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updated: 4/13/2017 11:32 AM

Suburban school districts holding millions of dollars more in reserve than state recommends

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  • Despite a number of building and renovation projects throughout the district, Kildeer-Countryside Elementary District 96 still has nearly two years worth of operating costs in reserve.

    Despite a number of building and renovation projects throughout the district, Kildeer-Countryside Elementary District 96 still has nearly two years worth of operating costs in reserve.
    Daily Herald File Photo, 2008

 
 

Kildeer-Countryside Elementary District 96 recently spent $9 million to accommodate all-day kindergarten, bought iPads for all students, and renovated classrooms and added running tracks at middle schools.

But that didn't leave it short of cash.

District 96 had $89.2 million in reserve at the end of the last school year, according to financial records collected by the Illinois State Board of Education. That amounts to nearly twice the $48.8 million spent to operate the district last year.

District 96 is not alone, according to a Daily Herald analysis of financial records of 93 suburban school districts. The school district had the highest reserves as a percentage of expenses, followed by Grass Lake Elementary District 36, Des Plaines Elementary District 62, Grant High School District 124 and Lisle Unit District 202. Eighteen of the school districts had enough in reserve to cover more than a year of operating expenses.

The state board recommends a minimum of 25 percent of annual operating costs be held in reserve, but it does not set a limit. All but eight of the 93 school districts had at least the minimum, while more than two-thirds had 50 percent or more.



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"When we last ran a referendum in 2006, we promised the community that we would not come back to them for at least a generation of kids, and we intend to keep that promise," District 96 Superintendent Julie Schmidt wrote in an email when asked about the district's reserves. "We are spending down our fund balances."

The district's reserves dropped only slightly from the 2015 school year to 2016. Meanwhile, spending was up by almost $5 million.

While suburban school officials say it's prudent to build up reserves, critics complain about school districts levying more property tax money than they need. Stockpiling money means school districts can fund building or renovation projects without getting voters' OK in a tax-increase referendum.

"It has to be justified when they levy," said Cal Skinner, an anti-tax blogger and former state legislator from Crystal Lake. "They always argue to levy to the max, otherwise they'll lose it forever, but the converse of that is if they don't levy for it taxpayers will save it forever."

Last year, District 36 in Antioch used $6 million of its $11 million reserves to add on to its single school. Superintendent Terry O'Brien said the district "strategically" saved for 10 years before moving forward. In 2015, the district had 368 percent of its annual operating expenses in reserve -- enough to run the school for more than 3 years even if it had no revenue.

That cost four board members their seats in last week's election. Challengers campaigned against the spending plan and the district's finances, and they won all four seats.

O'Brien defended the plan while acknowledging many of the children of taxpayers who covered the cost for the past decade won't directly benefit from the new addition.

"The hope with any education project for community members is that we are ultimately providing something that benefits the entire community, and it really does benefit all in the end," he said.

In Des Plaines District 62, voters approved a tax hike, which generated immediate reserves to pay off $109 million in construction debt, while the district abates taxes elsewhere. That way, taxpayers with children benefiting from the new facilities are paying upfront, district officials said.



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On the opposite end of the reserve spectrum, Millburn Elementary District 24 not only has no reserves, but its operating funds are $1.6 million in the red. With two schools in Lindenhurst and Wadsworth, the district has been slowly replenishing its funds for years since the Great Recession all but destroyed its property tax base, Superintendent Jason Lind said.

"Our cash flow stalled out and we started running deficits, which eroded our fund balance that we did have and got us in a hole quickly," Lind said. "We had to make significant cuts to remedy the cash problem starting in 2010 by going from over 150 employees to under 100, even though we had the same amount of students."

The district used to borrow money to cover payroll.

Lind sees the problem looming again as the state threatens to shift pension costs to schools, cut funding and freeze property taxes.

"That paints a very grim picture for Millburn if that happens," Lind said. "I have calculated that out and a two-year tax freeze would cost us $4.4 million over 10 years."

School officials throughout the suburbs agreed the state legislature and Gov. Bruce Rauner are creating anxiety, leading school boards to tax at the maximum level and stockpile reserves if they can.

The Daily Herald analysis showed 59 school districts had more in reserve accounts in 2016 than in 2015. Combined, that accounted for more than $141 million in reserves among those districts. The other 34 districts reduced reserves by a collective $82 million last year.

Meanwhile, district officials said their school boards are starting to take funding uneasiness into consideration at budget time.

"State funding for public schools continues to be inadequate and unreliable," Schmidt said. "Given that 87 percent of our revenue is local tax dollars, a permanent property tax freeze ... would have a devastating effect on districts like ours."

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Contact Jake at jgriffin@dailyherald.com or (847) 427-4602.

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