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PUBLIC HEARING FOR THE ADOPTION OF 2012 CERTIFICATE OF LEVY

Chris Whelton, Assistant Superintendent for Finance and Operations, explained at the November Board of Education meeting that each Illinois school district is required to certify annually and return to the respective county clerk, on or before the last Tuesday in December, its Certificate of Tax Levy.

Prior to the adoption of its aggregate levy, the Board of Education must estimate the dollar amount of the aggregate levy for the current year. If the aggregate levy is more than 105% of the prior year's extension, a notice must be published in the newspaper indicating that a public hearing will be held to approve the proposed tax levy increase. Although this year District 205’s proposed levy will not exceed 105% of last year's extension, it still published the notice of the proposed tax increase in the Elmhurst Press on December 7, 2012. The resolution, which was approved on November 13, 2012, is posted on BoardDocs and available at this link.

The December 18, 2012, presentation to the Board included a tax levy timeline, a discussion of the Property Tax Extension Limitation Law (PTELL), commonly called the “tax cap,” and a description of which revenue sources fall under the tax cap and which do not. A review of the Consumer Price Index (CPI) over the past ten years revealed an average of 2.49%, about half of the 5% limit set by PTELL. Over the past five years, CPI averaged 2.28%, which has created tremendous financial stress for suburban school districts.

Mr. Whelton also discussed the relationship between a change in Equalized Assessed Value (EAV), the tax rate and CPI. “Currently, we are estimating a 9% overall decrease in EAV. New construction is exempt from the tax cap, and therefore our extension can exceed the 3.0% CPI increase, but that is an unknown factor at this time. EAV has been dropping dramatically over the past five years, going from a high of nearly $80.7 million in 2007 to a low of $15.4 million (excluding Elmhurst Memorial Hospital) in 2011.”

Although fiscal years 2011 and 2012 had better-than-expected results, giving the District a little cushion to avoid short-term borrowing for its low cash flow months of April and May, revenues are diminishing at the state and federal level, while overall expenditures are increasing.

“On the expenditure side, staffing makes up 80% of our budget. The needs of our students and our enrollment drive our staffing, and enrollment continues to increase,” noted Mr. Whelton. “In providing a high-quality educational program for District 205 learners, we feel that we need to prepare students for college and career readiness. To that end, we need to invest in technology infrastructure. We are taking a measured approach in planning and preparing for the future where, at some point, our students will have a 1:1 technology device. There is a ton of groundwork that needs to be laid for this project. But it starts with an increase in technology spending on infrastructure over the next two years,” said Mr. Whelton.

“Our job is to provide an appropriate educational program for each and every child that resides within our boundaries and walks through our doors. On a per pupil basis, we receive a smaller percentage from the state and federal government each year for special education, while at the same time, these costs are escalating.

“One area that is increasing at a rate less than Consumer Price Index is wage rates or salary increases for the staff. The staff and Board of Education have recognized and acknowledged the financial condition of the school district. We are very fortunate to have a staff that is helping to keep our escalating expenditures down. Last year, the teachers’ salaries were frozen, and this year they are at 50% of CPI with no step. Administrators were also frozen last year. This year, any administrator that was frozen for the past two consecutive years received a CPI increase of 1.5%. All other administrators received a 50% of CPI or 0.75% increase. Custodians and maintenance staff received an increase of 75% of CPI. PSRP or support staff received an increase of 75% of CPI. So the Board and staff have agreed to wage increases of less than CPI or inflation.

“We are expecting a bill to pass in the first week of January that will eventually shift the Teachers Retirement System cost to the local school district. The current bill starts with a .5% shift in the first year or $258,000 here in District 205; 1% in the 2nd year, which translates to $516,000; 1.5% in the 3rd year at $774,000; 2% in the 4th year equals $1,032,000. And these expenditure increases would continue in this pattern up until the entire normal cost is shifted to the local school districts. This could be approximately 8% or $4,000,000 per year,” Mr. Whelton explained.

“The 2012 tax levy that we are recommending tonight will provide a tax extension that will increase in accordance with the property tax extension limitation of CPI, plus new construction. Regardless of the levy amount, the District will only receive what is allowed under the Property Tax Extension Limitation Law (PTELL). If new construction is $16 million, the extension for capped funds will increase 3.8%, and the overall extension will increase will be 3.96%. If the new construction is $45 million, the extension for capped funds will increase 5.25%, and the overall extension will increase by 5.28%.

“So even though we are levying an overall increase of 5.37%, we expect to receive less than that increase, depending on the amount of new construction.

“Most existing taxpayers will see the CPI increase of 3% in their tax bill, the percentage beyond 3% will be derived from new property/new construction that is added to the District’s tax rolls. On an existing taxpayer with $300,000 house, this would be an annual increase of $133.59.

“Again, the 2012 tax levy that we are recommending tonight will provide a tax extension that will only increase in accordance with PTELL limitation of CPI plus new construction. Regardless of the levy amount, the District will only receive what is allowed under this law.”

In late March, the District receives the final EAV, tax rates and tax extension figures from DuPage County. The first installment of the 2012 taxes is received in June 2013 (the final month of Fiscal Year 2013), and the second installment is received in September 2013. For this reason, the 2012 extension is more closely related to Fiscal Year or budget year 2014, because the first installment is not received until the very end of FY13.