Is $2.8 million too much for Maine Township to hold in reserve?
With more than $2.4 million in its general assistance reserve fund, Maine Township could have gone more than 2½ years without adding additional tax revenue and maintained its current level of spending.
The board for the township in northwest Cook County didn't do that. Instead, trustees voted 3-2 to increase the general assistance fund's reserves by nearly $400,000.
"We're not supposed to be a bank," complained Maine Township Trustee Susan Sweeney, who voted against it and argued for reducing the tax levy. "We're not supposed to be stockpiling cash in our reserves like this."
In fact, a state law that limits township reserve funds to 2½ times the average annual amount spent from that fund over the previous three years passed nearly unanimously in 2017.
"Two and a half times what was spent on average is still a lot of money," said Shelbyville Republican state Rep. Brad Halbrook, who sponsored the new law. "I really wish we'd picked one and a half."
Maine Township averaged $870,082 in annual general assistance spending between 2016 and 2018, according to the township's audits. By the end of 2018, the township had $2,406,206 in its general assistance reserve fund, which amounts to nearly 2.8 times the average spent. That reserve fund has also grown 85 percent from $1.3 million in 2016 to its current amount, according to the audits.
General assistance funds are intended to finance programs to help needy and at-risk residents of the township as well as cover administrative costs of the programs.
So why didn't the Maine Township board abate taxes to lower the reserve fund like Sweeney and fellow dissenting Trustee David Carrabotta suggested?
The township meets the letter of the law, its attorney, Keri-Lyn Krafthefer, said.
She said pension liabilities can't be considered part of the equation. The township reported more than $340,000 worth of pension liabilities in the general assistance fund. When the pension liabilities are subtracted, the reserves are 2.4 times the average annual amount spent.
"They're under the threshold," Krafthefer said.
Even though Halbrook's law makes allowances only for earmarked capital improvement funds, many township lawyers agree there's significant case law regarding saving for pension liabilities.
"Holding money in reserve for pension liability has survived many court challenges regarding laws that prevent governments from excess accumulation of funds," said Ross Secler, an attorney who works with several suburban townships, including Naperville Township.
Halbrook said townships shouldn't hover just below the threshold created by the new law.
"That was not the spirit or intent," he said.
There is nothing in Halbrook's law that automatically requires rebates or punishes townships that violate the reserve threshold. Taxpayers who want to challenge a township would have to file a suit, officials said.
Supervisor Laura Morask did not respond to several messages seeking comment. The two trustees who voted in favor of the budget could not be reached.
Meanwhile, residents critical of Maine Township said the pension liabilities in the general assistance fund reflect how money intended to help low-income residents in the township actually is being spent.
From 2016 through 2018, the township has spent an annual average of $181,097 on assistance for needy residents and an average of $688,986 on administration of the funds, with most of that going to salaries and benefits such as pensions, according to audits. That means for every dollar someone in need gets from the township, $3.80 is spent on operational costs.
"It's probably one of the worst ratios of assistance to salaries you can imagine, and it would never survive scrutiny outside the public sector," said township resident Joe Egan.
"Clearly, we're overtaxed. They've got more than two years of slush funds not earmarked for anything."
In addition to the general assistance reserves, Maine Township ended 2018 with more than a year's worth of expenses in its general town fund and its road and bridge fund, according to its audit. Most government finance models suggest three to six months of operating expenses be kept in reserve.
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