Susan Handelsman, who has been bird-dogging Woodstock School District 200 for several years is presenting the following information on Clay Academy to make sure it is on the public record.
Public Comment to the Woodstock School BoardFacility review committee was given incomplete information about the costs of running Clay Academy. Clay building has operating capacity for 300 students.
It currently hosts enrollment of 70, and only 11 (or 16%) of those students are from our own D200 taxing district.
The tuition these other 59 students pay does not begin to cover the cost of their enrollment.
D200 Taxpayers must pay for all additional costs to educate out-of-district students.
Rather than debating the Clintonesque interpretation of the word ‘operates’ in the Superintendent’s assertion that Clay ‘operates’ at a breakeven, let’s attempt to quantify all the costs to D200 taxpayers which were NOT included in the equation underlying that ‘operational’ breakeven assertion:
- Costs of the building.
Unless Clay classes are held in public parks and alleys, the costs of keeping Clay building compliant with life&safety standards must be factored in to the costs of maintaining a discount rate tuition-based school for other districts’ taxpayers’ benefit.
There is over $2 million demanded in improvements for the next ten years for Clay building, and the $10.5 million Life&Safety bond issued in 2010 described in large part Clay building projects as needed basis of debt.
We can assume a minimum of $200,000 per year just to keep old, according to administration zero value real estate, up to code.
- Costs of Exterior Maintenance.
Figures distributed to FRC included $2 million annual budget for exterior maintenance.
There are 12 school buildings.
Assuming the two high schools cost half the total exterior maintenance budget ($1/2million each), splitting the remaining $1 million over the remaining 10 schools allocates $100,000 per year exterior maintenance budget to Clay building.
- Costs of liability (insurance).
Tort fund taxes $700,000 per year. Some portion can be attributed to Clay. On a straight percentage of enrollment basis, that is 1% or $7000 per year.
- Use of District Resources.
Does Clay operate as an island without any use of D200 IT workforce, or software, or hardware, or infrastructure? Does Clay command any portion of the work-time of the District-wide Special Ed Administrators employed at D200 taxpayer expense? What about Superintendent and Financial managers of the District? What about Clay building share of the hundreds of thousands of tax dollars in consultant fees paid for mandatory building inspections and other consultations?
Conservative estimates indicate minimum $100,000 per year of annual workforce time value/ assets and resource value attributable to Clay.
(It is tempting to say it is ‘free’ because it is ‘surplus capacity’ (time, resources, etc’).
That is false logic. Start deleting those time/resource allocations and see whether D200 could eliminate even just 1 FTE…that would equate to $100,000 present value annual taxpayer dollars right there.
OR, answer this: what OTHER uses of these resources which might benefit in-district student are being neglected because those resources are given away for free to Out-Of-District –Discount-Tuition-Students?).
- The BIG COST THAT DWARFS ALL COSTS: UNFUNDED PENSION LIABILITY.
Even before the 2017 Illinois Law was passed which shifts all pension burdens to local taxpayers, D200 was assuming the first priority guarantor liability of OPEB: which stands for Other Post Employment Benefits. Right now, D200 taxpayers pay about half a million dollar$$ a year for OPEB. That is a cost in part to pay for $6600 per year health insurance premiums every year from when a TRS employee retires at age 53 until they turn age 65. The current premium rate is determined by State agency which has posted a 5% increase per year for near future years.
How much of that $500,000 per year is attributable to some of the 35-40 Clay Academy employees? How will that $500,000 grow in the future?
But OPEB is peanuts compared to PENSION LIABILITY and ACTUARIALLY DETERMINED UNFUNDED PENSION LIABILITY which has now been shifted from being an ILLINOIS STATE TAX liability to being a local property tax liability.
38% of salary is now local taxpayer responsibility, which is in addition to current local taxpayer responsibility to contribute 8% OUT OF THE 9% STATE REQUIRED EMPLOYEE PENSION CONTRIBUTION.
