McHenry High School Tax Hike Committee Wants Yes Vote To Keep Taxes from Maximum Decrease, Vote NO and cut your taxes by $325 a year!

The McHenry District 156 Vote Yes for Lower Taxes and Better Schools committee has a campaign that is a naked attempt to deceive voters into missing out on a really big tax cut in 2020.

The District currently levies about $4.5 million per year in property taxes for debt service.

This levy stops in FY2019 and the District’s last bonds will be repaid in FY2020.

(The proof of the size of the annual debt service property tax levy is shown on page 2 of the D156 FY2019 Budget.PDF. Note that the “Local Sources” for the Debt Service Fund total $4,474,000. The proof that the District’s bonds will be repaid in full in FY2020 is shown on page 3 of the D156 2018 Disclosure.PDF.)

Now please look at the spreadsheet.

It shows that annual debt service (principal plus interest) for a $44 million bond issue with a 15 year term is about $3.7 million per year.

If the District does NOT sell more debt, then after FY2020 they will be debt free. Their levy for debt service will drop from $4.75 million to ZERO.

That’s a reduction in property taxes of about $325 for the average $200,000 house.

But it’s technically correct to say that if they sell $44 million in new bonds and repay the bonds over 15 years, then their levy will “drop” by about $1 million per year, which is about $70 for a $200,000 house.

The above analysis is from bond analyst Steve Willson.

Now, let’s give the tax hikers a shot at your brain.

Here is what is written on the group’s web site:

We have a once-in-a-lifetime opportunity this election to lower our property taxes while improving our schools!

We have this opportunity because our school district has been a good fiscal steward of our tax dollars. Already with the lowest tax rate of any public school district in McHenry County, District 156 reduced our tax rate even further last year. Our tax rate is better than nearly 2/3 of all high school districts in McHenry, Lake, Cook, and DuPage Counties, lower than half the highest taxing districts.

The referendum will fund all priority facility and life safety infrastructure projects at both campuses and eliminate the use of mobile classrooms, ensuring our children’s safety and maintaining our investment in our schools.

The referendum will establish East Campus as a freshman center and West Campus as an upper-level campus for tenth through twelfth grade students, renovating East Campus and expanding West Campus.

This eliminates 95% of student travel and ensures all our children have equal access to educational opportunities.

Additionally, the referendum will construct a state-of-the-art Science, Technology, and Industry Center at the upper-level campus, providing our children real-world experiences in an innovative and integrated learning environment.

Most of these major improvements would be completed by the 2020-2021 school year.

Join us in supporting this community-driven plan to lower our property taxes, renovate our schools’ aging infrastructure, and provide 21st century learning opportunities for our children.

Vote yes on the referendum for lower taxes and better schools!

Here is the referendum question written all capital letters, which makes it harder to read:

COMMUNITY DISTRICT NUMBER 156
SHALL THE BOARD OF EDUCATION OF MCHENRY
COMMUNITY HIGH SCHOOL DISTRICT NUMBER 156,
MCHENRY AND LAKE COUNTIES, ILLINOIS, BUILD AND
EQUIP ADDITIONS TO, ALTER, REPAIR, EQUIP AND
IMPROVE THE SITES OF THE MCHENRY WEST HIGH
SCHOOL CAMPUS AND THE MCHENRY EAST HIGH
SCHOOL CAMPUS, INCLUDING, WITHOUT LIMITATION:
IMPROVING STUDENT SAFETY, SECURITY AND
LEARNING ENVIRONMENTS; CONSTRUCTING
INFRASTRUCTURE IMPROVEMENTS INCLUDING
ROOFS, VENTILATION, ENVIRONMENTAL UNITS,
DOORS, PLUMBING, ELECTRICAL IMPROVEMENTS,
PARKING LOTS, WALKWAYS, AND OTHER ADA
COMPLIANCE IMPROVEMENTS AT BOTH CAMPUSES;
CONSTRUCTING A SCIENCE, TECHNOLOGY AND
INDUSTRY CENTER AT WEST CAMPUS; EXPANDING
WEST CAMPUS TO ADD CLASSROOMS TO REPLACE
26-YEAR OLD MOBILE CLASSROOMS AND TO
ACCOMMODATE ADDITIONAL STUDENTS; AND
RENOVATING EAST CAMPUS CLASSROOMS; AND
ISSUE BONDS OF SAID SCHOOL DISTRICT TO THE
AMOUNT OF $44,000,000 FOR THE PURPOSE OF
PAYING THE COSTS THEREOF?

