District 54 considering plan to take on $70 million debt, but pay it off in four years

Schaumburg Township Elementary District 54 board members are preparing to abandon the district’s 14-year-old debt-free status, but with a plan to reclaim it in four years.

Officials pointed to external financial pressures as the reason to borrow $70 million, specifically to handle upcoming capital projects. But they added it’s just as much a priority to return to being debt-free as it was when it was accomplished in 2011.

“That’s a long run,” Superintendent Andy DuRoss said. “We’re very proud of our fiscal conservative approach. These are tough times with a lot of uncertainty.”

He added that only about 10% of Illinois school districts are currently debt-free.

Like all property taxes, the new debt would affect taxpayers proportionately to the value of their homes. The owner of a $300,000 home would pay an additional $90 in 2026, which would go up to $180 for the remaining three years, officials estimate.

Among the factors involved in the decision is the anticipated cutting of federal funding, of which the district received $10.9 million this year. Much of it is for the most vulnerable populations, including special education, low-income and at-risk students, DuRoss said.

Then there’s the state’s Evidence-Based Funding (EBF) that hasn’t kept up with inflation. The district’s current receipt of $1,337 per student represents a 19% increase since EBF was established in 2018. But inflation has risen 31.7% during the same period.

Increasing transportation costs, coupled with the state’s inability to keep up, is putting further pressure on the budget, officials said.

But the fact District 54 is planning to borrow specifically for its capital improvement costs for 2025-2027 makes it a rational decision, said Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability.

In fact, he believes the avoidance of spending operating funds on capital should be a higher priority for any organization than being debt-free.

“It’s not necessarily brilliant that you have no debt service,” Martire said. “It’s really sound fiscal procedure to incur debt to pay for capital.”

The borrowed money would reimburse the operating funds for this past summer’s capital projects and fund yet-to-be-finalized projects in the summers of 2026 and 2027. The recently completed work includes a major renovation of Lincoln Prairie School in Hoffman Estates and other roofing, parking lot, masonry, Health Life Safety and painting projects across the rest of the district.

District 54 has a total of 28 schools to maintain, with any major upgrades typically confined to the summer months.

The board of education is scheduled to vote Nov. 13 to borrow the first $50 million, with the remaining $20 million to follow two years later.

That vote is anticipated to have one dissenter.

Board Member Jim Pye, a retired real estate professional, criticized the plan at Thursday’s meeting for issuing only $50 million of the total in tax-exempt bonds, which he said will result in repaying $8.4 million in estimated interest and issuance costs.

“We are asking for more than we’re allowed, so that is why we will also sell bonds that are not tax-exempt if we vote to approve this in November,” he said. “If we pursue selling bonds, I believe we should lower the amount we are requesting so that we only sell tax-exempt bonds.”

Board President Nick Scipione said the other six members had previously heard Pye’s argument but endorsed the administration’s recommendation.

“We need to be fiscally sound in our budget,” Scipione said. “Could you cut your way out of this? The six felt that you couldn’t.”