Fiddling Around While 58 Burns?

What about the children!?!

What about the children!?!

The District 58 School Board met Monday to fight with Scott O’Connell again.  Oh, wait, they’re trying to figure out what tax rate they should charge on our real estate tax bills that provide their main chunk of revenue.  Sorry, my bad; all they ever seem to do is listen to a couple kids fight.  Plus they’re talking about housing market values going down as a reason to need more money, and that isn’t how it works; it’s EAV that counts and that went up 6%.  Plus, they have a budget deficit this year with no plan in place to address that deficit, and no long range planning.

The good news just keeps coming…Starting out by figuring what rate they need to set (and they want the maximum increase on that rate BTW); that’s totally backwards to the taxing body budget process.  Housing market values going down isn’t how it works either; it’s EAV that counts, and that went up 6%.

1. Figure out how much money you need for the fiscal year. That’s the levy.
2. Divide that into the EAV of the district. That EAV is set, and that information is provided by, the Township Assessor.
3. That gives you the rate.

Even if the rate stayed the same, their revenues would increase about 6%. Asking for the maximum increase in the rate first doesn’t make sense.  How much money do you need? Did they come up with a hard figure for how much they need to operate 58 next year or not?

If 58 does not know, they need to figure it out before the current budget expires on June 30, 2009. Did they produce a proposed budget yet?  The 11/10 Budget workshop didn’t have that on it’s agenda, and the 12/1 workshop has no agenda on line.  There’s no clue how much money they will need (well there is, keep reading) so why are they talking about rate?

The 2008-2009 budget showed revenues of about $52 million and expenditures of about $56.8 million. The hole is in operations and maintainance to the tune of $4.2 million (see page 22 for the summary). On top of that there’s no future looking budget planning at all; see the following pages, they are all blank.  If they’re doing it, it’s a well kept secret.

That’s a deficit that has to be addressed, and a lack of fiscal planning that has to start.

If Scott O’Connell has caused that $4.2 million budget hole, or single handedly prevented any fiscal long term planning by asking about 15 cent FOIA copies then hang him out to dry and get on with it, but it doesn’t seem like SO’s actions are of any consequence when stood up next to the bigger problems 58 is facing.  And the school yard back and forth about whether or not he’s wasting everyone’s time wastes everyone’s time.  Last time I checked board members are allowed comments, so do this: listen politely, and when he’s done thank him and move on.  That has seemed to be impossible, up to and including holding special meetings to censure O’Connell, which didn’t do anything but waste even more time.

Tangential note: From what I read, 58 seems incapable of filling simple FOIA requests.  Rather than dig in their heels every time Scott O’Connell asks for some information, just give him the keys to the file cabinet and let him go nuts.  Quit making a big deal mountain out of this mole hill.  Next…

Village staff put their shoulders to the stone and pushed out a 5 year budget projection in a couple months. It wasn’t easy, but they did it.  Public Works pushed their projections even further out into the future so budgets can be effectively planned.  Is it perfect?  No, but it at least provides some clue as to where the village is going.  Staff also combed the 09 budget a couple times so far looking for where they could save a couple bucks.  They made some hard decisions and council is making some hard decisions.

Beyond ensuring good educations for our kids, the needs of the district are very similar to the needs of the village.  They both have tangible property that needs maintaining and improving, they both have large personnel expenses, and spiraling costs of energy and health insurance.  District 58 has to have a new budget in place by July 1, 2009.  That’s six months away.  As the Village flies, that’s time enough for a budget, a five year budget plan, and a five plus year capital projects plan.  If we don’t have a school board willing to go there, and if we don’t have the staff willing to get us there, then maybe it’s time for wholesale change.

58 let a $4.6 million deficit slide this budget year.  They didn’t hide it; right at the top of page one it says:

Unbalanced budget, however, a deficit reduction plan is not required at this time.

Okay, so if it’s not required for this current year, wouldn’t it be at least prudent to think about it for the coming years?  Isn’t that a reason to look at trimming costs or increasing taxes?  Where was that talk?  Cunningham has had enough, and simply wants to move forward.  That’s one.  Do I hear a second?

Next guy that starts being a big meanie has to go sit in the corner.  Quit bickering and get to work; that line seems to be forming behind Cunningham.

Advertisements

10 Responses to “Fiddling Around While 58 Burns?”

  1. C. Grammich Says:

    “a lack of fiscal planning that has to start”

    Do you mean “stop”?

