million. This implies that arguments supporting the last levy were ill-considered, at best. This cash stockpile would better argue for a tax decrease!

Equally disturbing: This cash has not been well managed. The 2012 annual report shows $459,000 in earnings on the $115 million (average) in investable funds — a return of under one-half of 1 percent. Even with today's low-interest rates, this is incomprehensible.

The district's current bonded debt obligations equal $18.4 million, and its unfunded pension obligations are $6.9 million. Even if these obligations, totaling $25.3 million, somehow had to be settled in cash immediately, D200 would be left with $100 million of cash to fund future operations. Because the district runs surpluses every year, even this would not be called upon for many years.

A profitable not-for-profit operation: D200 has produced large surpluses for each of the past 10 years. The district's consolidated unrestricted net assets have grown from $4.5 million to $99.8 million. (Including restricted funds, current balances total $120 million.) For perspective, consider that total expenditures for the 2012 fiscal year equaled about $53 million. The district's current accumulated surplus could carry it for two more years, absent any revenue whatsoever!

The board's latest projections do not support the present need for a tax increase. Five year financial projections recently made public purport to make the case for higher taxes, but fail abjectly in doing so. Even taking these on face value (and thus ignoring the projected needs called upon to justify the 2002 increases), these show, on a consolidated basis, that further surpluses will be generated by D200 through 2017. Even if the post-2017 deficits being forecast actually do develop, the available accumulated surplus will allow the district to carry on operations and remain solvent through about 2033, even if year 2023's projected deficit continued indefinitely.

The current cash hoard of over $123 million, and the unrestricted surplus of almost $100 million, are more than adequate to carry the district for perhaps as long as another 15 years. Another tax hike is thus entirely unjustifiable.

Barry Jay Epstein, Ph.D., CPA, is a Chicago-based forensic accountant.

Reader Comments

9 Comments - Add Your Comment

Comment Policy

Jeanine Pedersen from Oak Park, Illinois  

Posted: December 20th, 2012 9:18 PM

While I appreciate the information in the article, and certainly do not support the tax increase, I would like to remind readers that this is the same group that, together with Noel Kuriakos, brought suit against District 97 after the referendum passed. This is a group who supports the flat tax rate, which I personally abhor.

Mary Rodrigo from Oak Park  

Posted: December 14th, 2012 11:16 PM

Why don't we do something! There is a meeting of D200 school board on Dec. 20th, at 7:30pm in the board room at OPRFHS. It's open to the public and it is the only chance you have to let the board know how you feel regarding this levy before they vote on it. We can all do something for ourselves by being there.

OP Malcolm X   

Posted: December 12th, 2012 8:13 PM

Yo Outrage. When OPRF stuck us with the back-door tax hike, the President at the time, Rigas, another 1 per center from River Forest, said they needed the money to fix the Achievement Gap and they would be fully "accountable." Well they failed miserably at the first but if you are right, just give em some more time and I guess they still might deliver. But they are "a counting" the taxes and maybe that is what he meant by accountability. Think u broke the code.

Outraged  

Posted: December 12th, 2012 7:12 PM

Higher property taxes mean less minorities can afford to live here, meaning less minorities to worry about, meaning less carping about the achievement gap. Hey, if you can afford the taxes - well it's all good if all you care about is their precious privileged Honors program. I suspect the Board members have no kids in the remedial track.

Want to stay in Oak Park from Oak Park  

Posted: December 12th, 2012 6:23 PM

Perfect, the next step is to have Ali El Saffar project how much our property taxes will rise if they vote on this unnecessary tax increase. D200 surplus will grow... and when D97 needs additional funds to accommodate enrollment growth we will be faced with another referendum to fund THAT district. Oak Park residents are generous to the schools. Why abuse this by asking for a tax increase when you are already running a surplus?

Unfortunately  

Posted: December 12th, 2012 5:38 PM

There is no mystery as to the reason for the mega-surplus: the members of the board are financially illiterate. That is why they rely on Witham for guidance and so the "reason" then becomes doubled. Oak Park, per capita, has more financial illiterates than most communities - and this is why the Village Board via Pope and friends spent like they did on vanity projects - because they had never heard of the phrase "Breakeven Analysis." Good people, but clueless financially - but believe otherwise.

Going broke from Oak Park  

Posted: December 12th, 2012 3:45 PM

Barry, can you run for the District 200 board please?

Amy Williams from Oak Park  

Posted: December 12th, 2012 3:15 PM

Great article, Barry! Lays the situation out very clearly -- the question now is how do we stop this? Is there any way we can affect the vote on the 20th?

One more thing  

Posted: December 12th, 2012 11:03 AM

Great article, but the missing factor in the equation here ?" which explains the levies ?" is that is that the faculty union will likely soon be asking for the reinstatement of the mega- salary raises that they had for the past five years. Salaries are frozen now. In 2014, however, they will approach the public & say "Ok neighbors, time for things to go back to normal now". And let me tell you, OP & RF friends, if things DO go back to "normal", the community probably WILL run dry at some point.

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