Local School Finances – How to Probe

Crack researcher Susan Handelsmann of rural Woodstock has put together a “how to” piece about figuring out what your school board has done with school finances.

The McHenry Grade School Board before the last election.

The McHenry Grade School Board before the last election.

It is presented below for McHenry Grade School District 15, but can be adapted for any Illinois school district.

1. Equalized Assessed Value (EAV) for District 15 can be found here (around page 14):
Assessed value in McHenry Elementary School District 15 for

Assessed value in McHenry Elementary School District 15 for 2012, 2013 and 2014.  Taxes are collected on assessed value in the year after the assessment year.

  • 2012:  $988,568,670
  • 2013:  $873,569,186
  • 2014:  $838,788,387
You can see the downward trend. This is the denominator in the tax rate equation [the bottom number], so the lower the EAV, the HIGHER the TAX RATE.
[I would add that under the Tax Cap, tax rates were pushed down as the increases in assessed valuation exceeded the rate of inflation.  That means the tax rates of most tax districts fell well below the limits imposed by state law.  The impact since property values plunged has been that most tax districts ask for the maximum increase allowed, that is, the entire increase in the Consumer Price Index (CPI) and get it.  That pushes the tax rate higher and higher.]
2. Note that in McHenry there is a Tax Increment Financing District (TIF) district skimming off the taxes on nearly $3 million of EAV.
School district boards are nearly the only defense against TIFs. You must become well-versed on this topic if you are not already.
3. In order to research bond details, bond debt totals and statutory debt amount caps, you may look in two places.
These are great resources for all manner of financial research on school spending.
A) emma.msrb.org    that is the muni bond posting site. The McHenry Grade School district is CUSIP number 580781
    enter your CUSIP (Committee on Uniform Securities Identification Procedures) number in search box. this will display debt instruments of this issuer.
    Click on one of the bond issue, for example “TAXABLE GO REFUNDING BONDS SERIES 2010B
    in the grey toolbar above issue details select “official Statements’
    Click on the pdf to download it.
It is a long document but once you get used to looking at them, you will find it less daunting.
The first part of the document has debt amounts and debt ratios (grade and high schools are limited by statue to borrow only 6.8% of EAV (13.6% for unit school districts).
But there are many loopholes for borrowing and schools use them a lot.
Further in document you should see all details of all outstanding debt.
**NOTE! the outstanding debt listed in statutory debt limit calculation is PRINCIPAL ONLY!!
SO if you see a bond with the same principal amount as when it was issued, check out how much unpaid interest may have accrued. This is Phantom Debt and it is very popular with schools to hide the true picture, and evade statutory borrowing caps.
This is where you will find budgets filed for the past several years.
You will want to look at these two documents for your school:
Click the year you want, school districts, then scroll down to your school. I think it is: 44-063-0150-04_AFR14.XLS
There are many page tabs with relevant data.
For example: PCTC_OEPP page 28-29 (you have to scroll to the right on bottom tabs).
This gives Operating Expense Per Pupil.
Yours is $12,007. State average is around $10,000.  ( *Note the number includes certain debt service)
4. Real estate data: See
Many sold homes in the under $20,000 price range.
This drags down EAV, and everyone appeals assessments, and the vicious downward cycle continues.
*Note that as our tax rates are 2-3 times that of national average, and at least double Chicago’s property tax rates, people may have trouble qualifying for a conventional mortgage. look at median household income and median home value differentials on a mortgage calculator.
Also calculate the amount of median household income spent on a median value home’s property taxes annually, as a percentage of income.
It is a stunning, horrifying figure when compared to national averages.
It means that families have to divert a huge chunk of household income to pay annual property taxes, and that money is then not available for other spending or saving categories…but almost anywhere in America that household would be paying only 3.6% of their household income to property taxes. (In Woodstock D200, 14% of household income must go to pay property taxes).
5. Woodstock is in a similar death spiral of property values. If you can find a winning formula to conquer school board runaway spending we might try it out here, too.

= = = = =
See also The School Employees on the McHenry Grade School Board


Comments

Local School Finances – How to Probe — 20 Comments

  1. As long as school board members continue to bow to the ‘strike’ weapon of unions due to the pressure of parents who demand uninterrupted highly paid day care by teachers, Susan’s army will recruit few soldiers.

    The quickest solution is the elimination of collective bargaining in the public sector.

    I do not believe we can recruit enough people to run for school boards with the proper attitude to correct the public education cost problem in our state.

    Of course we must address the elephant in the room – Democrat / union / rhino control in Springfield first.

  2. Problem: Strike threat

    Solution: ‘Strike Kit’ (lesson plans compiled by home school parents, utilizing free online resources such as Khan Academy).