    Any idea what have been the budgeted and actual deficits (or surpluses) for recent years? And how O&M has changed over time?

  2. markthoman Says:

    LOL. Yes the lack of planning has to stop, the long term planning has to start. You know, I always click the Edit button, and it never does…

    No idea of the history of 58 budgets and category expenses, they are not on line.

  3. C. Grammich Says:

    DGReport last summer noted the district had about $2 million more in revenues than it had anticipated for FY08 (see here ).

  4. C. Grammich Says:

    Whoops, I meant see here.

  5. C. Grammich Says:

    No, I did not mean to hyperlink (for emphasis or anything else) the entire previous comment. Yes, my html skills are, um, lacking.

  6. Art Jaros Says:

    Per the above: “The good news just keeps coming…Starting out by figuring what rate they need to set (and they want the maximum increase on that rate BTW); that’s totally BACKWARDS to the taxing body budget process. Housing market values going down isn’t how it works either; it’s EAV that counts, and that went up 6%.

    1. Figure out how much money you need for the fiscal year. That’s the levy.
    2. Divide that into the EAV of the district. That EAV is set, and that information is provided by, the Township Assessor.
    3. That gives you the rate.”

    Well, actually, Mark, neither the tax rate nor the EAV is “what counts” if I understand correctly what you mean by “what counts.”

    What counts from the government’s standpoint is the amount of tax dollars, not the rate or the EAV. What counts from the property taxpayer’s standpoint is also the amount of tax dollars, not the rate or the EAV (except that if EAV reflects true value, then the property owner knows whether his property is going up or down in true worth just by looking at the AV on his tax bill).

    Taxing bodies that are subject to the tax cap, like D58, do NOT generally need to worry about either tax rates or EAV (except for political, not financial or legal, reasons)–unless statutory limits are in danger of being “bumped” (see below). They need to determine the amount of tax dollars necessary to make ends meet based upon projected (budgeted) dollar outlays and non-tax revenue sources.

    Because D58, like D99 and the park district, is subject to the Illinois’ tax cap law (“PTELL”), the tax levy process goes substantially like this:

    1) The taxing body (i.e. Board) levies by adoption of an ordinance no later than a legal deadline late in the calendar year a dollar amount of taxes and DOES NOT set a tax rate. When you study a levy ordinance, you’ll actually see that there is a separate levy for various funds set out on a fund-by-fund basis and then the ordinance aggregates the dollar amount of those fund-by-fund levies. For a non-home rule unit of government like D58, a levy can be made only if state law authorizes it and statutory authorizations are generally, if not always, authorized for a specific “fund” (and the the lawful uses of which are specified by the law). The Board can levy any dollar amount, up or down from the prior year dollar amount of taxes it wants.

    2) However, if the amount of dollars levied goes UP “too much,” the County Clerk is responsible during the following Spring-time for reducing the amount of the dollars levied to the legal maximums. There are two types of legal maximums that the County Clerk is legally required to enforce:

    a) the statutory tax rate maximum applicable to the levy for a particular fund (note: not all authorized fund levies have a maximum legal tax rate). To enforce the fund levy rate maximums for those funds that have them, the County Clerk computes the provisional rate for each fund’s levy (included in the taxing body’s levy ordinance) implied by 101% of the tax levy by dividing that amount by the EAV; the clerk then rounds UP the tax rate by dropping off the smallest decimals in accordance with a particularly arcane statute that so provides. If that provisional rate exceeds the maximum, then the rate is reduced by the County Clerk to the statutory maximum for that fund and the dollar amount of the levy as extended is reduced to correspond to the maximum rate. Only in this situation where the Clerk reduces the amount of the dollar levy does the tax rate matter from the taxing body’s legal and financial standpoint. The sum of all of the tax dollars levied for tax capped funds, as so limited by maximum fund rate, are then aggregated and subject to the second limit (which is b) below which now follows):

    b) The tax cap maximum applicable to the aggregate of all separate fund levies which are subject to the tax cap (usually, all levies except debt service levies approved by referendum). In contrast to the tax rate limits, the tax cap limits the amount of the overally DOLLAR INCREASE from year-to-year (except for dollar levies for the occasional non-tax capped fund). The tax cap law does not impose a maximum rate even though the mechanics by which the maximum allowable DOLLAR INCREASE is enforced is through the computation each year of a “limiting rate.” (The failed referendum sought to suspend and would have permanently reset this very important limiting rate which is of considerable protection to and for property taxpayers). The tax cap law works like this:

