School district reserves too high, tax group says
A local group of citizens says that nearby school districts are hoarding taxes and should redistribute the money back to taxpayers.
The group says that 16 school districts in the Northwest suburbs have a total of $1.5 billion in unrestricted funds, citing June 30, 2010, balances. The group, Northwest Suburban Taxpayers United, which counts failed-Schaumburg mayoral hopeful Brian Costin as an member, said in a news release that the balances are excessive.
The group states a reserve with a balance of 20 percent of annual revenues is acceptable for businesses in the private sector who have to compete with other businesses. But because school districts receive a “steady” revenue stream from property taxes, “schools cannot compare themselves to such businesses,” the group said in a news release.
The group said districts should make out checks to taxpayers or reduce property taxes. Roland Ley, head of the group, wants to engage residents and get them out to meetings.
“We are considering a major petition drive for each taxing body,” he said.
The group cites Schaumburg Township Elementary District 54 as the top hoarder, with $191.7 million in cash and investments. That represents a 72 percent reserve. Palatine-Schaumburg High School District 211 is next with $135.4 million, or a 33 percent reserve.
The financial officers for districts 54 and 211 said these numbers are deceptive, as school districts receive income from property taxes twice a year, including right before the June 30 date from which the taxpayers group took its data.
“That’s when the money comes in,” said Mohsin Dada, assistant superintendent for business services for District 54. “It would like an organization or school has lots of money, but once the school starts — July, August, September, October, November — there are not tax receipts coming into the school district.”
Both Dada and District 211 Associate Superintendent for Business David Torres said reserves are essential to school districts. Dada did not say District 54 has a reserve policy — a minimum percentage of revenues or expenditures — it aims to keep. Torres said District 211 has a 33.3 percent reserve-fund balance policy.
Ley doesn’t buy the districts’ explanations, and said school officials keep bloated reserves.
“One would have to look at the monthly cash flows of each school district to know whether keeping a 20 percent balance at June 30 would be enough,” Let said. “In most, if not all, cases I think it would work.”
Torres cited the volatility in predicting how property values change as a need for reserves. He also mentioned problems with Cook County in distributing property taxes on time.
“And we’re all familiar with the current situations with the state funding in arrears,” Torres said.
As expenditures increase during the school year, the reserves are needed to ensure student services aren’t interrupted, Dada said. District 54 has worked hard not to raise property taxes, and would continue that practice, Dada said. He invited the taxpayers group to participate in budget planning meetings and to familiarize itself with the district’s policies.
“Everything we do is public; we seek public input when developing a budget,” he said.
Other districts with high fund balances include Elk Grove Township Elementary District 59, whose balance last June 30 was 93 percent of revenue and Arlington Heights Elementary District 25, whose fund balance was 71 percent, according to Northwest Suburban Taxpayers United.
At the other extreme, financially troubled Elgin Area Unit District 46 reserves were only about 12 percent of annual revenue, and Wheeling Township Elementary District 21 reserves were 18 percent. Community Unit District 300 had a reserve of 23 percent.
More information from the taxpayers group is at nstaxpayersunited.com, while most school districts have budget information posted on their websites.