Now let’s look at who is financing the school tax hike referendum:

The first contribution came from High School Superintendent John {Ryan} McTague. It was for $500.

Since then, the following big money has been contributred:

  • $1,000 – Buss Ford, McHenry
  • $1,500 – Joseph Parys, Partner, Center Point Energy, Downers Grove
  • $1,000 – Midwest Educational Furnishings, Inc
  • $1,000 – Wuff Werner, ABM, Cleveland

= = = = =
This is the last day that the Northwest Herald will accept election letters.


Comments

McHenry High School Tax Hike Committee Wants Yes Vote To Keep Taxes from Maximum Decrease, Vote NO and cut your taxes by $325 a year! — 6 Comments

  1. Let’s make this simple

    Suppose you only had $4,750 left to pay on your mortgage. In one year you would be debt-free!

    Now suppose someone came to you and said, “Sign this paper and I’ll cut your mortgage payments by $1,000 a year!”

    You read the papers, and you say to the guy, “Wait a second! If I don’t sign these I’m debt-free in a year! If I do sign them, I have to pay $3,750 a year for each of the next 12 years!”

    That’s D156’s supposed “savings”, only millions of dollars, not thousands of dollars.

  2. This is a test. Some of my postings aren’t showing up so I want to see if this one does.

  3. But D 156 already has it all.

    Deadwood faculty, bloated administration and mobs of idiot kids that can’t read and write to grade level.

  4. I admit I don’t know the details of the finances of the school district.

    But why can’t they operate within their budget?

    Any of them.

    Why is there no long-term plan for building improvements?

  5. It would be so much easier if local units of government would just put the following information on their website, but that is rare, so here we go again.

    The board is supposed to represent the taxpayers and should be insisting the administration post this information on its website.

    Maybe some of these folks want to be transparent but don’t know how to go about it.

    Many school district board members in general tend to follow the lead of the Superintendent, IASB, senior board members, and once in awhile the union, none of which typically advocate for the posting of the following information for bond referendums.

    Here are the current McHenry CHSD 156 Board members: Pat Arnold, Steve Bellmore, Dawn Bremer, Timothy Byers, Ronald Fischer, Timothy Hying, and Gary Kinshofer.

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

    The referendum is for $44 million in principal, unknown interest dollars, over 20 years, per page 33 of 59 of the document Community Connection Presentation .pdf on the district website under Our District > Vision 156 Community Engagement / Connection.

    That page also says:

    “Impact to Taxpayers: $200K Market Value Home – $203.”

    That conflicts with the Northwest Herald article below, which listed $208 not $203.

    Pretty close, a $5 difference.

    We need to know if it’s $203 per year for 20 years or if that number is expected to escalate.

    In general escalations are common.

    School district bond debt service (the payment principal and interest payments from the district to bondholders), unlike a 30 year fixed rate mortgage, is typically not structured to be the same amount until debt retirement.
    ++++++++++++++

    Not enough transparency.

    Need more information.

    To evaluate the bond proposal the following documents are required.

    Submit a FOIA request to the district requesting documents containing the following information.

    1. Current bond debt service schedule; please itemize annually the principal, interest, and total (principal + interest).

    2. Estimated bond debt service schedule for the referendum bonds; please itemize annually the principal, interest, and total (principal + interest).

    For illustrative purposes here is an example of what is being requested (the documents might look different, but this is the information being requested):

    Current Debt Service Schedule
    2019 – Principal – Interest – Total
    2020 – Principal – Interest – Total
    2021 – Principal – Interest – Total.
    etc.

    Proposed Debt Service Schedule for referendum bonds
    2019 – Principal – Interest – Total
    2020 – Principal – Interest – Total
    2021 – Principal – Interest – Total
    etc.

    Include that in the FOIA too.

    If they are a transparent district they will find a way to fill that request within 7 days.

    If they are not transparent they will play games, in which case, vote no.

    That’s the first step.

    There is no good way to evaluate a bond referendum without this information.

    It should be a state law that this information is provided on the district website for all bond referendums.

    ++++++++++

    It turns out the current debt service is buried in some district presentations.

    The district should also present it separately on their referendum website.

