Editor’s note: We are running this in order to give voters more information before they vote. It can be found on their website, http://www.oprfhs.org/facilities/index.cfm.
On Aug. 16, the District 200 Board of Education unanimously adopted a five-year pool and facilities plan, as well as a bond-issue question for the Nov. 8 ballot. The board intends to finance the project with $20 million in cash and is seeking the community’s approval for a bond issue of up to $25 million.
What is the high school’s current fund balance?
The unaudited fund balance at the end of the fiscal year on June 30, 2016, was $96.7 million, or 116% of budgeted expenditures for the current fiscal year.
How much of the fund balance has been earmarked for the pool and facilities project?
The board has planned to use $20 million from the fund balance for this project.
If you subtract that $20 million out of the fund balance, what would the remaining $76.7 million equate to?
That would leave 92% of budgeted expenses for this fiscal year.
How much of a fund balance does the district actually need to maintain?
To maintain its AAA credit rating from Standard & Poor’s credit rating agency, the high school must maintain a fund balance of at least 25% of its annual expenditures. Only 88 school districts in the nation have earned AAA status, the agency’s highest rating, which lowers borrowing costs. Most have fund balances substantially higher than 25%.
Even so, doesn’t a 92% balance seem awfully high?
Yes, and that’s why the district is in the midst of a plan to gradually and responsibly lower the fund balance to between 25% and 40% of expenses by 2023 and has established a policy to maintain future fund balances between 25% and 75%.
How did the district come up with these targets?
The targets were an outgrowth of work by the 2013 Finance Advisory Committee (FAC). This was a board committee created to examine the appropriateness of the high school’s fund balance, which at that time stood at $130 million, or 173% of expenditures. The board created the 15-person committee, more than half of whom were community members with financial expertise, out of concern that the fund balance created unnecessarily high tax levels and interfered with trust of the district.
Why not use the fund balance to pay the full cost of the pool and facilities project?
If the fund balance is spent down too quickly, we would have to go to an operating referendum sooner.
There is a philosophical belief that paying partially with bonds is more fair because a portion of the cost is paid by future users of the assets.
As of next year, the high school will be debt free and historically low interest rates could make this a wise time to borrow.
Is a bond referendum different from an operating referendum?
Yes. Funds raised from a bond referendum go into a district’s Capital Projects Fund. By law, these funds are to be used for specific purposes, such as financing facility refurbishment and construction projects. Funds from an operating referendum go into a district’s Education Fund, which covers the day-to-day costs of running a district.
The Education Fund is the high school’s largest fund and accounts for most of the instructional, co-curricular, special education, pupil support, and administrative aspects of the district’s operations. Funds from the Education Fund may, however, be used for capital projects as well.
But didn’t I hear about an operating referendum happening next year?
Oak Park Elementary School District 97, which serves grades K-8, has announced plans for an operating referendum next spring. Oak Park and River Forest High School District 200 is a completely separate school district.