District 15 looks again at borrowing millions

Officials in Palatine Township Elementary School District 15 want to issue bonds to fund $25 million of an estimated $119 million plan to make needed improvements at its buildings.

In 2010, District 15 wanted to borrow $27 million to pay for building improvements and operational costs. But residents who opposed the bond issuance challenged the district. They got 7,500 people to sign a petition demanding a referendum on the issuance of the bonds, and residents voted the bond issue down by a ratio of about 2 to 1.

This time around, however, District 15 can issue the bonds without voter approval as long as the amount is under a predetermined borrowing ceiling because the bonds the district is looking at issuing would fund repairs deemed mandatory by the state, school officials said.

Nonetheless, some residents and officials are raising concerns over the way District 15 is planning to pay for the mandatory safety repairs that include electrical, plumbing, roofing and parking lot projects. And they complained that the district unveiled the impact the proposed bonds would have on taxpayers at a special meeting rather than a regular meeting.

“The (Aug. 24) meeting was a special meeting with very low attendance,” said District 15 resident Len Green.

Green was on a community committee that looked at plans on the life-safety study, and he said the district initially did a good job of sharing study findings at meetings that were well-publicized.

Several people have said the district is only looking at a solution to paying for the highest-priority items, expected to cost $25 million. That leaves $94 million, or about 79 percent, of the repairs that the study said need to happen over the next five years without a funding source.

“The board needs to speak more holistically about the information and talk about the $119 million over the long term rather than the $25 million in the short term,” Green said. “The real picture is five times the $25 million they're talking about.”

The state requires the high-priority items identified in the study be fixed within two years, and the less urgent items must be completed within five years, officials said.

Superintendent Scott Thompson said the board doesn't have a plan yet for the other $94 million in recommended repairs. And, he said, the cost of those items could change.

“The committee has recommended $119 million worth of work, and to make a plan to take care of the ‘A' items right away, and then figure out how to take care of the rest,” Thompson said. “We don't know exactly what the long-range plan will be.”

The district does have money in a reserve fund that could cover some of the cost. The Illinois State Board of Education recommends a minimum reserve of at least 25 percent of the budget, or enough to cover three months of expenditures. District 15 has more than that, but school officials say they don't want to spend that down with the state budget uncertainty.

“My recommendation was not to use fund balances because those are needed when the state makes changes,” Thompson said. “I don't think it's wise to wipe those out.”

And Michael Adamczyk, chief school business official, said spending that money could affect the school district's financial profile and hurt its solid credit rating.

But board member Manjula Sriram said the board should look at spending reserves, as borrowing money also could affect the credit rating.

“It needs to be balanced to see how much we can take out of reserves without affecting our credit rating,” said Sriram, who often is at odds with other board members.

The chart that shows the repayment plan has not yet been put up on the district's website for the public to see. But if the district does issue the life-safety bonds, and repay them on a 20-year plan as Adamczyk has recommended, taxpayers' payments would start lower and balloon with time.

“We really want to impact taxpayers as little as possible for the first few years, and when our old debt retires, we'll increase the amount they're paying (on the new debt),” Thompson said.

With the suggested plan, the impact on a $250,000 house would be $17 for the 2015 tax year increasing to $58 by 2023 and $68 by tax year 2034, for a total of $937 over the 20-year repayment period.

The plan's impact on a $400,000 house looks similar, starting out at $27 for the 2015 tax year, $45 by tax year 2023 and $112 for tax year 2034. The impact totals $1,545 over 20 years.

As the payments increase, Sriram said, they could become problematic for residents on a fixed income.

Green said more community members should come to the meetings, learn about the board's decisions and understand how those decisions will affect them as taxpayers.

It remains unclear what the exact cost of the mandatory safety projects will be, as the board is waiting for final approval of its plan from the state. Thompson said he expects to get approval from the state in late September or early October.

Then, he said, the project will go out for a competitive bid in November.