    i) Take the prior year tax capped amount of dollars levied as extended by the County Clerk and inflate those dollars by a published CPI factor not in excess of 5%. (That’s the same published factor which I discovered that the prior D58 staff got wrong (to its considerable embarassment)and had already fed to its pre-O’Connell Board which Board uncritically accepted going into the last referendum). This is the maximum amount of tax-capped dollars that can be imposed and allocated to existing (“old”) property. Divide this amount by the current year’s EAV of “old” property to get the “limiting rate.”

    ii) Add to this CPI-increased dollar amount for old property an additional dollar amount of taxes from newly constructed and/or newly annexed property that came into the tax base during the year computed by multiplying the limiting rate time the taxable value (EAV minus exemptions)of such new property .

    iii) If the combined amount under i) and ii) above (the tax capped maximum) exceeds the combined amount of the rate-limited levies for such tax capped funds under the first limit (namely, a) above), then the overall dollars levied are reduced to comply with the tax cap maximum and the rates for various fund levies are adjusted downward to conform.

    3) To the finalized amount of the tax capped dollar levies as extended are added fund levies that are not subjected to the tax cap (for example, referendum-approved debt service levies to pay the principal and interest on bonds). The County Clerk likewise computes the rate for each of these levies.

    4) The sum of the rates for all funds as so limited and adjusted by the County Clerk is then transferred onto each property taxpayer’s own tax bill issued by the County Collector (who is the same person in DuPage as the County Treasurer, wearing “two hats”) and used to compute each taxpayer’s dollar share of the overall dollar amount of taxes for that taxing unit by multiplying the aggregate of those finalized tax rates by the taxable value (EAV minus exemptions) of the property owner’s real estate.

    That’s basically how it works. (I left out the complications and details added by the presence of one or more TIF districts!).

  7. Art Jaros Says:

    Correction: under point iii), the word “exceeds” must be replaced by “is less than”.

  8. Art Jaros Says:

    Here’s an improved, slightly amplified version, Mark, that can serve to replace #7 and #8 above:

    [Mark writes] above: “The good news just keeps coming…Starting out by figuring what rate they need to set (and they want the maximum increase on that rate BTW); that’s totally BACKWARDS to the taxing body budget process. Housing market values going down isn’t how it works either; it’s EAV that counts, and that went up 6%.

    1. Figure out how much money you need for the fiscal year. That’s the levy.
    2. Divide that into the EAV of the district. That EAV is set, and that information is provided by, the Township Assessor.
    3. That gives you the rate.”

    Well, actually, Mark, neither the tax rate nor the EAV is “what counts” if I understand correctly what you mean by “what counts.”

    What counts from the government’s standpoint is the amount of tax dollars, not the rate or the EAV. What counts from the property taxpayer’s standpoint is also the amount of tax dollars, not the rate or the EAV (with the caveat that if EAV reflects true value, then the property owner also knows (in addition to his tax dollar burden) whether his property is going up or down in true worth just by looking at the valuation shown on his tax bill).

    Taxing bodies that are subject to the tax cap, like D58, do NOT generally need to worry (from financial and/or legal standpoints affecting the District’s operation) about either tax rates or EAV (except for political reasons)–unless statutory limits are in danger of being “bumped” (see below). They need to determine the amount of tax dollars necessary to make ends meet based upon projected (budgeted) dollar outlays and non-tax revenue sources.

    Because D58, like D99 and the park district, is subject to the Illinois’ tax cap law (”PTELL”), the tax levy process goes substantially like this:

    1) The taxing body (i.e. Board) levies by adoption of an ordinance no later than a legal deadline late in the calendar year a dollar amount of taxes and DOES NOT set a tax rate. When you study a levy ordinance, you’ll actually see that there is a separate levy for various funds set out on a fund-by-fund basis and then the ordinance aggregates the dollar amount of those fund-by-fund levies. For a non-home rule unit of government like D58, a levy can be made only if state law authorizes it and statutory authorizations are generally, if not always, authorized for a specific “fund” (and the the lawful uses of which are specified by the law). The Board can levy any dollar amount, UP or DOWN from the prior year dollar amount of taxes it wants. The Board also knows (or should know) that by statute the levy dollar amount is automatically increased by 1% by the County Clerk when the tax levy is “extended.”

