“No new taxes.”
That was the explanation, perhaps not completely accurate, given by Tom Cofsky, president of the school board at Oak Park and River Forest High School District 200, as the school board voted unanimously Thursday evening, April 27, on a funding plan for its Project 2 that does not require a taxpayer referendum vote.
Project 2 is the school’s nearly $102 million plan to demolish and rebuild the southeast portion of the OPRF building on Scoville Avenue. Instead of asking voters in a referendum for permission to sell bonds to borrow the money to pay for a portion of the project the school board accepted the administration’s recommendation to pay for Project 2 by issuing 20-year debt certificates, a type of unsecured loan that is paid back out the school’s general operating levy, as well as using cash reserves and charitable donations. Unlike debt certificates, building bonds are paid off from a separate levy that would be a separate line item on a property tax bill.
The unanimous vote capped a months long, really years long, divisive and contentious debate and discussion about plans for a new swimming pool and other improvements to physical education and other facilities at OPRF.
“After 10 years it is time to act,” Cofsky said during his 15 minute explanation of the factors behind his vote. “I believe we should not ask our community for more money at this time. We don’t need it today. We should operate within our financial policy and continue to execute financial discipline and maximize the value of our tax dollars and as such I don’t feel we need a community vote.”
The plan the school board approved will pay for Project 2 by borrowing $45.3 million in 20-year debt certificates, using $44.2 million in cash reserves and assumes receiving at least $12.5 in charitable donations from the Imagine Foundation.
Construction on Project 2 will begin in 2024.
Although the vote was unanimous board member Kebreab Henry passed when his name was called first and then, after five other board members had voted yes, hesitated a long time before finally casting a yes vote while stating that he preferred another financing plan. At a Committee of the Whole Meeting two weeks ago Henry said that he favored a plan would pay for Project 2 by a combination of issuing $15.6 million in five-year debt certificates, asking voters to approve $13.7 million in referendum bonds, issuing $22.5 million in debt service extension bonds, which are subject to what is known as a back door referendum, and using $44 million in reserves along with the charitable donations.
Board member Fred Arkin said he struggled with his vote but said that it is important for the school board to speak with one voice.
“I believe it needs to be unanimous,” Arkin said.
The board considered three final financing options. The other option the board considered was to ask voters to issue $44.5 million in referendum bonds to use along with $51 million in cash reserves and the assumed $12.5 million in charitable donations.
The $45.3 million in debt certificates will be paid off over 20 years by using an estimated $3.5 million annually from the school’s operating levy. Since OPRF has been levying less than the maximum amount allowed by law for most of the past decade it is likely that the operating levy will have to be higher in the future to raise the money to pay back the debt certificates than it would have had to be if Project 2 was financed by referendum bonds.
After the meeting Cofsky told Wednesday Journal that in the future it is likely that the district will have to levy the maximum amount allowed by law but he said that paying the debt incurred for Project 2 will force future school boards to be disciplined and careful in their spending. The $3.5 million going to pay back debt will likely be a little more than four percent of the operating levy in the next few years.
Community members of the OPRF Community Finance Committee (CFC) estimated that the annual impact on taxpayers of borrowing $45.3 million in debt certificates and or $44.5 in referendum bonds would be similar, roughly $200 a year for the owner of a home worth $500,000. The difference is that the financial impact of referendum bonds is obvious and apparent on a tax bill while the cost of paying back debt certificates is not obvious to the average taxpayer. Cofsky said using debt certificates to borrow will slow the buildup of cash reserves.
“I find it interesting that those pushing for referendum are the same people who have been criticizing this board for taking and holding taxpayer money for the last 10 years,” Cofsky said. “Is this disingenuous? If we can afford to do the work with our own current means, why do we need to go to the taxpayers now for more money. If we don’t need it yet, why do we need to get it?”
Cofsky acknowledged there are risks in funding such an expensive project from operating revenues. He listed the risks as inflation above the rate of five percent, the maximum amount the operating levy can be increased in one year under the tax cap law, a pension cost shift switching the responsibility for paying teacher pensions to local school districts from the state, a big increase in enrollment, a significant change in local economic conditions and the loss of budget discipline by future school boards.
