Education Matters US

Thursday, July 28, 2005

By Jeff Kolkey
Source: Northwest Herald

HUNTLEY – District 158 officials on Wednesday enlisted state legislators, financial experts and lawyers in an effort to keep their promise to voters and limit the effects of a November tax increase.

Limiting the tax-rate increase to 55 cents would keep taxes in check, but also would mean a loss of state aid “more than the levy increase generated from the referendum,” according to a draft position paper written by board Vice President Glen Stewart.

State Rep. Mike Tryon (R-Crystal Lake) and State Sen. Pamela Althoff (R-McHenry), along with McHenry County Clerk Katherine Schultz and others, attended the Wednesday work session.

The group gathered to brainstorm options to deal with the district’s problems.

“It is a testament to how important this issue is that they cleared their schedules to be here,” Stewart said.

Although the district might need to continue short-term borrowing for several years, the tax increase in its first year already has eliminated what was a projected education fund deficit.

If nothing is done, the tax rate will continue to increase until the maximum approved by voters is reached over five years.

Voters were told a 55-cent increase would cost the owner of a house with an assessed value of $200,000 about $340 more a year with the homestead exemption.

Full implementation would mean a $1.22 rate increase and cost the owner of a house with the same value about $751 more a year, $411 more than voters were told.

Financial projections show the district has a combined operating fund surplus of nearly $6 million as a result of the tax increase passing in November, said Tony Quagliano, a member of the district’s Financial Advisory Committee.

Maintaining the rate in subsequent years will mean the surplus continues to grow, but the district must tailor its tax levy to stop further rate increases.

Also, those projected surpluses could quickly disappear if nothing is done to prevent the expected loss of state aid.

Although Tryon said he is working to consolidate three bills that would make future tax increase referendums easier for both governments and voters to understand, that would not help the district with its current dilemma.

As the amount of available local resources – property taxes – increases, the amount of state aid the district receives will decrease.

The loss will occur even if the district does not accept all the money voters approved in the November referendum. Although the district would tax at a lower rate, a higher amount is still considered to be available to the district using the general state aid formula.

Several possible solutions were unveiled during the work session, each with drawbacks. Some have never been attempted in Illinois.

Among them is a new referendum that would decrease the previously approved tax rate increase or a referendum that would rescind further implementation of the November referendum. It is thought that these options would lower the amount of available local resources and prevent loss of state aid.

“How that would work when we are still in a [rate increase] factoring mode, I have no idea,” Schultz said. “There is no language in the property tax code to rescind what you have done. You are going into uncharted waters.”

Another idea was a new property tax law that would allow school districts to rescind further implementation of tax increases.

Schultz said it could be possible for a judge to order her office to alter the tax extension process for District 158.

Although Quagliano said he doubted the district had grounds to seek a court order, school district lawyer Anthony Ficarelli said it is an option that is being explored.

Quagliano said the work session was productive.

“It got all the right people in the room at the same time and got all the facts on the table as the district understood them,” Quagliano said. “In that sense, it got the ball started rolling forward. I just don’t know where it will go from here.”

Thursday, July 28, 2005

By Jeffrey Gaunt
Source: Daily Herald

Huntley District 158 school board members don’t want your money.

At least, they don’t want any more than they asked for while campaigning for the 55-cent tax-rate increase voters approved in November.

With that in mind, District 158 school board members met with county officials, residents, state legislators and attorneys Wednesday to explore ways to avoid collecting more money than the law allows.

“We’re dealing with problems in the tax cap legislation,” said state Rep. Mike Tryon, a Crystal Lake Republican. “Holding true to what the referendum stated, you want to take 55 cents.”

But toeing the line on a 55-cent increase – or $360 a year for the owner of a $200,000 house as district officials said during their campaign – is not as easy at it seems, the participants agreed.

Board members learned in January their 55-cent tax-rate increase could cost homeowners three to four times more than anticipated. The board apologized at the time for not providing enough information before the election.

Now district officials are trying to follow through on a promise made after the election not to collect more money than was said during the campaign.

District officials could, for instance, simply ask the Kane and McHenry county clerks for less money than the district is entitled to receive.

But general state aid – which makes up a good chunk of District 158’s funding – is based on the assumption the district collects everything it has coming to it.

And because local property taxes trade off with state aid, the district will receive less money from the state, whether or not it collects all it’s due in local taxes.

That’s why district attorneys are also going to look into a change in state regulations that wouldn’t penalize the district for asking for less money from residents.

And district officials also may consider a one-time revenue source, called a transition payment, that would hold the district’s state aid steady for one year. Still, the district would likely lose millions in the following years.

Board members also hope a change in the law – proposed this year by Tryon – could provide a solution.

The proposal, which would change the way county clerks calculate the amount of money due taxing bodies after tax-rate increases, passed unanimously in the House but later died in the Senate.

Tryon hopes to reintroduce the bill – with some modifications – during the fall veto session. But even if approved, the bill likely wouldn’t help District 158, unless state lawmakers decide to add a clause that would allow the law to be applied retroactively.

Even so, the bill would prevent other school districts from following in District 158’s footsteps.

“I feel confident that we’re going to get a bill that fixes all these things for the future,” Tryon said.

In the meantime, it’s little consolation for District 158 officials. So the district’s legal counsel, as well as Tryon and state Sen. Pam Althoff, a McHenry Republican, are looking for alternatives.

“I would like to see several avenues explored,” school board President Mike Skala said. “I don’t think we’re going to leave here with one answer.”