Education Matters US

On Wednesday night, Jan. 10, the Grayslake Elementary District 46 school board voted to not defease the bonds they had voted to abate over the coming 2 years back at the October 16^th meeting. This means tax payers will see no tax relief and the district will continue to earn and spend the interest from these bonds. They can also spend the bond money itself in the future if it is not paid back.

In October, Jill Rohrer, Kristen Coe-Peek, Sue Facklam and Keith Surroz voted yes to abate these bonds over a two year period. This would have brought about $568 in tax relief to the owner of a $200,000 home. These 4 members had chosen to do what was ethical in giving back the amount of money that exceeded voter approval. However, it was discovered after the meeting that a motion was not sufficient to abate the bonds and a resolution had to be introduced to accomplish this. This was just another legal loophole to allow the district to convince board members that they needed the money and to circumvent the will of the voters.

Now it is January and instead of abating the bonds as originally approved, the resolution was made to defease (explained toward the bottom of this article) the bonds instead of the standard abatement. Elizabeth Hennessey made a presentation to the board members explaining the differences between defeasement and abatement (Copy has been FOIA’ed). The discussion between the board members came down to the tax relief the voters would receive. Defeasing the bonds would bring relief of less than $30 per year until the final year, 2024 where relief of $213 would be given.

When the resolution to defease the $6.9 million dollars in bonds was voted upon, it was 4-3 against defeasing the bonds. Rohrer, Coe-Peek, and Facklam had again voted to pay off the issued bond amount that exceeded voter approval. Cheryl Davis, Karen Weinert, and Mark Hannon voted against paying off this debt just as they had before.

Keith Surroz became the swing vote. Keith had made statements in October that he was voting to abate the bonds because it was unethical to keep more than what the voters approved. With defeasement being the option, Keith felt there was not enough tax relief for the taxpayer. He also believed the interests being earned from the bond money could help restore programs. His vote this time around was to keep the money. This means the district keeps the money that exceeds voter approval. They get to continue to earn interest on this money and the taxpayer sees no tax relief whatsoever.

If Keith feels there should be more tax relief, he should introduce a resolution that would abate the bonds over 2 years. This was how he voted in October. If Keith does not, then one of the other 3 board members, who know this issuance is unethical, should introduce this resolution. This must be done soon, since it was stated that an abatement decision must be made before March 1^st if there is to be any tax relief in this years (2006) tax bills.

Some will try and confuse you by saying issuing and keeping these bonds is legal and therefore it is ethical. Yes, this is “legal” via a loophole that several other states have banned. Just because it is legal though, does mean it is ethical. Borrowing more that voters approve is unethical. It is also unethical to exceeded their debt limit as they have done. How this was done is explained by the Daily Herald. [Emphasis mine]

Every time voters turn around there are more and more “legal” loopholes for taxing bodies like schools to use to legally take more money than the voters approved. If the loopholes aren’t present, there are barriers and accounting practices that obfuscate the data in such ways that the average taxpayer does not have the time to figure out what the accurate financial status truly is. Thank goodness in our district that we have people that are not average taxpayers and cannot have the wool pulled over their eyes. Unfortunately, it is still hard to get all the data for them to review.

Once again, the public government school system thwarts the will of the public. The voters have spoken by defeating referendums and calling/emailing school board members to be fiscally responsible. Yet, board members like Karen Weinert and Mark Hannan, who were elected 2 years ago for these very reasons, refuse to vote the will of the public and support the school system’s sense of entitlement and use of “legal” loopholes to legally take taxpayer money for their use without voter approval.

Residents of District 46 should be outraged by the actions and inactions of individual school board members. This should prove to you once and for all that the public government school system is setup to make it difficult to stop their entitlements. The only way to stop them is to keep an ever watchful eye on them. You can do this by running for the school board yourself, reviewing documents from the district, or by volunteering to help me and others by attending board meetings; taking notes; distributing flyers to others; contacting board members and State Legislators; asking for board packets; asking for total transparency; asking for accurate board minutes on their website; learn the views of board candidates and elect those who are fiscally responsible and want total transparency.

You can contact each board member to voice your views on this matter individually with the numbers below or email the entire board at once.

Continue reading if you want a refresher on these bonds and the defeasement option.

Bond Refresher, taken from previous post:

Source for above chart is the bond presentation made by Elizabeth Hennessey of William Blair & Company. This presentation was given to the school board at their March 20^th meeting. Specifically, they came from:

¹ Page 6
² Bond used total ( page 6 ) + premiums received and spent on bonds ( page 8 )
³ Bond authority approved by voters ( page 8 ) – total spent ^2
4 Page 6
⁵ Bond authority approved by voters ( page 8 ) + Bonds issued 11/03/05 ( page 8 )

This chart provides a better summary of the amounts explained above:

When you review the presentation you will see a claim that they really only exceeded authority by just over $4 million dollars. This is because they are adding in the savings from previous bond authorities. The law states a bond authority cannot be used once bonds have been issued on new bond authority. This means that any bond authority before the 1999 should not be included in this discussion on how much money is available in the 1999 issue just made last year.

Defeasement:

The basics of defeasement is that the district places the amount of the principal plus malfeasance issuance fees into an escrow account that cannot be touch by the district. The escrow money then earns interest and this interest is used to pay back the bonds in 2024. The principal and interest is removed from the district debt schedule effectively lowering it by almost $13 million dollars. The levy reduction each year is only a few cents until the final year.

Comparison (These are close but not exact until I get the FOIA’ed document):

The above comparison leads me to some obvious questions:

1. Since the district must pay back about $4.8 million dollars in interest by abating now, why was this not disclosed before the bonds were issued? If it was, why was this not disclosed to the public?
2. Since the William Blair Company did not discover and/or disclose the previous issuance of Premium Bonds against the 1999 bond authority, are there legal steps the district can take to recover the issuance fees and interest cost because of their negligence in doing their job?
3. Since the defeasance option did not pass, will the board press for another vote on the abatement of bonds over 2 years as the previously approved motion? If so, when will the take place? The deadline is March 1^st for any tax relief this year.
4. Will the board press for a vote on a longer term abatement plan of bonds over 8 or 10 years? If so, when will the take place? The deadline is March 1^st for any tax relief this year.
5. Why was the third option was not explored as outlined in the March 20^th, 2006 William Blair Presentation

in which abatement takes place annually providing a benefit to all taxpayers who will pay for these bonds?

The actions of the board as a whole is very disappointing in this matter. They are blowing a real opportunity to earn some trust with the voters and are failing miserably. Yet, there are some members that still remember why they were elected, even though I feel they make too many compromises.

This issue in particular is troubling because members of the public believed the abatement had already taken place. They will now be suprised that no abatement is taking place and will be left with a feeling that their phone calls and emails in October were wasted. There will be more mistrust due to this inaction because they had already been informed about tax relief coming this year. The board members did not keep the public informed that the direction had changed slightly. They left us in the dark when they could have used our help if they had trusted us more. The public got the details of this action change the same night of the vote no opportunity to comment or give their opinion. Without an understanding beforehand that this was taking place in this manner, the public was left out of the process and without a voice.

The district and board want our trust and yet they continue to prove they are unworthy of it. Trust is earned it is not given just because of your position.