  3. 2006 2007 2008 2009 2010 2011 2012 2013 2014
    CPI used for PTELL 2.50% 4.10% 0.10% 2.70% 1.50% 3.00% 1.70% 1.50% 0.80%

    Above are the Consumer Price Index inflation rates used to calculate PTELL maximums.

    See how your school district levy increase compares to this rate of inflation.

    If school increased levy at the rate of inflation, the levy would be <20% higher in 2014 than in 2006.
    (1×1.025×1.041×1.001×1.027×1.015×1.03×1.017×1.015×1.008)=1.1932

    Woodstock D200 levy in 2006 was $46 million, in 2014 $59 million. This is a 28% increased levy vs <20% inflation rate.

    Woodstock D200 expenses in 2006 were $54.7 million, and $103 million in 2014. This is 90% increased spending vs. <20% inflation rate.

  4. Well done, Susan! Thanks for your time and attention to such matters.

  5. Khan Academy is common core aligned and they also data mine.

    Do a search on Kahn Academy, search: Communism. Read the comments.

    I wouldn’t promote Kahn Academy as a Christian Conservative homeschool curriculum.

  6. Susan,

    One note, you can’t compound a district’s levy over the years as you have done.

    First, you are missing the impact of new growth that comes onto the tax base over the course of several years.

    This new property adds to the levy extension of a school district each year which means the operating levy amount will exceed compounded CPI.

    Second, you are also including the levy amount for debt service. CPI has no effect on the debt service levy.

    The amount of the debt service levy will equal the amount of the upcoming debt service expense required to be paid that year.

    That amount can swing wildly from year to year depending on what principal and interest payments are scheduled to be paid during the upcoming year.

    However, districts typically structure their debt to avoid these swings so that the taxpayers don’t see dramatic changes in their tax bill one year to the next.

    One additional link that I find useful, especially during “Levy Season”, is the county “Tax Computation Report” which breaks down every district’s levy in detail. See:

    https://www.co.mchenry.il.us/county-government/departments-a-i/county-clerk/taxes

    These reports are available for the last 11 years.

  7. In Woodstock, we have had no new growth in these years!

    There are small EAV increases from low income/subsidized developments.

    (But your critique is noted, I just didn’t want to get off the track too much into the details, as long as those details don’t change final result much.)(also, I should have noted that enrollment has been flat for the decade)

    The debt service levy has stayed steady around $11 mil/year.

    (Refi activity, heavy in recent years, has extruded debt far into the future. Also there is a CAB from 2006 still listed on books at principal…but at 8.5% compounded biannually, you can guess what the present value of that debt truly is.)

    So again, I believe this is a fair comparison to make to CPI in this case.

    the reference link is great, I hadn’t looked at that.

    Will do.

  8. There actually has been a lot of new growth for D200 over the 2006-2014 time horizon (especially 06-09).

    I’d recommend looking at the link to the Tax Computation Reports by year for D200.

    Near the top is a section for “New Property” which identifies the amount of EAV attributable to growth.

  9. You’re 100% right, here is the new property from each year:

    2006 $43 MIL
    2007 $49 MIL
    2009 $29 MIL
    2010 $$6.5 MIL
    2011 $4 MIL
    2012 $ 5.6 MIL
    2013 $$4.4 MIL
    2014 $4.8 MIL

    I should never write anything from Intuitive anecdotal evidence.

    I live close by Apple Creek subdivision,

    A large project no doubt included In those numbers, which was plowed under

    And is once again a cornfield.

    However I never meant to suggest d200 Violated PTELL.

    I meant to suggest they are overtaxing

    Relative to the means of their community.

    And these new construction data makes the crash of EAV even more horrifying, because existing homes and property had to

    Fall enough to crater both existing eav and new construction as well.

  10. Woodstock D200 is one of the worst abusers.

    Is anyone out there interested in running for this board that would have.

    The guts to vote “no” ?

  11. Anyone can show Susan, and others who post here in an attempt to educate the voters, their gratitude by getting more involved in political campaigns which support honest conservative candidates.

    I am posting this here because the link I am including needs exposure and the topic is public education.

    As you read this keep in mind what happened in the Palatine School District relative to the use of the girls locker room.

    The McHenry County Board continually approves the acceptance of GRANT monies from the federal government.

    Schools continually accept federal education department monies.

    Guess what?

    The tie between the two is being utilized by the current Administration’s to achieve his number one goal: The Fundamental Transformation of America.

    There are a few Board members who continually attempt to get their fellow Board members and the public to understand that those grants come with ‘strings’.

    Hammerand and Evertsen constantly address the topic and vote against accepting those grants.

    We used to have Schuster involved also but the voters replaced her with a guy who has proven to be useless when it comes to representing his constituents (my opinion).

    On the other hand, we have Board members like Donna Kurtz who will actually lobby for and get a Special Board Meeting to reverse a vote against accepting a grant (Health Care Navigators last year).

    Barb Wheeler who used to be on the Board supported grants because in her words it was ‘low hanging fruit’.

    Now I invite you to read what is at this link:

    http://www.newswithviews.com/iserbyt/iserbyt144.htm
    Here is a small excerpt:

    ” For years, the cities have been robbing the suburbs but they now have a scheme that will quickly end in a takeover of the suburbs by a leftist federal government.HUD announced enforcement of its new 377-page rule called the Affirmatively Furthering Fair Housing Rule which will allow them to move people from poor crime-ridden areas into “wealthy” suburbs. It was announced by leftist Julian Castro Monday. The rule has force behind it. Federal monies will be withheld and lawsuits accusing residents of racism will be filed. Any town that takes federal funds will be transformed.

    It is not only forcing unnecessary racial integration, its forcing class integration and the destruction of the local governments who will officially become satellites of the urban areas. Neighborhoods will be diversified according to income levels. The plan is to make us into a classless society of the type Karl Marx promoted.”

    Any tax dollars distributed by the federal government and accepted by any government unit comes with strings attached.

    It is not just community development and the schools, you should read the strings attached to grants associated with Public Transit!

  12. It is not the teacher salaries that concern me (and for those that feel teachers are ‘highly paid’ babysitters, watch your own damn kids and give them your own substandard education at home).

    Teachers have master’s degrees.

    They have actual experience in managing large groups of people.

    They care for all the kids, even after your terrible parenting has given up on the kid.

    They teach ALL the kids, because our laws are designed to ensure an education for ALL.

    Funding is now mostly local, because state and federal aren’t providing it.

    Look at the funding years ago versus now.

    Millions of dollars unpaid to local districts.

    Look into administration and how they spend the money.

    I don’t get a new iPhone each year, either personally or from work, but some administrators do.

    I don’t have to use my personal laptop for work, but the teachers I know do, because they aren’t provided with laptops that actually work.

    But administrators, who don’t teach, get new laptops each year?

    Schools in Mississippi get laptops for each kid… not seeing it here…

    As for teacher pay… Master’s plus 15 years makes less than an entry level, GED only sheriff’s deputy… depending on district, teacher retirement is self-funded and will probably be stolen by our broke state.

    If you really feel school is just for babysitting, you ARE part of the problem.

    PS: Homeschooling isn’t just for Christians.

    And Khan Academy isn’t great at everything.

  13. LJ: RE: “Teachers have master’s degrees”

    If the teachers are so good, why is the product they produce so poor?

    Re: “teacher retirement is self-funded”

    Do teachers have part time jobs in the summer to pay for their retirement or do the taxpayers of the state fund their retirement?

  14. As to home schooling and Khan Academy:

    That was a suggested response to teacher strikes, so that children don’t lose a step in their schooling while negotiations are going on.

    Khan Academy is free, online, lessons are short and modular and interactive.

    There are others of course, this is one example.

    The overall point, however, is that students and parents have no reason to let a teachers strike cause any lapse in student learning.

    As to teachers funding their own retirement, there are hundreds of postings on this blog by Commenter Mark, with source -cited descriptions and examples about the ratio between what teachers contribute into and amount they receive in pension benefits.

    Very little is contributed by employees relative to benefits received.

    If teachers have uneasiness about the financial condition of imrf or trs( as they should), they could tell their union masters to ask for 401ks and defined contribution plans like most citizens have, which would be in control of the employee.

    Take a look at what a peer ( say, a nurse) would have to save over 28 years in order to end up with an annuity at age 55 retirement. There are online annuity calculators which will easily tell you the lump sum amount of money needed to purchase an annuity for 30 years.

    Then you must raise that amount because of the additional health benefits and the COLA.

    Teachers could do a great service to the overtaxed community by pointing out such examples of wasteful spending like tech perqs for Admin. Are those goodies used for personal use at all? That makes them taxable fringe benefits , and if the recipient hasn’t paid income tax in that taxable fringe benefit there might be a whistleblower award in it for the party who contacts IRS.

    Teachers could help themselves and their entire community ( including those children) if they would speak with one voice : Any Springfield Legislator who votes YES for any TIF 12 year extension will get a big NO vote from Teachers Union.

    Teachers could also band together to prevent local tifs from forming which divert property taxes from struggling homeowners to control of a Mayor for largely unregulated, specifically undisclosed distribution to developers of her choice.

