Question #1 would prevent a buildup of excessive cash reserves for everyday operating (non-capital) expenses such as in District 200 (OPRF High School). About 15 years ago, the D200 school board utilized a tax loophole and began amassing a cash reserve that topped out at $125 million. At one point, they had 808 Days Cash on Hand (DCOH).
The Government Finance Officers Association recommends a minimum fund balance of 60 Days Cash on Hand of either revenues or expenditures. The Illinois State Board of Education gives school districts with 90 days fund-balance-to-expenditures its highest Financial Profile score. Some DCOH is necessary to weather the seasonality of property tax collections (only twice a year). Most extraordinary expenses are covered by insurance. The schools have other sources of revenue in addition to property taxes: state and federal aid, student fees, lunchroom revenue, etc. The 180 Days Cash on Hand is more than adequate for everyday liquidity.
Instead, the high school will now use it for a massive capital project known as “Imagine OPRF.” This will result in an unwarranted, huge transfer of wealth from the recent past and the present (whose people may not be around to see the benefits) to future people (who will have paid nothing for what they enjoy).
The Park District of Oak Park has also had a significant buildup of operating cash, which it now intends to use to build a Community Center. This would include yet another swimming pool, making four pools between the parks and the high school. This is another example of an intergenerational transfer of wealth with no justification.
Question #2 calls for referendum approval of capital expenditures greater than $5 million. It would impact spending such as the proposed community center and the Imagine project at OPRF. Neither is currently slated to go before voters for funding of these major capital projects. Funding for such projects should be voted on and approved by the taxpayers that would benefit from them. D200’s massive cash reserve continues to skew this basic funding dynamic. Board members are elected to decide policy; a board seat is not a blank check.
Remember, these referendums are not binding — the village needs on the order of much more than $5 million at a time for street, water pipe and sewer rebuilding. A new police station taking more property off the tax rolls is another matter.
These expenditures, unlike operating costs, should be bonded (with debt issued). But what about the interest that comes with bonds? That is simply rent on the money. By not paying taxes now (and returning overtaxed money), citizens can invest or save that money for mortgage prepayment, college savings accounts for their children, retirement accounts, or whatever they choose. They can come out ahead and pass the payment of debt service on to those who will benefit.
Here are some major capital projects starting up or proposed:
1. Imagine OPRF, including an oversized swimming pool
2. A park district community center
3. A new police station
The two referendum questions appear at the bottom of the ballot, after the Judges Section.
Kevin Peppard, an Oak Park resident, was the sponsor of the two advisory questions appearing on Oak Park ballots this November.