“We’ve got to really play our game out well and even then, it’s going to be a challenge,” Cofsky said.
The community members of the CFC did not favor the use of long-term debt certificates to finance Project 2 worrying that paying back debt from the operating fund will limit the financial flexibility of the district in the future.
Referendum advocates were disappointed but not surprised by the vote which was telegraphed at the Committee of the Whole Meeting two weeks ago.
“The board’s in a tough spot; I think they chose the wrong funding mechanism,” said referendum advocate and Project 2 critic Jack Powers. Powers and many other referendum advocates say that the 10 lane 25 by 40-yard new swimming pool that has a 420-seat observation gallery that is part of Project 2 is unnecessarily large.
Powers and many other referendum advocates and Project 2 skeptics say that the decision to use debt certificates seemed preordained from the start of the funding discussion last year.
“Seems like the board made a decision, worked backward to justify it, cherry picking data to support its foregone conclusion, and ignored 23,000+ voters,” Powers wrote in an email to Wednesday Journal after the meeting. “Twice it heard the CFC say no to long term debt certificates and yes to referendum as best practice, and it ignored them too.”
The reference to 23,000+ voters is to an advisory referendum that 76.6 percent of Oak Park voters supported in 2020 that states that all capital projects that cost more than $5 million should be put to a referendum. But Cofsky didn’t find that argument convincing.
“Everyday taxpayers don’t understand the workings of the finances,” Cofsky said.
Instead Cofsky pointed to recent school board elections in which some pool opponents and referendum advocates have lost including the most recent election held earlier this month.
“Recently a candidate advocating that Project 2 must go on the ballot for referendum lost by 953 votes or 17 percent,” said Cofsky referring to Brian Souders defeat last month.
Another referendum advocate, Bridgett Baron, said she thought the vote was a predetermined outcome and called some of the board members comments disingenuous.
Monica Sheehan, who led the opposition to a large new swimming pool in a 2016 referendum and has been a leading critic of Project 2 and a staunch referendum advocate, also criticized the board’s decision to bypass voters and use debt certificates to help pay for Project 2.
“D200 residents spent considerable time advocating for a referendum vote on Project 2, a vote that in any other community is automatic,” Sheehan said in an email to Wednesday Journal. “Since 2005, the administration and board have exploited loopholes to take unauthorized tax dollars and to circumvent voters on funding a larger-than-necessary pool.”
The long and contentious debate about Project 2 and its funding has generated increasingly harsh comments from both sides. Supporters of Project 2 said the very narrow defeat of a pool referendum in 2016 and the efforts of opponents just delayed needed improvements at OPRF and raised the costs of the project. Alison Welch, a supporter of Project 2 and an advocate of paying for it with debt certificates said a referendum on Project 2 would have been divisive and, in a public comment at the school board meeting Thursday, she accused Project 2 opponents and referendum advocates of deliberating misstating facts and fanning emotion.
“Opponents have demonstrated over several years a willingness to misrepresent facts, to spread personal opinions and speculations as if they are established truth, to mislead through inflammatory language, and ignore or dismiss facts they don’t like,” Welch said in a public comment at the board meeting before the vote. “They regularly and publicly attack the intentions and integrity of administrators, teachers, staff, board members, consultants, members of the Imagine Group and other community members. We saw it in the 2016 referendum. We see it several times a month at this podium, weekly in letters to the paper, daily in social media posts. Project 2 opponents routinely complain about a lack of public trust in our elected officials and education professionals while at the same time their misinformation and conspiracy theories are a key source of influencing this lack of trust. Symbolically they take embers and fan flames every week.”
Representatives of the Imagine Foundation said the board vote will allow fundraising to ramp up.
“I am thrilled to see the board taking the next step to make Project 2 happen. It will make a new physical education facility an exciting reality at OPRF, and modernize several performing arts spaces, too,” said Stephen Schuler, a foundation board member in a press release issued by the Imagine Foundation. “By working together with donors, the Imagine Foundation can help minimize the financial impact on D200 and the residents of Oak Park and River Forest.”
