D86 Board Approves Flat Tax Levy

The District 86 Board of Education voted Monday night to approve a flat tax levy, meaning the district will collect next year the same amount they are collecting this year instead of extending the collected amount by at least 1.7 percent as allowed by law.

Board members voted 4-3 for the flat levy, with Victor Casini, Ed Corcoran, Board President Claudia Manley, and Richard Skoda casting the yes votes. Kay Gallo, Michael Kuhn and Jennifer Planson voted against the flat levy.

The estimated levy would collect $72.6 million from residents via property taxes. The final levy amount will be presented at the board's Dec. 16 meeting.

“We have the skills and resources in the district to continue down the path of educational excellence and provide a zero-percent increase to all taxpayers of District 86,” Board President Claudia Manley said in a statement Tuesday. “We can create a win-win scenario in 2014 for the students and the taxpayers with efficiency gains and a reasonable approach to labor issues which are more than 75 percent of our costs.”

The effects of a flat levy for Fiscal Year 2015 were explained by Michael Frances of PMA Securities, Inc., the district’s financial advisor, during a Nov. 12 meeting of the board’s finance committee.

A flat levy for FY 2015 would leave the district with $22.8 million at the end of that fiscal year (27.1 percent of projected expenditures), and if followed by continuous max levies, with $37.6 million at the end of FY 2019 (42.5 percent of projected expenditures).

That balance does not include tax revenue that arrives in June but is meant for the following fiscal year.

PMA projected that a maximum levy extension in FY 2015, which would extend the total amount of property-tax dollars District 86 collects by 1.7 percent (the 2012 Consumer Price Index) over the levy approved last year, would lead to the district’s fund balance at the end of the 2014-15 school year containing about $23.5 million (27.9 percent of expenditures), and about $43.7 million at the end of FY 2019 (49.4 percent of expenditures) if max levies are approved each year in between.

Board member Ed Corcoran said after that finance committee meeting he supported the idea of a flat levy for this year. 

"We had a budget surplus last year and under the zero scenario we believe we would have a budget surplus next year," Corcoran said.

Community member Sue Pircon took issue with some of the assumptions included in the PMA projections, including 2 percent annual salary increases for teachers from FY 2016 to FY 2019, increases that must be negotiated, and the assumption that there will be no changes to the state’s pension-funding model.

Among the changes discussed by state lawmakers has been passing on more pension responsibility to school districts. Frances said Nov. 12 that District 86 should be keeping an eye on Springfield, especially as a wealthy district who would likely be among the most affected by such a change.

Pircon said the 2 percent teacher raises would not attract the best educators to the district, and that a flat levy can’t be justified based on the current political climate at the state and federal levels.

“I find the expenditure assumptions on the PMA model almost comical,” Pircon said.

She later added, “You have a responsibility to the students, parents and taxpayers. District 86 is one of the top districts in the state. We live here because of the schools. Don’t screw them up.”

School district business managers often recommend max levies, because any levy can only be extended based on the prior year's levy. So any money not collected one year affects the amount that can be collected each year to come.  

It is possible for taxing bodies to collect a max levy to keep its collecting power maxed out while also going a little easier on taxpayers. Lake Zurich Community School District 95 board is preparing to levy to the max this winter, according to the Chicago Tribune, but is planning to abate a portion of that collected amount and give it back to taxpayers.

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