Tax Protest Suit against Wonder Lake’s Harrison Grade School

The first part of attorney Tim Dwyer’s tax protest suit is against McHenry County.  You can read about that here.

The second section goes after excessive levies at Wonder Lake’s Harrison Grade School District 36.

As with the challenged funds of McHenry County government, Dwyer goes after property taxes levied, even though the school district has more than enough funds in the bank to finance the function for over two years.

Part of the suit observes,

No statutory authority exists for large accumulations to provide for possible emergencies, which may or may not occur, since emergencies engendered by unforeseen circumstances are amply provided for in the statute, and may not be anticipated, as no resource is ample to meet every emergency which could possibly occur.

This part of the School Code is quoted:

As to School Districts, the Illinois School Code (105 ILCS 5/17-5.1) specifically provides that

“No tax … shall be levied at a rate sufficient to accumulate funds nor shall funds for such purposes be accumulated as authorized in, said sections until the board of education or school board has by resolution ordered the submission of the proposition of accumulating funds for such purpose to the electors of the district at a regular scheduled election and the proposition has been approved by a majority of the electors voting thereon.”

Dwyer argues,

Absent a referendum, the accumulation of public funds beyond the actual requirements for the particular purpose for the ensuing year is illegal and contrary to the policy of the law, as well as being an imposition upon the taxpayer, depriving him or her of funds to which he is entitled.

The suit focuses on the Wonder Lake school district’s Transportation Fund.

Dwyer points out that  the Transportation Fund’s

money “exceed[s] five years’ requirements on the basis of the actual average expenditure of the three preceding years.”

The average amount spent on busing students over the last three years has been $370,000.

That is compared with the last levy of $1,808,979 and the cash on hand of $1,397,538.

Putting the two figures together gets one to $3.2 million.

That amounts to “562 days of cash on hand.”


Comments

Tax Protest Suit against Wonder Lake’s Harrison Grade School — 10 Comments

  1. It is a PTELL evasion tactic to levy more than needed in (uncapped) Transportation Fund, then later make transfers to the (capped) Education Fund.

    The public must be notified of upcoming transfers and OMA applies.

  2. When do they replace the buses next or is replacement a yearly thing built into the budget?

    Do they pay cash or borrow and pay interest on the new buses?

  3. My understanding is that money is transferred from the Transportation Fund to other funds and spent.

    Money is transferred to the Operation and Maintenance Fund, for example and used to pay off the bonds.

  4. Paying off bonds and getting rid of interest payments is a good thing.

    Having said that, over taxation isn’t a fav of anybody.

  5. According to PTAX Rate and Levy Manual 2013 page 12-13

    School Districts (fewer than 500,000 inhabitants)

    Education

    District – Grades 1 through 8 105 ILCS 5/17-2, 5/17-2.2, 5/17-3 DOR Code 002

    0.92% – Subject to backdoor referendum, as to portion of rate in excess of rate permitted on 6/30/65. May be increased to 3.5% by referendum for a period of not less than 3 nor more than 10 years or for an unlimited period.

    District – Grades 9 through 12 105 ILCS 5/17-2, 5/17-2.2, 5/17-3 DOR Code 002

    0.92% – Subject to backdoor referendum, as to portion of rate in excess of rate permitted on 6/30/65. May be increased to 3.5% by referendum for a period of not less than 3 nor more than 10 years or for an unlimited period.

    Grades 1 through 12 (Unit) 105 ILCS 5/17-2, 5/17-2.2, 5/17-3 DOR Code 002

    1.84%- for the 1988-89 school year and thereafter. Subject to backdoor referendum, as to portion of rate in excess of rate permitted on 07-09-57. May be increased to 4.00% by referendum; the time period is not less than 3 nor more than 10 years, or for an unlimited period.

    Note: If a unit school is being established from an elementary district or districts and a high school district, and the combined rate prior to formation of the unit district is greater than 4.00% then the maximum rate for educational purposes shall be:

    1) For the first year following the formation of the new unit district, the maximum rate shall equal the lesser of the
    actual combined rate of the previous highest elementary district rate and the high school district rate or 6.40%.

