Tax levy essential, but not always an easy decision for board members

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Tax levy essential, but not always an easy decision for board members

March 18, 2019 - 23:07
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At a glance:

  • The purpose of school district tax levies: School funding depends on them.
  • The reasons several board members have voted against levies: An effort to encourage fiscal restraint.
  • The reasons the majority of board members regularly vote in favor of levies: Property taxes are the biggest source of school funding, and without that revenue, schools would struggle.

The Illinois School Code requires all school boards to pass a levy each fall to determine how much money is needed to operate schools.

“Each district shall ascertain as near as practicable, annually, how much money must be raised by special tax for transportation purposes if any and for educational and for operations and maintenance purposes for the next ensuing year,” according to Max Weiss of the Illinois State Board of Education. 
 
“If there’s no valid levy, we would not extend taxes,” said Margarett Zilligen of the real estate and tax office of the Cook County Clerk’s Office. The State of Illinois funds less than one-third of the cost of education. To keep schools open, property taxes are needed to make up the difference.
 
But several elected officials decided to vote against school levies. 
 
Annette Bannon and Beth Larocca of District 233 voted for the Homewood-Flossmoor High School 2018 preliminary levy in November. When the final vote on the levy was taken in December, Bannon and Larocca voted 'no' to make a statement. The vote was 5-2. Bannon also voted 'no' on the 2017 levy.

Merle Kimbrough-Huckabee, a board member in Flossmoor School District 161, has voted no on the district’s levy each year during her four-year term to raise the issue of the district’s cash surplus.
 
To the average person, a tax levy doesn’t mean much; just another level of government bureaucracy.
 
Yet a tax levy is an absolute necessity. A tax levy is the way taxing bodies — villages, parks, libraries and schools — get money from property owners to help fund their operations. 
 
The levy is determined through a budget process. Once the taxing district sets a budget, it can say how much money it will need for the following year’s operations. 
 
That number is sent to the Cook County Clerk’s Office where the tax rate is set. The county adjusts for an aggregate number, depending on fund restrictions, and the current property tax freeze imposed by the State of Illinois. This year property tax increases were held to 2.1 percent, equal to the Consumer Price Index.
 
When the final levy number is determined by the Cook County Clerk’s Office it is sent to the Cook County Treasurer’s Office for inclusion on tax bills.
 
The majority of tax bills in Homewood and Flossmoor fund schools. The rates are high because the state provides less than one-third of the cost for education putting the heavy burden on property owners. The problem isn’t something the school boards can fix, but they are working with local legislators Sen. Toi Hutchinson, D-Olympia Fields, and Rep. Will Davis, D-Homewood, for property tax relief. The school boards in Homewood District 153, Flossmoor District 161 and Homewood-Flossmoor High District 233 all voted to apply for tax grants from the state. H-F was approved for the $1.96 million grant. To receive the grant, the board abated $2 million in taxes.

Voting 'NO'
Bannon told the Chronicle her vote against the 2018 levy is not “forever. I voted no because I would like to see that we’re a little more fiscally responsible. We’re not irresponsible, but I’m trying to balance our needs here with our community.”
 
Larocca said she voted no, but knew the levy would pass. 
 
Both say the school board should be making cuts to help reduce taxes.
 
“We have to pass a tax levy. We don’t have to pass it for that exact amount. So my point is, I think we need to look at ways to save money,” Larocca said. She thinks the district could increase some class sizes, make budget cuts and she likes District 233 candidate Jimo Kasali’s suggestion that Districts 153, 161 and 233 look at the possibility of merging.
 
She believes the school board’s $2 million tax abatement isn’t going to help much, because the district’s levy calls for $600,000 to $800,000 collected in taxes. The board agreed Feb. 19 to accept a $1.96 million state grant for property tax reduction in exchange for the abatement.
 
Bannon said the levy is “one of the foundational pieces for taxes in general and our community is speaking loudly about their taxes. We’re not currently financially hurting that I would do something to hurt the children or the school.”

She acknowledged cuts could hurt the district's Standard & Poor's Triple-A bond rating, but she said she's been told a downgrade to a Double-A would be okay for the H-F financial picture. 
 
“Our community is so good because the people are here because they’re so committed to education, which is why H-F has gotten so great, and we have to keep that greatness,” Bannon said, but she believes taxes are a deterrent.
 
Kimbrough-Huckabee told the Chronicle, "I believe taking the stand not to vote on the (District 161) levy as presented or proposed invoked and generated a much needed conversation for our district school board members. This allowed the board to now think of setting a defined amount for reserves and now seek a proposal as to how the fund balance will be spent down to our designated reserve amount.”
 
She said District 161 has a $13 million reserve fund. She said four years ago it was $30 million. She considered it to be too high and argued the district should be spending down its reserves.
 
 “I couldn't again vote on something  (the levy) that no one wasn't going to address that was tied to the fund balance,” Kimbrough-Huckabee said. 

Voting ‘YES’
Those serving in an elected position agree to make major decisions. School board members who have voted for levies say they recognize the heavy tax burden placed on homeowners. Before they vote, they have studied all the needs of the schools provided by the board's budget committee and a review of the levy.

In Homewood District 153, levies have been receiving unanimous support. 
 
“Property taxes are the largest source of our district's revenue making up 70 to 75 percent of our revenue,” said board president Shelly Marks. “We do not have a means of collecting the revenue without approving a levy and we can not fund the education of our students without property tax revenue.  
 
“Additionally, when you vote against a levy or the Consumer Price Index (CPI) annual increase, you have a negative impact on all future levies because each one is based on the prior year so you really impact the district in respect to all future budgets,” Marks pointed out. “A district always has the option to rebate any portion of property tax it collects. I believe that if you don't collect the CPI the impact on an individual tax bill will be small but the congregate of all tax bills will have a hugely detrimental impact on the education of both current and future students.  
 
“Funding our schools by approving tax levies is essential and is in the best interest of our community and our students,” she said.
 
In District 233, the school board collects approximately 61 percent of its revenue through taxes. If the board failed to pass the 2018 levy, it would be out approximately $38 million.
 
Debbie Berman, who has voted for levies since joining the board in 2014, said: “Voting against the levy is not exercising fiscal responsibility, it is fiscal irresponsibility because you are giving up 61 percent of our needed revenue with no alternative source of revenue to replace it. That would have a devastating financial impact on our district.”

She pointed out the board unanimously approved the budget and the initial tax levy. 

"We (on the District 233 board) unanimously approved the budget which was based on the assumption that we would be levying those dollars. We also have approved contracts and other expenditures that are dependent on those funds," said Berman.
 
“We need to work with our state legislators to get Illinois to step up and cover more of the funding.  We did that this year on a small scale with the property tax rebate, but the state needs to do much more to support public education,” Berman said. “But until we are able to get Illinois to pay what it should for public education, we have no choice in Illinois but to rely heavily on local property taxes.”
 
Jody Scariano, who has served on the District 233 board for two decades, said, “I voted  for the tax levy because the academic and programming for our students is dependent on our district approving a responsible levy for funds each year. 
 
“A no vote would destroy the financial stability of our district that has been built over the years,” and could put the district on the state’s financial watch list. The district has a Triple-A bond rating from Standard & Poor’s. Failure to approve a levy “would immediately be catastrophic and in the long-term our high school and school district would become unrecognizable,” Scariano stressed.
 
“I voted for the levy because I want H-F to continue to be its best and provide its best to students,” said District 233 board member Gerald Pauling. “That, of course, requires resources, and the only way to get those resources is through the levy process.  If we do not continue to support our school and provide it the resources it needs, then our students, the school and our entire community will suffer.”
 
Pauling said for months before the board approved a budget and levy, members reviewed numbers provided by the finance committee and business manager.
 
“The budget they presented is conservative and takes advantage of several cost saving opportunities, and the levy they recommended likewise is conservative, in line with the cost of living in our area and in line with what other districts are levying,” Pauling said. “I believe my vote was informed, responsible and — consistent with my fiduciary duty as a board member — in the best interests of the district.”
 
At the Feb. 10 League of Women Voters forum, the 10 candidates running in the district were asked if they would support a levy. Kimbrough-Huckabee said if elected, she would question the H-F levy.

Berman, Pauling and Scariano all said they would continue to support school levies.
 
P. Andrew Lindstom said strong finances in District 233 are essential not just for its operation, but its S&P500 rating.
 
Nathan Legardy said, “We should not do anything that would destabilize our schools” adding, “what needs to be considered are the property values (equalized assessed valuation).”
 
Pamela Jackson said she would study the issue looking at all the data available and Jonathan Cook said he would "follow a board member’s fiduciary duties."
 
Kasali said he wants a tax freeze. Paris Walker believes board members should consider "all factors" when voting "so that we can continue to operate at an optimal level." She, too, argues Illinois needs a new way of funding public schools and promised to work with legislators on finding solutions.