Freeze or cut taxes to drop OPRF fund reserves, finance committee advises board

Lower taxes, constrained spending suggested by ad hoc finance advisory committee

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By Terry Dean

Staff reporter

District 200's super-sized fund balance should be reduced over the next 2 to 4 years to less than 100 percent of the high school's annual expense level, with further reductions to below 40 percent of annualized expenses in the years that follow, according to the district's ad hoc finance advisory committee.

The committee finalized its recommendations concerning the proper use and size of OPRF's large fund balance in a meeting Monday. The Oak Park and River Forest High School board will consider those recommendations at a special meeting Dec. 10. The Finance Advisory Committee met for the final time on Monday, wrapping up several months of work in examining what to do with the school's $118 million fund balance.

The committee has given the D200 board the flexibility to "phase down" the fund balance through a variety of options. One thing the group made clear, however: bringing down the fund balance must happen "sooner than later," namely over the next 8 years.

Last month, the committee discussed some possible ways to do that via changes to the school's annual levy. Options included adopting a flat or lower levy over the next 3-to-4 years. The school board will vote on next year's tax levy on Dec. 19. Last month, as required by statute, the board approved a preliminary levy and used a placeholder figure of a 2 percent increase over the previous year. The board, however, can change that levy when it adopts its final version in two weeks.

The FAC offered two specific recommendations to the board concerning that levy vote: either maintain the current rate for next year (a flat levy) or reduce next year's levy by $10 million.

D200 could also adopt a flat levy, at the 2012 tax rate, for up to four years, or it could significantly reduce its levy over a 1-to-2 year period starting in 2014, according to the FAC's recommendations.

The FAC also recommended providing tax relief "in the near term" that benefits the property owners whose taxes helped build the fund balance in the first place. The school should also constrain the growth in future taxes, the FAC says.

The committee urged the school to improve its financial oversight practices and communications with the public — the FAC plans to meet again in the spring to further discuss how the school can do that.

The committee made clear that the fund balance should be maintained for operational and educational needs above all else but with some financial restraints.

"Significant capital projects," for instance, should be paid for over time. "Non-operating fund balances" should be maintained at "reasonable levels to meet debt service requirements on any outstanding bonds," the committee said. Those fund balances should also be maintained for "clearly identified life safety and capital projects."

The committee Monday decided against naming specific capital projects in its recommendation, namely upgrading the pools, which was mentioned in the committee's draft document but taken out.

During that lengthy discussion, committee member Judy Greffin warned against naming the pools or any other specific project in its recommendations. Greffin noted that the school has many capital projects it is considering. She strongly urged against being too specific on which projects should be done.

Other committee members noted that the pool was mentioned because it is among the district's most pressing capital projects. But the committee ultimately sided with Greffin's position, saying the more general approach was more appropriate.

The committee completed its draft document Monday after more than two hours of discussion and some wordsmithing.

Jeff Weissglass, the ad hoc committee chair and vice president of the D200 school board, thanked the committee members for their work over the last months. The school board will host a special meeting next Tuesday to consider and take action on the recommendations.

The committee's work, however, isn't complete just yet. It still needs to hammer out specific recommendations for the district to improve its communications to the public concerning its finances. Weissglass said the committee will meet again next spring to continue that work, as well as to decide the FAC's ongoing role with the district.

CONTACT: tdean@wjinc.com

Fund Balance Phase Down and Property Tax Relief Recommendations

Reader Comments

17 Comments - Add Your Comment

Comment Policy

Unfortunately  

Posted: December 10th, 2013 11:49 AM

@Mann Parent. Well, sort of. What do I mean? Chicago is financially FULLY responsible for their pension funds. Yes, they pay their employees (and which most have, like OP teachers, "contributions" withheld from their salaries), but then, unlike D97/200, are ALSO responsible for making additional/separate contributions to their pension funds - and they've been worse than Illinois in this regard. See this: http://abcnews.go.com/Politics/wireStory/pension-crisis-endangers-chicagos-future-21157710

Mann Parent  

Posted: December 10th, 2013 10:44 AM

If by paying a teacher's salary and the teacher then contributing to the pension system out of this salary, this could be interpreted as the district paying nothing or it could be viewed as paying a lot. Even if the district paid the pension system directly for the teacher and didn't include it in the salary figure, it is still paying. However, as noted, there is no "pension fund" to bring up to fully funded. The part that's missing is the State's contribution, not the District/employee part.

Unfortunately  

Posted: December 6th, 2013 2:47 PM

@Carella - OPRF has no such thing as a "pension fund." Period. Translated: unlike municipalities, school districts essentially pay nothing for employee pension expenses.

Carella  

Posted: December 6th, 2013 12:06 PM

Just to be sure. Is the Pension fund current and funded appropriately?

Bridgett from Oak Park  

Posted: December 6th, 2013 10:44 AM

Considering that D200 has $118 million, for them to ask for a tax levy would be stunning. So I'm not at all impressed by a flat tax levy (a "freeze"), since it's the same thing as not asking for a tax levy. That seems like a no-brainer. Now, lowering the tax levy, and giving back the money to the tax payers that they've been overcharging over the years? That would impress me.

Mimi Jordan from Oak Park  

Posted: December 6th, 2013 9:45 AM

Very well done and informative article. Thank you FAC members for working so hard on our behalf and coming up with reasonable solutions.

Done from Oak Park  

Posted: December 6th, 2013 8:51 AM

Remember, folks - this is only a recommendation and I'm guessing not the one the board wanted to hear. I'll believe that this board really takes tax relief to heart when I see it.

Mr. Middle  

Posted: December 6th, 2013 8:30 AM

I am extremely encouraged and impressed with this report. It identifies that within a few years the funds balance should be less than 40% of budget which is exactly the reason the current fund is obscene. I would vote for the $10M reduction now.

Mike Lennox from Oak Park  

Posted: December 5th, 2013 10:12 PM

Tax Enough Already

OPDad  

Posted: December 5th, 2013 4:12 PM

Seems reasonable. What's the catch?

Unfortunately  

Posted: December 5th, 2013 3:01 PM

Ditto on the previous mentioned compliments regarding the work of this committee!!

Valerie Stefanic from Oak Park  

Posted: December 5th, 2013 2:47 PM

I applaud that the committee is considering some type of relief to taxpayers. There seems to be enough cash to allow for needed improvements while not taking advantage of residents.

Paddy Boy  

Posted: December 5th, 2013 2:32 PM

Can yah hear me! "Tax Relief" and "Oak Park" in the same article! I'll drink to that!

Jim from South Oak Park  

Posted: December 5th, 2013 1:10 PM

I've been quick to object to the surplus, let me be quick to compliment what appears to be some solid, rational thinking on the part of this committee. Many taxpayers are in a real bind today, and this effort recognizes our situation. Appreciate our voices being heard by the committee.

Tom P from Oak Park  

Posted: December 5th, 2013 1:03 PM

The findings seem logical and I support them

Jeff CPA from Oak Park  

Posted: December 5th, 2013 12:46 PM

Tax relief of any kind is needed as we move forward with the many new taxes being imposed under the Affordable Care Act, many which are finally hitting in 2013 and 2014 (limits on HSA and flex benefit deductions, taxes on interest and dividends and the new tax on earned income that will affect many two-income Oak Park families).

Thank you  

Posted: December 5th, 2013 11:25 AM

Thank you indeed. This seems like a completely reasonable and responsible way to handle the topic and a middle solution. Well done!

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