    2) For the second year after the formation of the new unit district, the maximum rate shall equal the lesser of the
    actual combined rate of the previous highest elementary district rate and the high school district rate or 5.80%.

    3) For the third year after the formation of the new unit district, the maximum rate shall equal the lesser of the actual
    combined rate of the previous highest elementary district rate and the high school district rate or 5.20%.

    4) For the fourth year after the formation of the new unit district, the maximum rate shall equal the lesser of the
    actual combined rate of the previous highest elementary district rate and the high school district rate or 4.60%.

    5) For the fifth year after the formation of the new unit district and thereafter, the maximum rate shall be no greater than 4.00%.

    Operations and Maintenance

    Grades 1 through 8 105 ILCS 5/17-2, 5/17-2.2, 5/17-5 DOR Code 004
    0.25% – Subject to backdoor referendum. May be increased by referendum to 0.55%.

    Grades 9 through 12 105 ILCS 5/17-2, 5/17-2.2, 5/17-5 DOR Code 004
    0.25% – Subject to backdoor referendum. May be increased by referendum to 0.55%.

    Grades 1 through 12 (Unit) 105 ILCS 5/17-2, 5/17-2.2, 5/17-5 DOR Code 004

    0.50%- Subject to backdoor referendum the first year the district increases the rate to 0.50%. May be increased to 0.75% by referendum. May be increased to 1.10% if a community unit district is set by a single elementary district and a secondary district having coterminous boundaries.

    Transportation

    Grades K through 8 105 ILCS 5/17-2, 5/17-2.2 DOR Code 030
    0.20% – Under certain circumstances and if claim is certified by State Board of Education. Subject to backdoor referendum. May be increased to a higher rate by referendum.

    Grades 1 through 8 105 ILCS 5/17-2, 5/17-4 DOR Code 030
    0.12% – May be increased to a higher rate by referendum.

    Grades 9 through 12 105 ILCS 5/17-2, 5/17-4 DOR Code 030
    0.12% – May be increased by referendum to a higher rate.
    Grades 1 through 12 105 ILCS 5/17-2, 5/17-4 DOR Code 030
    0.20% – For school year 1988-89 and thereafter. May be increased to a higher rate by referendum.

  6. But then, you’ve got THIS:

    ILLINOIS DEPT. OF REVENUE PROPERTY TAX
    FUND MAX RATE AND STATUTE REFERENCE

    (Note: NO rate limit in the Transportation Fund, compared to PTAX manual of 2013 limit)

