Woodstock School District’s Debt That Taxpayers Will Have to Come Up With

Under the information provided by commenter Mark about Woodstock area residents’ public debt, this was posted by rural Woodtock resident Susan Handlesman:

ADD TO PUBLIC DEBT OF WOODSTOCK RESIDENTS WOODSTOCK D200 DEBT

Woodstock Taxable property (non-TIF) is liable for School debt.

Woodstock CUSD 200 CAFR states principal debt at $95 million in 2020.

That is in compliance with legal reporting but off by $50 million additional actual dollars debt.

https://www.woodstockschools.org/cms/lib/IL02213588/Centricity/Domain/49/CAFRforWebYrEnding063019.pdf
pg 39

Woodstock D200 has HIDDEN DEBT of $50 million interest accruing, owed interest on a 2006 CAB (capital appreciation bond) which borrowed $13 million in 2006 at 8 1/2% compounding interest rate, but will owe $50 million interest in addition to that principal, in 2022.

So living in Woodstock, which means property is obligated to pay for school district 200 debt, taxable (NON-TIF ) properties are obligated to a debt of around $150 million.

The amount per property of debt burden is best calculated as a percentage of property value.

EAV of D200 is around $800 million, so $150 million debt divided by $800 million EAV indicates a a debt obligation of 18.75% of EAV; or 6.25% of total fair market value of ALL Woodstock taxable property.

(Remember, TIF free-riders, new residents for whom these school buildings were built ARE PROTECTED BY LAW FROM ANY OBLIGATION FOR THIS DEBT BURDEN. They are not legally allowed to pay this debt, only NON-TIF properties are obligated to pay this debt. Learn about TIF!!).


Comments

Woodstock School District’s Debt That Taxpayers Will Have to Come Up With — 4 Comments

  1. The Woodstock CUSD 200 boundary (attendance area) includes Greenwood, and parts of Bull Valley and Wonder Lake.

    Thus it is not only City of Woodstock property taxpayers that are responsible for Woodstock CUSD 200 bond debt.

    One of the problems in an Illinois property taxpayer understanding the amount of government debt attributed to their property is that there are so many different property taxing districts, each with its own boundary, on their property tax bills.

    +++++++++++++++++

    Woodstock CUSD did disclose the bond interest in its Comprehensive Annual Financial Report (CAFR) for fiscal year ending June 30, 2019 (FY 2019).

    The total bond principal and interest debt is $168,538,794.

    Add to that the total pension debt.

    TRS $293,057,593 + IMRF $13,752,241 = $306,809,834 total pension debt, and that includes principal and interest, and is also known as the the unfunded liability, aka the net pension liability.

    $168,538,794 bonds + $306,809,834 pensions = $475,348,628 bond & pension debt.

    The bond debt is higher than the typical school district of its size due to the housing crisis arriving shortly after the referendum was approved to borrow money (via bonds) to build Woodstock North.

    This resulted in lower than expected enrollment and fewer than projected property taxpayers to pay off the bond debt.

    ++++++++++++

    Who’s responsible for the paying off the debt?

    The bond debt is a local taxpayer responsibility.

    The majority of the pension debt is a state responsibility.

    The IMRF portion of the pension debt is a local responsibility (think local property taxes).

    The TRS portion of the pension debt is state responsibility (think state income tax payers).

    A small portion of the TRS pension debt is allocated to local but remains a state responsibility at this time.

    The entire TRS pension debt is “on behalf” of the local school district but remains a state responsibility at this time.

    In other words at a future time state lawmakers can shift a portion of the TRS debt to local property taxpayers.

    ++++++++++++

    A few highlights:

    1. The pension debt is bigger than the bond debt.

    2. Interest is included in the pension debt.

    ++++++++++++

    The most recent City of Woodstock CAFR does a poor job of disclosing bond principal and interest debt, compared to the most recent Woodstock CUSD 200 CAFR.

    It would be wise for local property taxpayers to pressure their elected City of Woodstock officials to better disclose the bond principal and interest debt now buy putting the information on its website, and in the future by improving such disclosure in its CAFR.

    The same goes for any property taxing district that does not do a good job at disclosing bond interest debt.

    For a template on good bond principal and interest disclosure look at the following post, and the Woodstock CUSD 200 FY 2019 CAFR (look at both).

    ++++++++++++

    http://mchenrycountyblog.com/2019/12/09/debt-burden-of-woodstock-taxpayers/#comment-518219

    ++++++++++++

    Of all the local units of government in Illinois, in almost all cases, it is the school districts that have, by far, the most debt.

    Once of the main reasons for this is local school districts hike pay and grant sick days, resulting in hiked state pension contributions and eventual pension payouts, yet the pension debt is the responsibility of state taxpayers.

    Another main reason is state legislators and governors hiked pension benefits (legislative pension benefit hikes).

    Both of these occurred while the pensions were already underfunded.

    The result is massive pension debt.

    ++++++++++

    Illinois is not normal, compared to other states, regarding pension debt.

    Illinois probably has the most convoluted pension laws of any state.