    2) However, if the amount of dollars levied (including the 1% addition) goes UP “too much,” the County Clerk is responsible during the following Spring-time for reducing the amount of the dollars levied to the legal maximums. There are two types of legal maximums that the County Clerk is legally required to enforce:

    a) the statutory tax rate maximum applicable to the levy for a particular fund (note: not all authorized fund levies have a maximum legal tax rate). To enforce the fund levy rate maximums for those funds that have them, the County Clerk computes the provisional rate for each fund’s levy (included in the taxing body’s levy ordinance) implied by 101% of the tax levy by dividing that amount by the EAV net of exemptions; the clerk then rounds UP the tax rate (to the nearest 1/10,000 per $100 of AV) by dropping off the smaller decimals in accordance with a particularly arcane statute that so provides. If that provisional rate exceeds the maximum rate contained in the statutory section applicable to that fund’s tax levy, then the rate is reduced by the County Clerk to the statutory maximum for that fund and the dollar amount of the levy as extended is recomputed in order to reduce it to correspond to the maximum rate. Only in this situation where the Clerk reduces the amount of the dollar levy does the tax rate matter from the taxing body’s internal legal and financial standpoint. The sum of all of the tax dollars levied for tax capped funds, as so limited by maximum fund rate, are then aggregated and subject to the second limit (which is b) below which now follows):

    b) The tax cap maximum applicable to the aggregate dollar amount of all separate fund levies which are subject to the tax cap (usually, all levies except debt service levies approved by referendum). In contrast to the fund-specific tax rate limits, the tax cap limits, not the rate and not a particular fund, but rather the amount of the overall DOLLAR INCREASE from year-to-year (except for dollar levies for the occasional fund which is exempt from the tax cap–these may be referred to as non-tax capped funds). The tax cap law does not impose a maximum rate even though the mechanics by which the maximum allowable DOLLAR INCREASE is enforced is through the computation each year of a “limiting rate.” (The failed referendum sought to suspend and would have permanently reset this very important limiting rate which is of considerable protection to and for property taxpayers). The tax cap law works pretty much like this:

    i) Take the prior year tax capped amount of dollars levied as extended by the County Clerk and inflate those dollars by a published CPI factor not in excess of 5%. (That’s the same published factor which I discovered that the prior D58 staff got wrong (to its considerable embarassment)and had already fed to its pre-O’Connell Board which Board uncritically accepted going into the last referendum). This is the maximum amount of tax-capped dollars that can be imposed and allocated to existing (”old”) property. Divide this amount by the current year’s EAV net of exemptions of “old” property to get the “limiting rate.”

    ii) Add to the amount deteremined in i) (namely, the CPI-increased dollar amount for old property) an additional dollar amount of taxes from newly constructed and/or newly annexed property that came into the tax base during the year computed by multiplying the limiting rate time the taxable value (EAV minus exemptions)of such new property .

    iii) If the combined amount under i) and ii) above (the tax capped maximum) is less than the combined amount of the rate-limited levies for such tax capped funds under the first limit (namely, a) above), then the overall dollars levied are reduced to comply with that tax cap maximum; the rates for various fund levies are adjusted downward to conform.

    3) To the finalized amount of the tax capped dollar levies as extended are added fund levies that are not subjected to the tax cap (for example, referendum-approved debt service levies to pay the principal and interest on bonds). The County Clerk likewise computes the rate for each of these levies.

    4) The sum of the rates for all funds as so limited and adjusted by the County Clerk is then transferred onto each property taxpayer’s own tax bill issued by the County Collector (who is the same person in DuPage as the County Treasurer, wearing “two hats”) and used to compute each taxpayer’s dollar share of the overall dollar amount of taxes for that taxing unit by multiplying the aggregate of those finalized tax rates by the taxable value (EAV minus exemptions) of the property owner’s real estate.

    That’s basically how it works. (I left out the complications and details added by the presence of one or more TIF districts!).

  9. C. Grammich Says:

    While I agree with many points in the original post about the need for better planning, there also might be limits to the parallels. The children who will be in D58 pre-school five years from now, and even some who might be in kindergarten, haven’t been born yet. It’s even tougher to predict the number of children who might have special needs (e.g., learning disabilities, limited English proficiency), much less what mandates or funding might apply to them. No, neither of these additional points negates yours about capital planning.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: