Bond sale is unnecessary

As reported in the Oct. 8 issue of the Daily Herald, I stated that the $20 million of working cash fund bonds that District 214 is planning to sell is totally unnecessary, in part because the district already has about $50 million of excess cash and investments in just operating funds.

The $50 million is based on the district keeping enough in reserves at year end to meet its seasonal low. Even if they kept a 30 percent reserve, there would be an excess of $39 million.

The average month-end balances during the two years ending June 30, 2010, was about 60 percent of annual operating expenditures. Far above the 30 percent to 50 percent quoted as being the district’s excessive goal. Consider that the Government Finance Officers Association recommends a minimum balance of 15 percent and the Illinois State Board of Education requires a 25 percent balance to qualify for its highest Financial Profile sub-score.

Assuming that these bonds would mature in 20 years and bear an interest rate of 3 percent, they will unnecessarily cost taxpayers about $1.3 million a year. If the $20 million was being used to pay off some of the 4- to 5-percent bonds owed by the district, it would make some sense.

Finally, consider that when the board approved this bond sale, there was no evidence of need, no details as to the term, rate of interest or other conditions, no indication as to how these bonds would be sold and whether there would be competitive bidding, no financial projections, no discussion or questions from Board members and no clear indication as to why the district was selling these bonds.

According to the Daily Herald report, the only reason for selling these bond is because interest rates are low. That’s like buying something you don’t need just because it’s on sale. Is this the kind of financial oversight and fiduciary responsibility specified in the Illinois statutes? And how about looking out for taxpayers’ interests also required by statute? What a waste. No wonder most taxpayers are irate with the third year in a row of 10 percent to 20 percent property tax increases.

Roland G. Ley

Arlington Heights