The Elgin Area School District U-46 school board next month is expected to approve the 2013 tax levy incorporating a 1.7 percent increase from the previous year's property tax extension for existing homeowners.
The district estimates it will levy $313 million in property taxes in 2013, a 3.8 percent increase over the previous year's extension, which includes capturing new construction revenue from improved properties and levying for debt service, officials said.
The levy for the debt service fund -- which amounts to roughly $43 million -- is fixed and determined based on the repayment schedule for bonds, said Dale Burnidge, U-46 finance director.
Officials say overall it's a nominal increase and necessary to pay bills.
Yet, some school board members are hesitant to raise taxes in the current economic climate.
"We should come back with a flat levy," school board member Traci O'Neal Ellis told staff members at this week's board meeting.
Ellis later added that with public education funded primarily through local property taxes, homeowners will have to face the brunt of the cost until the system changes.
Board member Jennifer Shroder said the school board cannot think in the short term and has to have a longer vision for the district. "I feel it's an investment into these kids and that pays great dividends to our society," she said.
Board member Maria Bidelman said a flat levy could result in increasing class sizes, which is untenable.
"I feel like we're asking for our fair share," she said. "We have to pay our bills. We need to have something in our coffers to deal with our students' lives on a day-to-day basis."
U-46 Chief Operations Officer Jeff King said the district typically has increased its property tax levy each year based on the Consumer Price Index.
"We've always done whatever the CPI is from the previous December," he said. "It was 3 percent last year. That's what we requested."
Without a levy increase, the district will lose out between $4 million and $6 million in revenue, which will have a compounding effect year after year, King said.
"If you do a flat levy for less than the CPI amount, you are basically foregoing on funds forever," King said.
Revenue from new construction also cannot be recaptured later on, he said.
Officials are estimating the total taxable value of property that was either newly built or improved to be $30 million. The actual equalized assessed value of improved properties won't be known until April for DuPage and Kane counties, and September for Cook County.
King said the district has had to borrow money -- $22 million -- to maintain its buildings.
"We won't need to do that for this year we are in," he said.
King said the district has only a couple of million dollars in its capital improvements fund, which is not enough to complete the $200 million worth of outstanding projects identified in its 10-year life safety plan.
Officials needs to find a funding source for future maintenance projects, whether it means borrowing, using operating funds or some other revenue, he said.
The biggest drain on the district's finances has been the yet unresolved discrimination lawsuit that has left the district's tort fund at a $21 million deficit as of the beginning of this school year, King said.
"We pay the (legal) bills out of the education fund at this point," he said. "Truthfully, we don't have a plan to pay the tort. If we see another environment with low CPI, we're going to be in trouble again."
The proposed tax levy resolution is expected to be adopted by the school board Dec. 9. The levy must be filed with respective counties no later than Dec. 31.