The financial advisor to Oak Park and River Forest High District 200 had to correct a misstatement made in a report prepared for the school’s Community Finance Committee after watchdog and critic Monica Sheehan pointed out the mistake on a community Facebook page.
In her March 13 report to the CFC financial advisor Elizabeth Hennessy included a chart of debt practices by peer districts of OPRF used since 2012. She stated that two districts similar to OPRF in their financial profile, New Trier High School District 113 and Highland Park Township High School District 113, recently used debt certificates, a type of borrowing that does not have a separate levy behind it and does not need to be approved by voters in a referendum, to fund major capital projects. But on closer examination it turned out that the two districts used alternate revenue bonds, not debt certificates, to finance the projects.
Alternate Revenue Bonds are like debt certificates in that they are typically repaid out of operating revenues because the separate levy to pay off the bonds is typically abated. While alternate revenue bonds don’t require a referendum the decision whether to issue the bonds can be placed on a referendum ballot if within 30 days of the school board vote to authorize issuing the bonds 7.5 percent of the registered voters in a district sign a petition asking for a referendum. This process is commonly referred to as a back door referendum.
Sheehan suggested in a public comment at the March 23 OPRF school board meeting that the mistake was no accident.
“Last week the administration falsely promoted that Districts 203 and 113 used debt certificates to fund recent projects,” Sheehan said. “I searched the schools’ websites and proved otherwise, and I posted the information on Facebook. Without that action it’s unlikely that the administration would have corrected its false narrative at the CFC on (March 21). “
At the March 21 CFC meeting Hennessy acknowledged the mistake but said that it was not deliberate.
“There was certainly no intent to deceive,” Hennessy told the CFC.
Hennessy presented the CFC with a new report that included a more complete explanation of alternate revenue bonds.
Many proponents of Project 2, the approximately $102 million plan to demolish the southeast corner of OPRF and replace it with modern and up to date physical education facilities, including a new 10 lane swimming pool, advocate paying for the project with just debt certificates and cash reserves avoiding the need to get voter approval for the borrowing in a referendum. Some supporters used the initial mistaken reference to New Trier and Highland Park District 113 using approximately $46 million in 20-year debt certificates to pay for projects as analogous to OPRF issuing $45.3 million in 20-year debt certificates to help pay for Project 2.