  15. Some teachers have real master’s degrees.

    Many teachers have master’s degrees in education, which are basically a joke.

    As a matter of fact, just about any degree with the word ‘education’ in the title is a joke.

    I have several friends who have gotten master’s degrees in education, and the courses that they took were far easier than anything that I took as an undergrad.

    They were even easier than many classes that I took in high school.

    What’s really sad is that we the taxpayers pay for those Mickey Mouse degrees and then we give the teachers a big raise for completing them.

    It’s a racket.

  16. Every taxing district needs a watchdog group to perform analysis such as the above.

    The place to start is the public schools.

    Second would be the municipalities, in particular police and fire departments.

    Third would be fire protection districts (fire protection districts are their own taxing district whereas fire departments are part of the municipality).

    Fourth would be conservation district or forest preserve district, in large part due to bond debt.

    The teacher / administrator (TRS), police (downstate police), and fire (downstate fire) pension benefit hikes while pensions were already underfunded are actually the largest problems facing taxpayers (yes we know public sector workers are taxpayers too).

    Retiree healthcare is a major financial burden that will be increasingly felt by taxpayers.

    The public sector unions and administrators have been networked for decads at the local, state, and Federal levels to hike taxes.

    They have been in cahoots with politicians to hike pension benefits, retiree healthcare benefits, coolective bargaining agreements, administrator contracts, board policies, administrative agency rules, and pass referendums.

    The press has not been able to expose what has happened early enough, often enough, and in enough detail.

    We now have massive unsustainable financial problems at current tax and service levels.

    All taxpayers should have an exit contigency plan from this state if taxes are a concern to them.

    Public education is ripe for reform.

    The best teacher presentations should be put on the internet and less classroom time devoted to lecture, more to interactive lessons and targeted assistance.

    Paying a drivers ed or gym teacher the same as a physics or chemistry teacher is a waste of taxpayer money.

    Paying for masters degree tuition reimburement and salary hikes is a waste of taxpayer money.

    Paying the worst performing teacher the same as the best performing teacher is a waste of taxpayer money.

    The hiked pension and retiree healthcare benefitre while pensions and retiree healthcare were already underfunded are a waste of taxpayer money.

    Obtaining a teacher masters degree is one of the easiest masters to obtain and their is little to no evidence proving a teacher with a masters can better educate a child than a teacher with a bachelors.

    Sure maybe a class here or there made a difference in this or that teacher.

    Instead of a masters there are far more cost effective alternatives especially with todays technology.

    The McHenry High School teacher strike while teacher pensions are about 40% funded exposed the complete dysfunctionality of public education in Illinois.

    They struck over $375,000.

    Teacher and administrator pensions are underfunded well over $50,000,000,000 in this state and that can and should be broken down by school district from which the teacher and administrator retired.

  17. http://mchenrycountyblog.com/2015/10/01/mchenry-high-school-teachers-strike

    Here is a post of teacher and administrator salaries and pensions in McHenry High School District.

    The salary and pension history of public employees should be posted so the public can decide for themselves if they are willing to pay the pay and pensions, rather than just relying on misleading average statistics which omit average number of years worked, average full time employment status, etc.

    A teacher work year is roughly 180 days including the roughly average 10 – 15 sick days a year they can accumulate up to 340 days and cash out at ending salary at retirement or exchange for years of service credit to retire earlier.

    A ridiculous amont of data is far to difficult for the average taxpayer to obtain and understand, there is all sorts of work that needs to be done, and far too few people doing it.

    Exposing this stuff is a great underappreciated public service.

    How about that for an Eagle Scout or high school service hours project.

    The systems are all too often in place due to political power not due to an affordable sustainable system.

  18. Why is it that the County, some Townships, some Municipalities and even the Conservation District can cut their property tax BUT Schools can NOT?

  19. The largest cost in a school district is teacher salaries and benefits, and those are largely contained in the teacher collective bargaining agreement.

    The prevailing wage requirement is an imediment to containing the labor cost of the trades (construction and building maintenance telated costs).

    Many school districts trick the public during referendums, telling the public the cost of the referendum for a $300,000 house is x, but in fact the cost for year 2 is more, etc. (escalating bond repayment schedule).

    The board and public generally are not human resource experts so they are lacking knowledge and skills to contain costs.

    Lots of unfunded state and Federal mandates.

    The teacher unions are organized and networked at the local, regional, state and Federal levels.

    Illinois has mandated that fees to a public secor union are a condition of employment when a union is present for that job at that employer.

    Public education has a lot of specialized state and federal laws and understanding it requires a lot of time, it is a big learning curve.

    The education of their children is one of the top priorities of most parents and most kids attend public schools.

    Those are some of the major reasons.

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