    State lawmakers constantly tinkered with the pension code annually for decades.

    Why?

    Pension laws are supposed to be predictable and stable.

    ++++++++++++++

    One big reason is a claim made by legislators such as, “I never voted for a tax hike.”

    Sounds great.

    But what about voting for debt hikes.

    Huh?

    What’s a debt hike?

    ++++++++++

    One example of a debt hike, is a legislative pension benefit hike.

    What’s a legislative pension benefit hike?

    Passing a state law that results in a bigger pension payout or earlier retirement.

    If that’s done without a corresponding revenue hike, debt ensues.

    ++++++++++

    One way to accumulate a lot of pension debt is to vote for pension benefit hikes without voting for a way fund the hikes.

    +++++++

    How did they get away with it?

    Poor disclosure.

    +++++++

    The result?

    The Illinois Pension Ponzi scheme, protected by the Illinois state constitution.

    The Illinois state constitution protects the government pension ponzi scheme.

    A ponzi scheme is where new investor money is required to over payouts promised to past investors.

    In this case the new investors are taxpayers, citizens paying fees to the government, those participating in legal gambling, etc.

    +++++++++++

    While expressing bond debt as a percentage of property value is helpful, one also has to keep in mind property taxes are only one source of revenue for a unit of government.

    In the case of bond debt, there is typically a bond levy and extension that is outside the tax cap, which is directly tied to property tax bills, to retire the bond debt.

    So bond debt as a percentage of property value is an accurate picture of property taxpayer debt to the government.

    ++++++++++

    IMRF is handled similar to bonds in terms of property taxes, IMRF debt as a percentage of property valuye is also an accurate picture of property taxpayer debt to the government.

    ++++++++++

    Other pension debt is not handled similar bonds in terms of property taxes.

    Most notably at the local level in McHenry County, that is Downstate Police, Downstate Fire, and TRS.

    Nonetheless, there are not enough other sources of revenue for most units of government in Illinois to pay off Downstate Police and Downstate Fire without hiking property taxes.

    ++++++++++++

    The TRS debt is a nightmare.

    The fact that school districts are local unit of governments yet the state is responsible for the pension debt means one has to look at the state budget and taxpayers to express that debt.

    What percentage of the state contribution to the TRS pension fund can be reasonably attributed to state income taxpayers?

    Then one could ballpark a state income taxpayer liability for the TRS debt attributed to a local school district, in this case, CUSD 200.

    ++++++++++++

    One of the problems with the Valley Hi rebate is it was done while the County has pension and long term debt (bonds, issuance premiums, leases, etc.).

    The county could have instead used the money to pay down the pension or bond debt, to reduce the interest payments.

    Or if that was not legally possible, lobby the General Assembly to pass a law to do so.

    The county is not acting in a fiscally prudent manner by having chronically underfunded IMRF pensions, aka pension debt.

    +++++++++++

    Pensions are designed to be 100% funded.

    Not chronically underfunded.

    In Illinois most pensions are chronically underfunded.

    This increases the cost of the pensions and thus the cost of government.

    +++++++++

    Getting back to Woodstock CUSD 200.

    Let’s use the bond principal and interest figure of $168,538,794 in the district’s FY 2019 CAFR, to further refine the numbers in the article.

    +++++++++

    Next refer to the Tax Year 2018 Tax Computation Report from the McHenry County Clerk website.

    pdf page 31 of 310 is for Taxing District EU200 – SCHOOL DIST 200.

    That is Woodstock CUSD 200.

    The Total EAV is $850,664,798, and that includes TIFs.

    The Rate Setting EAV of $844,268,297 excludes the TIF increment.

    As its name implies, the Rate Setting EAV is used to set the tax rate.

    +++++++++

    Rate Setting EAV: $844,268,297

    Bond Principal and Interest: $168,538,794

    $168,538,794 / $844,268,297 = 19.96%

    Bond Principal and Interest debt is 19.96% of Rate Setting EAV.

    +++++++++++++

    19.96% / 3 = 6.65%

    Bond Principal and Interest is 6.65% of the “fair market value” of the property.

    “Fair market value” is in quotes because not everyone believes they can sell their property for 3x EAV.

    +++++++++

    Using a $300,000 house as an example.

    $300,000 x 6.65% = $19,500 Woodstock CUSD 200 bond debt.

    +++++++++

    To get a comprehension of the scale of the scale of TRS pension debt attributed to local school district operations, let’s pretend local property taxpayers were responsible for the TRS debt.

    Woodstock CUSD 200 TRS proportionate share = $293,057,593.

    Rate Setting EAV: $844,268,297

    $293,057,593 / $844,268,297 = 34.71%

    TRS would be 34.71% of Rate Setting EAV.

    34.71 / 3 = 11.57%

    TRS would be 11.57% of the fair market value of the property.

    $300,000 x 11.57% = $34,710.

    If TRS were are property taxpayer responsibility, the property taxpayer of the $300,000 home would owe $34,710 for TRS pensions.

    +++++++++

    Woodstock CUSD 200 property taxpayers already $19,500 to Woodstock CUSD 200 for bond debt.