    EDUCATIONAL DISTRICTS (FEWER THAN 500,000 INHABITANTS)
    Max
    Statute
    Statute
    Statute
    Statute
    Special Comments
    002
    Education (Grades 1 through 8)
    3.50000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-3
    Subject to Backdoor Referendum
    002
    Education (Grades 9 through 12)
    3.50000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-3
    Subject to Backdoor Referendum
    002
    Education (Grades 1 through 12 (Unit))
    4.00000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-3
    Subject to Backdoor Referendum
    003
    Bonds & Interest (Area Vocational Building)
    No rate Limit
    105 ILCS 5/19-30
    003
    Bonds & Interest (Building Sites, Playground, etc.)
    No rate Limit
    105 ILCS 5/19-2
    003
    Bonds & Interest (Building and Repair)
    No rate Limit
    105 ILCS 5/32-5.6
    003
    Bonds & Interest (Exhibition Facilities)
    No rate Limit
    105 ILCS 5/19a-4
    003
    Bonds & Interest (Fire Prevention, Safety, Energy Conservation)
    No rate Limit
    105 ILCS 5/17-2.11
    003
    Bonds & Interest (Funding – Techers’ Wages or other Claims)
    No rate Limit
    105 ILCS 5/19-8 through 10
    Subject to Backdoor Referendum
    003
    Bonds & Interest (Non-High School Tuition, Other Claims and Judgements)
    No rate Limit
    105 ILCS 5/12-13,14
    003
    Bonds & Interest (Non-High School Tuition and Other Claims)
    No rate Limit
    105 ILCS 5/12-15,16
    003
    Bonds & Interest (Refunding)
    No rate Limit
    105 ILCS 5/19-15
    105 ILCS 5/19-18
    003
    Bonds & Interest (Temporary Relocation)
    No rate Limit
    105 ILCS 5/17-2.2d
    105 ILCS 5/2-3.77
    003
    Bonds & Interest (Working Cash Fund)
    No rate Limit
    105 ILCS 5/20-2
    105 ILCS 5/20-4
    105 ILCS 5/20-7
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Grades 1 through 8)
    0.55000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-5
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Grades 9 through 12)
    0.55000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-5
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Grades 1 through 12 (Unit))
    0.75000%
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    105 ILCS 5/17-5
    Subject to Backdoor Referendum
    004
    Operations and Maintenance (Health Care Purposes)
    0.54400%
    105 ILCS 5/17-2.2b
    Subject to Backdoor Referendum
    030
    Transportation (Grades K through 8)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-2.2
    Subject to Backdoor Referendum
    030
    Transportation (Grades 1 through 8)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-4
    Subject to Backdoor Referendum
    030
    Transportation (Grades 9 through 12)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-4
    Subject to Backdoor Referendum
    030
    Transportation (Grades 1 through 12)
    No rate Limit
    105 ILCS 5/17-2
    105 ILCS 5/17-4
    Subject to Backdoor Referendum
    031
    Working Cash
    0.05000%
    105 ILCS 5/20-3
    032
    Fire Prevention, Safety, Energy Conservation and School Security
    0.10000%
    105 ILCS 5/17-2.11
    033
    Special Education Purposes (Maintaining Only K – 8)
    0.40000%
    105 ILCS 5/17-2.2a
    033
    Special Education Purposes (Maintaining Only 9 – 12)
    0.40000%
    105 ILCS 5/17-2.2a
    033
    Special Education Purposes (Maintaining K – 12)
    0.80000%
    105 ILCS 5/17-2.2a
    036
    Capital Improvement
    0.75000%
    105 ILCS 5/17-2
    037
    Area Vocational Education Building Fund
    0.05000%
    105 ILCS 5/17-2.4
    057
    Lease of Educational Facilities and Computer Technology
    0.10000%
    105 ILCS 5/17-2.2c
    087
    Capital Development Board – Rental of Buildings
    No rate Limit
    105 ILCS 5/35-1 through 5/35-31
    088
    Summer School
    0.15000%
    105 ILCS 5/17-2
    098
    Temporary Relocation
    0.05000%
    105 ILCS 5/17-2.2c
    105 ILCS 5/2-3.77
    119
    Health Insurance for Employees
    No rate Limit
    105 ILCS 5/17-2.6
    151
    Non-High School Indebtness
    No rate Limit
    105 ILCS 5/12-26
    152
    Non-High School (Tuition)
    1.60000%
    105 ILCS 5/12-11.1
    161
    Employees’ Pension (IMRF, Social Security & Medicare)
    No rate Limit
    40 ILCS 5/17-171
    40 ILCS 5/21-110
    40 ILCS 5/21-110.1

  7. Reply to “The Nob” –

    This district owns no buses and the expenses are incurred by renting buses from an outside vendor on an annual contract.

    To Susan-

    agreed that this fund is not capped – however according to 105 ILCS 5/17-2 a district is statutorily required to levy for the intended purpose.

    In this case money levied for the Transportation Fund is meant to be used for the transportation of students, not to create a slush fund that can be transferred out at some later date (after a hearing) to spend however they wish.

  8. And yet it happens.

    There is even language in the cafr defending the practice.

    I am given to believe D200 has purchased many buses.

  9. That may be true for D200 – but Harrison School district is D36 – a one school PK-8 district.

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