ISSUES: Tax Levy
73% of your real estate taxes go to fund the school district. For those not on social media, this is today’s post from the EPIC Facebook page. Credit to Isaac Yue for his great work pulling all the facts, data and analysis together.
Bear in mind, School performance and taxes are closely tied to real estate values. Low performing schools with high real estate taxes (if this trend continues) does not bode well for property values in Elmhurst.
Furthermore, enrollment growth was another reason the district gave for the referendum, but enrollment, according to IRC data, has dropped about 4%.
One of the important responsibilities of a board member is to critically evaluate the finances of the district. Question: Did we need a tax increase and do the numbers support it?
CASH RESERVES
The first chart is the amount of reserves and surplus we had in the D205 accounts at the end of June 2022. School budget year goes from July 1, 2021 to June 30, 2022. The low point of the budget reserve is on June 30th. Tax money comes in on and after July 1. This was presented by Mr. Welton at the Dec 2023 board meeting. As you can see, the operating funds are made of 5 components: Education, Operations, Transportation, Retirement, Working Cash.
- The total fund balance or “reserves” on 6/30/22 was $68.3 million.
- We had a surplus of $6.8 million for the 2022 school year.
The $45 million reserves people are referring to is in the top left corner, only the Education Fund balance surplus in July 1, 2021.
BOARD POLICY
How much should we have in a reserve fund? D205 Board Policy 4:20 states: The Board shall have policies, practices, and plans that will result in fund balances of no less than 26% of the budgeted expenditures for the Operating Funds on July 1 at the beginning of the fiscal year.
The second chart is the total expenditure D205 project this year of $162.2 million. There are $20 million in capital project expenses which is not counted in the reserves calculation. Therefore:
- Operating Funds Expenditure = $162.2 million – $20 million = $142.2 million
- Minimum reserves by board policy = $142.2 million x 26% = $37 million
As you can see in the first chart in Dec 2022 presentation (between the red circles, we have $68 million in reserve which equals 48% of expenditure.
INCREASED COST CALCULATIONS
As we all have experienced, everything has gotten more expensive. Key reasons we heard to justify the maximum allowed tax increase was due to “double digit” cost increases. The 3rd chart are the major cost increases that Mr. Welton presented. They include 12% increase in bus contracts, 15.75% in nurse contracts, and 6.5% in health premium increases. Board Doc Feb 9.A.3.r
The 4th chart is all the calculated cost increases: all numbers are from monthly financial statements on board docs. One example is Doc Oct Board Doc 8.B.a (5th chart)
Bussing:
- Total contracts $6.1 million – $1.2 million state reimbursement = $4.9 million D205 cost
- 12% increase in cost = $4.9 million x 12% = $588,000
Nursing:
- Total contract $1.6 million
- 15.75% increase in cost = $1.6 million x 15.75% = $252,000
Health Insurance
- Total contract $12 million
D205 covers ~ 85% of health insurance premium = $12 million x 85% = $10.2 million - 6.5% increase in cost = $10.2 million x 6.5% = $663,000
The total cost increases = $1.5 million
SUMMARY
We will leave policy to others, but here are some fun math exercises without any tax increase:
- Total Reserves = $68 million
- Subtract $37 million (26% board policy reserve)
- Invest this reserve $37 million in 4% bank account = $1.5 million to cover the cost increases in bussing, nursing and health insurance.
- Excess reserves = $68 million – $37 million = $31 million
Let’s even assume we pay out $21 million all at once for cost overruns and new projects (in reality the board voted to pay the $21 million over 3 years: 2023, 2024, 2025)
Total Leftover excess funds = $31 million – $21 million = $10 million
Ideas for $10 million left over to do whatever you want:
- Hire interventionists, tutors for each school
- New technology leases
- Parking structure at York
- Replace all your big capital items ex: Buy new HVAC systems $4mill
- Teacher inflation bonuses: Let’s say you give each teacher a 5% 1 time inflation adjustment bonus (Average D205 salary = $90,249 x 5% = $4500 x 590 teachers = $2.7 million)
Also since we had a $7 million surplus last year, we may have another one this year to cover any surprises.
Our town is very generous and has shown to be willing to help our schools even with 70% of our town who don’t have kids attending a D205 school.
So the question is why did the board raise everyone’s property taxes to the max 5%, which gives us additional $8 million in revenues every year to increase our already large reserves?
Why did Hosler and Trautmann rubber stamp, and why do Asseff and Henry agree with the max tax increase?
At the January BOE meeting I called out D205 for unnecessarily raising your taxes
In February D205 rolled back a portion of the tax increase.
As a board member this is excactly how I will advocate for you!