    $19,500 bond debt + $34,710 pension debt = $54,210 debt on a $300,000 house attributed to CUSD 200 operations.

    The TRS pension debt is a state responsibility so the owner of the $300,000 property in the Woodstock CUSD 200 property taxing district doesn’t really owe $54,210 to Woodstock CUSD 200.

    The $300,000 property owner does owe $19,500 for bonds, and the $34,710 for pensions has to come from somewhere.

    The primary source of revenue for TRS would be state income taxes, but the state has many other sources of revenue as well.

    This is example of why Jack Roeser of Family Taxpayers was so upset with the public education cartel in Illinois.

    The public education cartel consisting of:

    – IEA & IFT teacher unions,

    – state legislators (State Reps and State Senators),

    – local school board members, and

    – local school district superintendents,

    as they collectively created and were most responsible for the mess.

    The current CUSD 200 Superintendent inherited the mess.

    +++++++++

    A few additional notes about the Tax Year 2018 Tax Computation Report from the McHenry County Clerk website.

    The Total Extension is $56,689,441.71.

    The Extension is the final number; the Levy Request is an interim step.

    The Limited Rate is 6.714624.

    The Limited Rate is an adjustment to the tax rate that takes into account the Property Tax Extension Limitation Law (PTELL).

    The Limited Rate is the final rate.

  2. Wow, Thanks Mark for the detailed analysis.

    That’s something the local Fake News would never, never do.

    They perceive their job as fronting for the sick elites.

  3. Mark has been providing exquisite analyses, meticulously researched and source-cited, for years.

    It is to the shame of us citizens that we haven’t used his work product to greater effect.

    Would more citizens participate in watchdog efforts if there were quantifiable benefits made available to participants?

  4. Further refining the pension & OPEB debt mess in a local Illinois school district, which in this case is Woodstock CUSD 200.

    Defining debt as an unfunded liability (net pension liability), which is the amount of money the district is short, compared to if it were 100% funded.

    ++++++++++++++

    Local Debt

    IMRF pension: $13,752,241

    TRS: Employer’s proportionate share of the net pension liability: $4,216,402

    TRIP OPEB: Employer’s proportionate share of the net THIS liability: $42,985,300

    Bonds: $168,538,794

    Total Local Debt: $229,492,737.

    Source: FY 2019 Woodstock CUSD 200 CAFR.

    ++++++++++

    Allocating local debt to property taxpayers of the district:

    Next refer to the Tax Year 2018 Tax Computation Report from the McHenry County Clerk website.

    pdf page 31 of 310 is for Taxing District EU200 – SCHOOL DIST 200.

    That is Woodstock CUSD 200.

    The Total EAV is $850,664,798, and that includes TIFs.

    The Rate Setting EAV of $844,268,297 excludes the TIF increment.

    As its name implies, the Rate Setting EAV is used to set the tax rate.

    +++++++++

    Rate Setting EAV: $844,268,297

    Total Local Debt: $229,492,737.

    $229,492,737 / $844,268,297 = 27.18%

    Local debt (bonds, pension proportionate share, OPEB proportionate share) is 27% of Rate Setting EAV.

    +++++++++++++

    27.18 / 3 = 9.06%

    Bond Principal and Interest is 9.06% of the “fair market value” of the property.

    “Fair market value” is in quotes because not everyone believes they can sell their property for 3x EAV.

    +++++++++

    Using a $300,000 house as an example.

    $300,000 x 9.06% = $27,180.

    The owner of a $300,000 house owes Woodstock CUSD 200 $27,180 for bonds, IMRF, TRS pension proportionate share, and TRIP OPEB proportionate share.

    +++++++++

    In addition to that the district has single employer OPEB plan with a $6,359,468 net pension liability.

    It is called the “Post-retirement Health Plan.”

    Here are some nuggets of information about that plan from the Woodstock CUSD 200 FY 2019 CAFR.

    “The plan provides for the District to pay for medical, dental and life insurance coverage for retired administrators through age 65.”

    “The District contributes to the plan on a pay-as-you go cash basis.”

    The question is if the employer is responsible for the entire $6,359,468, or if the employee is reponsible for a portion (and if so what percentage).

    Hopefully someone will look into that.

    +++++++++++

    State responsibility for TRS & TRIP unfunded liabilities attributed to Woodstock CUSD 200 operations.

    State’s proportionate share of the net pension liability associated with the employer: $288,841,191

    State’s proportionate share of the net THIS liability associated with the employer: 57,719,988

    Total state responsibility for TRS & TRIP unfunded liabilities attributed to Woodstock CUSD 200 operations: $346,561,179.

    ++++++++++++++

    Total Local & State taxpayer responsibility for bonds, pensions, & OPEB attributed to Woodstock CUSD 200 Operations:

    Local: $229,492,737

    State: $346,561,179.

    Total: $576,053,916.

    +++++++++++

    The state and local government is in debt $576,053,916 due to Woodstock CUSD 200 operations.

    That does not include the $6,359,468 single employer OPEB plan (post-retirement Health Plan).

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