Concerning the proposed property tax levy for High School District 211, the district put together a press release suggesting they’re doing a remarkable job keeping taxes low, and projecting dire consequences should it not continue to collect the maximum permissible levy amount under the tax cap. That prompted me to have a look at the numbers myself using levy data from Cook County and financial data from the district’s website.
For the last seven years ending in 2012, the operational funds’ combined annual levy increase averaged about $5.2 million. Over the same period, on average the total revenue exceeded expenditures by about $10.6 million each year, adding these excesses to an ever growing fund balance. While it’s the district’s policy to maintain an ending fund balance of about one third budgeted expenditures, the balance rose from a reasonable level of $66 million in 2005 to over $148 million in 2012, about $75 million over their policy’s target level.
The district’s strategy is to keep its operational funds’ levy at this excessively high level and take every penny it can under the tax cap, then shift money around to make token reductions to its bond levy giving the appearance of being taxpayer friendly. Rather, it needs to suspend any operational fund levy increase for a number of years to work down this excessive fund balance and reach an appropriate levy level before resuming increases.
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Now, should we be so lucky that the district does decide to keep its publicly stated levy flat it is then vital that it also instructs Cook County to not later add to its levy the additional 3% for “Loss and Cost”, which would otherwise be negated under the tax cap when the districts requests their maximum levy. I’ll bet most of you were unaware that occurred.
To illustrate how this works use the first link below to examine the file “2012_D211_Cook_County_Tax_Ext.pdf”, which was last year’s levy filing with Cook County. See the district’s publicly stated levy request for its Educational Fund of $158,238,011, which was then raised “behind the scenes” by Cook County an additional 3% to $162,985,151 for “Loss and Cost”. But since the district had already requested what it thought to be its maximum increase under the tax cap, which it was, when Cook County later applied the maximum rate under the tax cap it reduced the levy back down to $158,463,663. This extra amount was permitted for so-called “new property” added to the tax rolls, which is exempt from the tax cap.
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Now, should the district this year (or any year for that matter) not ask for their maximum levy amount permissible under the tax cap then this added 3% “Loss and Cost” factor Cook County adds by default may actually stick. Let’s say that the district did not request any levy increase for its new levy. Let us also assume that the CPI used to compute the limiting rate increase under the tax cap was 3%. Let us also assume that the district does not advise Cook County to forgo the adding of 3% for “Loss and Cost”. In this example, the district would give the appearance it was holding the line on tax increases but would still receive a 3% increase behind the scenes when Cook County increases it by 3%.
The whole basis of Cook County adding this extra 3% by default to a taxing body’s non-bond levy (or 5% for any levy to bonds) is to account for people who fail to pay their property taxes, so that the amount of money Cook County collects and remits to the taxing body is at least as much as they originally requested. However, historical statistics by Cook County show that the true “loss” is actually closer to 1% or less. And, and argument could even be made that those “lost” taxes are eventually collected such as from a tax sale of the property in default. This whole practice of “Loss and Cost” additions is also fodder for some savvy lawyers who routinely bring tax objection lawsuits on behalf of certain large property owners in what some would call a “scam”. Any taxing body may lower, or even eliminate, Cook County’s “Loss and Cost” addition as even District 211 did in 2006.
Going back to the issue at hand, District 211’s operational fund balance has grown substantially since 2005 causing it to exceed its own policy by over $75 million. On average, every year for the past seven years it has levied the maximum annual increase at an average of about $5.2 million each year which then added on average about $10.6 million of excess to this fund balance each and every year. The latest audited financial documents from the district used for this analysis were for the year ending June 30, 2012. A new report is due out in about a month, for the year ending June 30, 2013. It is expected that the operational fund excess would then have grown by at least $10 million more. The operational levy level is clearly too high. The operational fund balance is clearly too high. The practice of always seeking every penny available under the tax cap is clearly unwarranted in the case of District 211. I have children attending District 211 and would be among the first to fight for funds that are truly needed. I fail to see the need in this case and am instead rather shocked to see what has transpired financially over these past seven years.
My analysis and copies of the Cook County levy reports can be found here:
https://drive.google.com/folderview?id=0B-NGxr9I3-DDbzQ3bUdTbjVtb0E&usp=sharing
Copies of D211’s Comprehensive Annual Financial Reports can be found here:
