Schools rake in more than voters OK

By Jeffrey Gaunt and Catherine Edman
Daily Herald Staff Writers
Posted Monday, April 10, 2005

Voters who authorized school tax increases have paid hundreds of dollars more each year than they were led to believe, a Daily Herald analysis shows.

A study of 25 tax-rate increases approved by suburban voters during the past five years shows homeowners routinely paid more than most school officials had projected — as high in one case as an average of $435 a year for the owner of a $300,000 home.

That extra comes on top of the hundreds of dollars homeowners already paid after agreeing to a tax increase.

The analysis, which doesn’t apply to districts where voters approved only construction projects, shows tax-rate increases generated millions of dollars more to school coffers than voters — in most cases —were led to believe.

“It has allowed for a misuse of the tax cap law,” said Wayne Wasylko, Lake County’s director of tax extension. “Certain taxing districts reaped a harvest of additional dollars in excess of what the voters approved.”

For example, one district the Daily Herald examined —Libertyville-Vernon Hills High School District 128 — boosted its operating funds by 85 percent in three years after voters approved a tax increase.

This can happen because of a nuance in the complicated state tax cap law, which was created in the early 1990s to shield homeowners from large property tax increases in Cook, DuPage, Lake, Kane, McHenry and Will counties.

The tax cap causes tax rates to drop over time. When voters approve a tax-rate increase, school officials can raise most rates back up to their legal maximums — and then tack on the voter-approved increase. And it allows them five years to do that.

But county clerks say that defeats the purpose of the tax cap. They’ve lobbied state lawmakers, and a bill sponsored by state Rep. Mike Tryon, a Crystal Lake Republican, is being considered in the Illinois House.

If the bill works as intended, tax-rate increases would more closely resemble the way districts pitch them to voters.

“If taxpayers can’t know exactly what they’re going to be paying, it complicates the referendum process,” Tryon said. “If we don’t fix this, the future of all referendums is at stake.”

The bill would apply to all taxing bodies — not just school districts.

Other governments ask for tax increases, too. But those ballot questions generally take another form, such as asking for specific amounts of money or one-year tax cap exemptions.

With schools, it is commonplace to apply tax-rate increases over time.

Additionally, school taxes account for nearly two-thirds of the average tax bill.

Here are some county-by-county examples of where taxpayers were hardest hit:

•The owner of a $300,000 house in Central Unit District 301, based in Burlington, paid $1,023 more to the school district over four years than school projections suggested.

•The owner of a $300,000 house in Libertyville-Vernon Hills Area High School District 128 paid $973 more over five years than projections indicated.

•The owner of a $300,000 house in Naperville Unit District 203 paid $1,541 more over five years than the district campaign projected.

However, not every district took more than it told voters.

The owner of a $300,000 house in Wheeling Elementary District 21 has paid about what the district told voters it would over three years.

In all, the 25 districts examined by the Daily Herald collected $204 million more than most school officials would project.

“The districts should get what people vote on, not what they think they can get out of it,” DuPage County Clerk Gary King said.

School officials in some cases said they were unaware how much a tax increase would net; others said they felt explaining the process to voters would be too complicated. Either way, many school officials said they are merely using everything the law allows to bring in money.

The gap between what school officials estimate the tax increase will cost homeowners and what it could really cost already has taken its toll in Huntley Unit District 158.

In January, school board members acknowledged they had not understood the intricacies of the tax cap formula — or that homeowners would have to pay more than the board had suggested.

The school board unanimously and publicly apologized for failing to publicize accurate information.

A month later, still facing a storm of public resentment, the district’s superintendent and top financial officer resigned. And school officials have yet to collect a dime from the tax-rate increase.

According to the Daily Herald’s analysis, the following districts have been collecting more already:

Glen Ellyn District 41

John Marcheschi knew what he voted for in 2001: a 55-cent property tax increase.

The boost in Glen Ellyn Elementary District 41 was destined for the education fund: to hire teachers, buy classroom supplies and reduce class sizes.

For an extra $531 a year from the owner of a $300,000 house, the district could do it all.

Or so Marcheschi, a District 41 board member, thought.

But from 2000 to 2005, the owner of a $300,000 house paid a total of $1,320 more than school officials said to expect.

Over five years, that homeowner paid $18,455 in property taxes to District 41, while the district forecast a $17,135 bill.

Board President John Vivoda said the cost to taxpayers was greater than what was projected, but that’s because the district’s needs increased.

“The referendum, everything connected with the referendum, was estimates,” Vivoda said.

The district’s actions were all legal and open to public scrutiny, he said.

“Once we got the referendum passed, we were then in the mode of levying dollars,” Vivoda said. “We don’t have huge surpluses. We have added incredible numbers of staff. … If we have maximized our revenue through the referendum, I can assure the taxpayers we are spending the money as responsibly as possible.”

But Marcheschi refused to support the district’s yearly property tax levy after seeing how much the district collected since 2000 because of the tax rate increase.

“A big thing with me is that we have to be open and honest with people,” Marcheschi said. “I voted no for the levy because I don’t think taking more money in than taxpayers expected was being open and honest — and ultimately risks whether we’ll be successful in future referendums.”

Libertyville-Vernon Hills High School District 128

When District 128 officials asked voters for a 36-cent tax-rate increase in 2001, they said it would cost the owner of a $300,000 house $360 more a year.

When the vote was approved, the homeowner paid a total of $11,043 over five years. Using the district’s math, the homeowner would have paid $10,070 — a difference of $973.

“We did take the maximum we were allowed each year,” said Yasmine Dada, assistant superintendent for business. “Each year it’s a discussion with the board of education. It’s not something that is done behind closed doors.”

But district officials still could have better explained the tax increase before the election, Dada said.

“To the taxpayers, yes, perhaps it should have been more specific,” she said, “so they were also aware of what the impact would be down the road. You want to be up front to your community because under the tax cap you are eventually going to have to go for another referendum. Like it or not.”

Before the election, officials said the tax boost would raise an additional $2 million for the district’s education fund. And it has. Every year.

It’s also allowed the district to move cash into other funds.

Between 2001 and 2004 the balance in the tort and liability fund has more than doubled, up to $1.3 million; the operations and maintenance fund balance rose from $5.5 million to $8.5 million; and in 2003 the district added a new $1.1 million lease fund.

Naperville Unit Dist. 203

Voters thought they knew what it would cost to maintain programs in schools and cut District 203’s deficit when they hit the voting booth in 2002.

The owner of a $300,000 house would spend $511 more annually for a 53-cent boost in the education fund rate.

That translates into $21,777 in total taxes paid to the district over five years.

But during that span of time, the homeowner paid $23,318 — or $1,541 more.

Throughout the campaign, officials said they planned to reduce the district’s deficit. But they never explained how an increase in the education fund could lead to higher rates in other funds — and an even bigger tax bill overall.

“In the couple of years prior to the referendum, I was robbing that (education fund) to keep other funds from going into the red,” said Allen Albus, the district’s assistant superintendent for finance. “I distributed that (increase) in a way to get the other funds into the black.”

Albus said trying to project future tax bills is nearly impossible, given all of the variables. And trying to explain those projections to a voting public would be tough, at best.

“I remember one guy (on the referendum committee) saying this won’t make sense to anyone,” Albus said. “So we decided to focus on (telling residents about) reducing the deficit.”

Geneva Unit District 304

In 2001, Geneva Unit District 304 officials had an extremely accurate idea of how much their 30-cent tax-rate increase would cost homeowners.

But nobody told voters that.

At the time, school officials told residents the owner of a $300,000 house could expect $290 annual increases with the tax hike.

That’s what is indicated in both the district’s newsletter and in referendum fliers.

Internal district documents around that time, however, had the district receiving roughly $3æmillion to $4æmillion more per year — for the next five years.

The internal documents, produced in 2001, have proven to be extremely accurate. The district was off at most about $1 million on collections of $40 million in 2004.

The cost to homeowners, however, hasn’t been close.

Over the past five years, the owner of a $300,000 home has paid roughly $1,741 beyond officials’ projections — or an average of $435 more every year.

Had that one-year projection held true, the owner of a $300,000 house would have paid $20,289 over five years, rather than the $22,030 the district actually received.

“It’s pushing boulders uphill trying to get the general population to understand school funding,” said Tricia Stewart, an outgoing school board member. “To try and break it down into small, manageable pieces is extremely difficult.”

Central Unit District 301

In 2002, officials in Central Unit District 301 in Kane County told voters a 30-cent education fund tax increase would cost $290 a year more for the owner of a $300,000 house.

If that were true, the homeowner would have paid $18,182 over four years. The homeowner wound up paying $19,205 — or $1,023 more than projected.

District 301 used the flexibility a voter-approved tax increase provides under the law to also bolster other funds.

Business Manager Ron Cope pointed out the district is growing rapidly, both in the number of new houses and students.

“I’m sure we’re going to be trying to prop up the educational fund,” Cope said. But he added other costs are associated with running a district.

“Transportation routes are going to increase dramatically. We’re going to be building new buildings,” Cope said. “That’s the reason why you don’t see the money concentrated in one (fund) rate.”

Prairie Grove District 46

When Prairie Grove Elementary District 46 in McHenry County asked for a 50-cent increase in its education fund rate, officials say, they had no idea what to expect. They didn’t know the county clerk interpreted the law in such a way that they’d actually get large increases every year.

For five years.

“That’s out of our control,” Superintendent Mary Fasbender said of the clerk’s interpretations.

After the first year, when that became apparent, district leaders held public meetings to alert homeowners they’d pay more than first expected, she said.

“I don’t think anyone in the district at that point in time realized how it would be implemented,” said Cathy Wolfe, the district’s director of business and finance. “Had we known that … obviously we would have shared that information.”

Instead of the $11,385 the owner of a $300,000 house would have paid under the simple formula, the homeowner wound up paying $12,333 — an additional $948 — over four years.

Fasbender said officials did discuss the possibility of not taking all the money they were entitled to under the law, but decided not go that route after speaking with their consultants.

“It was the advice of our bond counsel not to do that,” she said. “We were not in financial black mode, if you will. We were still in the red.”

Wheeling Elementary District 21

Like the other districts, Wheeling Elementary District 21 has collected all of the money the law allowed in the first three years after voters approved its tax increase.

The difference is, unlike the other districts, officials in District 21 told voters up front what they were going to do.

“The commitment that was made with the community was that this would be phased in over a three-year period,” said Daniel Schuler, the district’s assistant superintendent for planning. “We’ve accessed what was available to us under the cap.”

Of course, the law allows districts to apply the tax increase over five years. District leaders say they will leave money on the table in the fourth and fifth years.

Thus far, the owner of a $300,000 house has paid $11,200 since 2002 — roughly what was promised.

“There have been some districts who really haven’t gone the whole way in trying to communicate with their community,” Schuler said. “As long as it’s properly communicated to the community, I think you’re on solid ground.”