Having decided last summer to hold a tax hike referendum next April, the District 97 Board of Education last week chose a specific, and somewhat unusual method, of raising money for the cash-strapped system.
Rather than asking voters to approve a permanent increase in property tax rates, the school board will ask voters to OK the issuance of working cash bonds — a debt instrument – that will be gradually repaid and then fully retired. Taxes would rise sufficiently to repay those bonds but the tax increase would expire when the bonds were paid off.
The board decided that while the bonding route was more of a mid-term than long-term solution to school funding issues, that it would be less of a burden on recession-weary property taxpayers. Peter Traczyk, school board president, said later that the bonding plan could bridge the several years until 2018 when the district will pay off construction of the two middle schools and the village’s downtown TIF district expires. Both milestones will ease the district’s finances.
When the board meets again on Nov. 13 for an additional study session, it will decide the amount of bonding capacity it will seek from voters.
A small crowd of about 20 people sat in the audience at Longfellow School where last Tuesday’s meeting took place. The board spent three hours going over projections, revenue and expense targets, and looking at generic numbers of what a working cash referendum could look like.
“The board has decided to issue debt instead of doing an operating tax because it’s, to me, easier to understand,” said Peter Traczyk, president of the school board, after the meeting. “We’re asking for a set amount of money and not a rate increase that’s going to keep growing into the future. You know when we’re going to pay it back, [and] it’s going to end, so it’s not this continuing obligation.”
The board acknowledged that a working cash referendum was more of short-term solution for a much needed cash infusion. Without a referendum, the district will run out of money by 2014 and resort to drastic cuts to prevent that from happening. Traczyk also noted that the bonds for the two middle schools are set to expire in 2018, which will drop the district’s levy by $3.5 million annually. That presents an opportunity for the district to run a referendum in 2018 that increases the district’s tax rate without actually raising the taxes paid by a property owner.
“We’re sensitive that this is not the right economic environment to run a referendum,” Traczyk said. “But given the impact of the state budget crisis on our already dwindling fund balances, we’re looking for approval of a smaller referendum to bridge us to 2018, when our middle school bonds retire and the downtown TIF expires, as well.”
Members spent a good deal of time Tuesday talking about longer term planning, including the need to address the district’s structural deficit. Supt. Albert Roberts stressed that the deficit can’t be solved solely by cutting spending. Roberts and the board talked about how a successful referendum can lead to investments in such things as technology and capital improvements.
Roberts reiterated a point he’s made in previous discussions, that a referendum is about investing in the future rather than maintaining the status quo.