TO MAKE THAT MORE CLEAR: TRS BENEFIT ENTITLEMENT RECIPIENTS ARE NOT REQUIRED TO DEDUCT 6% OF THEIR SALARIES FOR SOCIAL SECURITY, AND THEY ARE NOT REQUIRED TO DEDUCT 9% OF THEIR SALARY FOR COLA PENSIONS which are worth multimillions of dollars in present value according to annuity calculators:
THEY ARE REQUIRED TO DEDUCT 1% OF THEIR SALARY FOR PENSIONS WHICH WILL PAY MULTIPLES OF SOCIAL SECURITY EXPECTED BENEFITS AND MAY BEGIN COLLECTING AT AGE 53 RATHER THAN AGE 65.
AND, THEY ONLY PAY 10% OF insurance premiums, and Zero% after they retire at age 53.
Illinois now has the right to demand that at any time in the future the actuarial defined unfunded liability of the pension fund exceeds 90% of funded value, the difference will be demanded from local taxpayers.
Let that sink in. IF the stock market ever crashes again, OR the pension managers make bad bets or even if the pension managers engage in fraud…LOCAL TAXPAYERS MUST BAIL THEM OUT.
How can we determine the quantifiable value of this encumbrance?
Clay has 35-40 employees for 11 in-District enrollment. Would Clay need this many employees if 59 of other Districts’ taxpayers’ students were NOT HERE?
Let’s assume that 11/70= 15.7%= the proportion of Clay TRS employees to whom local taxpayers would be obligated to pay OPEB and constitutionally guaranteed pension benefit entitlements.
Are half of Clay employees TRS entitled?
35/2 X .16 = 2.8
That is, ordinarily D200 taxpayers would be on the hook to guarantee, with their homes as collateral, 2.8 TRS employees’ pension benefit entitlements for our 11 students?
That leaves 14.7 employees for whom the taxpayers of D200 are being required to guarantee pension contributions AND to guarantee that when the stock market crashes or poor judgment or fraud by pension fund managers occurs in the future, our home value should serve as collateral to guarantee these pension and benefit entitlements for benefit of teachers teaching other districts’ children .
Let’s assume that the guarantee of multimillion dollar present-value benefits for which State of Illinois used to pay 38% of salary, AND OPEB which was always locally guaranteed, are valued at payment of $10,000 per year per employee.
That indicates a total $147000 per year contribution obligation for D200 taxpayers.
TOTAL ASSUMPTIONS COST OF 59 NON-D200 TUITION STUDENTS NOT INCLUDED IN SUPT. COSTS:
$554,000 per year tax burden solely on D200 taxpayers, THE FIRST YEAR. (amortized over 11 D200 students).
That is, $50,000 per in district Clay Student is the additional cost charged to D200 taxpayers in order to run Clay Academy as a discount tuition choice for other districts taxpayers.
Look at this another way:
if another District offered D200 the choice to send its own 11 students to that school for a net cost of $16,000 per each student per year, WOULD YOU ON THE SCHOOL BOARD OBJECT? That is what Clay is offering to the 59 out-of-district students enrolled, at a cost of at minimum $300,000 per year to your community, rising annually in excess of rates of inflation and limitless in terms of future liability.
Contracts, as you know, contain inflationary escalation, so the costs next year will be 4-5% higher (=$576,160…the next year, $599206).
So whatever the cost per each of 11 D200 students Superintendant Moan asserted, add $554,000 divided by 11 students, which is over $50,000 per D200 student.
Now you school board members know the magnitude of the taxpayer liability which YOU are responsible for inflicting on local taxpayers in order to maintain a discount alternative for other wealthier districts’ tuition students, if you choose to ignore it.
This Board should actively, not passively, decide whether it is a good forced allocation of D200 taxpayers’ limited Special Ed Funding to subsidize other district’s students when so many good alternatives exist
Here are alternatives which should be discussed by this Board:
- Give Clay building to Allendale School, which is one of many Clay competitors.
(D200 has listed a great many schools which offer special education services in your FRC report online. Time for School Board Members who sought election to responsibly oversee a $100,000,000+ budget to do some research on cost efficiencies being willfully overlooked).
Allendale could takeover Clay Academy operations intact.
- A parents group may form a charter school operation to take over operating Clay Academy.
- Send 11 D200 students to Allendale, or to SEDOM. The tuition minus State reimbursements total a big savings for D200 taxpayers.
(Compare the total costs to the other districts’ taxpayers sending their children to Clay, at a net cost to those taxpayers of about $16,000 per student. If those 59 students were absorbed by Allendale or SEDOM, they may lower the overall tuition costs for all students there.)