Tax attorney weighs in on District 3 bond plan

I wrote last month about how officials in Fox River Grove Elementary District 3 planned to issue bonds to pay for school renovations.

Their plan sparked my interest because officials in another district, West Chicago Elementary District 33, got themselves into hot water over similar plans.

As you may recall, District 33 board members, a former superintendent and district consultants could be held personally liable for the decision to issue working cash bonds, then transfer the money to a construction fund.

In a story I wrote last month, officials and a consultant in District 3 said they were aware of the West Chicago case but did not believe it applied to them.

Officials in District 3, it seems, have found a way around the recent appellate court decision that declared District 33's decision illegal.

Instead of transferring the working cash money, which is normally supposed to act as a cash reserve, directly to a construction fund, the officials plan to use the education fund as a pass-through before putting the cash in a construction fund.

In a previous column about this issue, I neither denounced nor supported this plan. However, upon reflection, a suburban school board member's description of the practice as "money laundering" seems apt.

For what is money laundering other than an accounting trick that allows you to use money for something you would not be able to pay for if you did not have the accounting trick at your disposal?

Like a mobster funneling profits from bootlegging into an olive oil importing operation, the maneuver contemplated by District 3 is a way to legitimize money that would otherwise be illegitimate.

When I wrote a story last month about the similarity between District 3's plan and the actions that caused a legal headache for District 33, I had hoped to speak with Chicago attorney James Rooney to get some balance.

You probably haven't heard of Rooney. He's a guy who finds angry taxpayers in school districts like West Chicago and Fox River Grove and files expensive lawsuits against the districts and their top officials. It was his lawsuit that led to the recent appellate court decision about District 33.

Rooney was on a European cruise when I wrote the story, but I had a chance to talk to the jet-lagged attorney after he got back. I told him District 3's interpretation of the appellate court decision and asked him if he agreed with it. "No," was the answer.

"You can't just use (working cash bonds) as a way of running funds for project purposes instead of working cash purposes," Rooney said. "I just don't think that that's what the General Assembly intended to do, to bypass the referendum requirements in order to sell bonds."

The good news for District 3 is that the law does not allow class-action suits in these type of cases; individual taxpayers must sue and can only recover their money, according to Rooney.

And to boot, Rooney is busy Chicago tax attorney. He simply may not have the time to sue District 3.

"I don't go out looking for clients. They generally come to me," Rooney said. "(District) 3 might not be one of the ones I end up going after."