The District 122 school board has given a 5-2 consensus for administrators to move forward with a plan that would cost the average resident about $16 in additional tax revenue next year.
Despite the slight increase, the plan that Supt. Mike Sass presented during a special board meeting Tuesday includes refinancing debt to significantly cut what taxes would be, and also cut $50 in registration fees per student.
Purpose of the Meeting
Board President Nick DiSandro, who was elected in April, called the meeting so the members could look at numerous financial planning issues and put them in context with each other.
In the next few board meetings, the discussion will focus on a facility projects plan, refinancing the district's bond debt and passing the annual tax levy. That all comes before the board's annual strategic plan meeting in February in which cuts are made to reduce the budget deficit.
"In the past it seems (the board) talked about all these money things and each piece was separated," he said. "It needs to come into focus altogether."
Parts of the Plan
Sass said he and the other administrators have been looking through various components of the district's finances to try and form a plan for the next year that, above all else, meets the needs of the district and students but keeps in mind families' personal finances.
The plan that Sass recommended to the board includes:
1. Tax the max: He suggested the board approve a tax levy of the maximum amount allowed by law, which is last year's levy plus the rate of inflation. For a district resident with a $300,000 house, that would mean about $33 in additional taxes next year. Business manager Harold Huang said it would cost the district an additional $4.5 million over five years if they didn't haul in the most it could from property taxes, which makes up the majority of the district's budget.
2. But save taxpayers money: The district has discussed five scenarios to refinance its debt, and Sass recommended one that would save taxpayers the most money over the next six years. The tax increase noted above could be significantly more if not for refinancing.
3. Decrease fees: The board didn't give a consensus on this matter, but it will be revisited. Sass recommended decreasing student registration fees by $50. Right now, parents pay between $275 and $285 per student.
4. Construction finance plan: At next week's board meeting, the district will review a plan to finance various construction projects needed at some of the older schools. Sass said administrators looked at many ways to pay for this, and his suggestion was taking $6.5 million from the district's reserves.
Refinancing the Debt
Originally, the district structured its debt repayment for new buildings with conservative estimates based on assumed growth from new families and taxpayers. Then the economy tanked and tax and interest rates ballooned.
Currently, the district's plan involves paying off debt through 2027, and the tax levy would increase from about $8.3 million in December 2010 to about $12.1 million by December 2013. For a homeowner with a $300,000 house, that would mean about a thousand dollars more in taxes over the next four years.
The to save taxpayers money in the short term and hope that new growth helps share the cost later. The scenario Sass recommended was one that would increase the district's tax rate 1 cent for the next three years and 2 cents for the following three years.
Without this refinancing, the average resident's tax bill could increase by $95 next year. However, this plan would add about $20 million in interest owed by the district, which concerned member Maureen Broderick. It would help taxpayers right now, yes, but would it burden the district too much in the long run?
Sass said the hope is that new development, both commercial and residential, will lead to more tax revenue to offset future debt payments.
"I don't like to sit with a crystal ball and try to forecast what New Lenox is going to be like," Broderick said. She added that she wants to see a more detailed breakdown of all the times the district has refinanced its debt and how much additional interest that's added.
Whether to Cut Fees
Sass' plan to reduce registration fees was met with concern by board members. Cutting $50 in fees from each student could mean about $250,000 less revenue annually for the district.
Some board members worried that was too big a loss for something they feel parents aren't overburdened with.
"I've been paying for five kids this whole time and I haven't had a problem with it," member Sue Gillooley said. "I'm just concerned with if we had to make cuts (because of the lost revenue)."
Member Kathy Miller suggested a tiered plan in which families with multiple children in the district could pay reduced fees, but DiSandro didn't think that was fair, and he and Pat Martino were in favor of reducing the fees.
Deb Kedzior worried about decreasing fees, only then having to restore them later if the district decided it was too big a hit. She said the district could look elsewhere to give parents relief, such as the cost of required items in the school supply list.
The board did not give administration a consensus on this part of the plan and decided it would be best to revisit it later, probably around the time the members work on a budget deficit reduction plan. By the time that comes, the district might decide it wouldn't be feasible to cut fees.
"I feel our moms and dads need some relief today," Sass said.
What Comes Next
Upcoming board meetings will give the board a chance to further review some of these plans and vote on them.
- Nov. 2: Facilities director Bob Nelson will present a plan that prioritizes building projects and gives the board an idea of the options available the fund them.
- Nov. 16:The board will vote on both the projected tax levy and a plan to refinance the debt.
- Dec. 14: The board will vote to officially approve the tax levy.
Following those meetings, the district will get a five-year financial forecast and start looking ahead to ways to trim its budget deficit. Right now, the district projects a $1 million budget deficit in the next year, but that will be covered by a surplus from last year's budget.
However, other changes could force the district to find other ways to cut. The board plans to review its bus schedule changes from last year, which saved about $372,000, and Gov. Pat Quinn might also veto additional transportation funding.
The board took an unofficial vote during Tuesday's meeting to determine whether to give Sass consensus to move forward with the first two parts of the plan (the tax levy and bond refinancing). Broderick said no because of her concerns with bond refinancing and Sue Smith said no because she wants to try and find a way that taxes don't increase at all.
The school board meets at 7 p.m. at the Nov. 2, Nov. 16 and Dec. 14.