    Unless you have the know how and software to extract the page from the pdf document; or don’t mind scrolling through the larger document every time you want to reference it; just submit a FOIA request for it.

    ++++++++++

    Here is the typical lousy reporting of a school district bond referendum.

    This from the Northwest Herald.

    “A taxpayer with a $200,000 home currently pays about $273 annually toward the district’s current bonds, which the district is set to pay off in levy year 2018.

    If the referendum is approved, those payments would be replaced and the same taxpayer would pay about $208 annually in property taxes to pay for the new building bonds, according district documents.”

    https://www.nwherald.com/2018/08/24/mchenry-district-156-referendum-seeks-44m-for-buildings-overhaul-freshman-campus-plan/aq4mk6h

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

    What district documents?

    Neither the names of the documents, nor a URL to the documents are listed in the article.

    $208 for how many years?

    The article doesn’t say, but from other information on the district website, it seems to be 20 years.

    Is the taxpayer payment for bonds projected to stay at $208 until all bonds are retired (all 20 years)?

    Send that blurb to the district with a foia request for documents indicating the amount of property taxes annually if the bond referendum were to pass, for bond principal and interest for a $200,000 home for all future years until all bonds would be retired.

    That would look something like this.

    2018 Levy Year – $208
    2019 Levy Year – $208
    2020 Levy Year – $208
    2021 Levy Year – $250
    2022 Levy Year – $300
    etc.

    Those numbers are pulled out of thin air to illustrate that although the article leads you to believe the payments will be $208 until all bonds are retired, that may not be the case.

    Will be interesting to discover if the projected payments for the referendum bonds are $208 per year for 20 years for a $200,000 home value.

    ++++++++

    The district does have the current bond debt service schedule included in a few presentations on their website,

    Page 59 of 76 of, Board Meeting 8-20-18.pdf (Existing Debt Service on Bonds)

    Page 60 of 76 of, Board Meeting 8-20-18.pdf (Projected Debt Capacity)

    Page 39 of 76 of, Board Meeting 8-20-18.pdf (Capital Planning Tool)

    Page 30 of 59 of Community Connection Presentation .pdf (Existing Debt Service on Bonds)

    Page 31 of 59 of Community Connection Presentation .pdf (Projected Debt Capacity)

    Page 28 of 59 of Community Connection Presentation .pdf (Capital Planning Tool)

    The Capital Planning Tool slides are both blurry and thus unreadable.

    One could submit a FOIA request for a clean, readable version of those documents.

    They can at least provide an easy to read copy for their customer the taxpayer.

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

    More about FOIA.

    If all of the above is requested, everything can be placed on 1 FOIA request. That counts as 1 FOIA request.

    Or, they can be submitted as individual FOIA requests. That counts as 4 FOIA requests (or whatever the number that is requested).

    That can make a difference in some circumstances.

    If you exceed the number of allotted FOIA requests within a certain timeframe you are labeled a frequent requester, which results in the district being able to take longer to respond to your FOIA requests.

    Lots of information on FOIA is found on the State of Illinois Attorney General, Public Access Counselor website.

    +++++++++++

    Although that does not seem to be the case here, it seems the use of certificates in lieu of bonds is increasing.

    Examples would be debt certificates, building certificates, and lease certificates.

    Certificates typically don’t have a dedicated property tax levy.

  6. Now is a good time to remind taxpayers of how pension debt comes into play.

    The biggest pension debt is TRS (IMRF is much smaller).

    The TRS pension debt drawfs the bond debt.

    The TRS pension debt attributed to McHenry CHSD 156 teachers and administrators is $228,946,794.

    Almost $239 Million dollars.

    More technically that is the Unfunded Pension Liability (Net Pension Liability).

    The source of information is the McHenry CHSD 156 audited financial report (AFR).

    Couldn’t find the audited AFR on the McHenry CHSD 156 website.

    But it is on the EMMA MSRB website.

    Here are more details.

    That $239M is currently a state responsibility, on behalf of the school district.

    It’s broken down as follows.

    District Proportionate Share: $6,332,149
    State Proportionate Share: $222,614,645
    Total: 228,946,794.

    Even more details.

    There is a lag time from when TRS calculates the unfunded pension liability (net pension liability), to when it appears in the district’s annual financial report.

    Straight from the AFR:

    “The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015 and rolled forward to June 30, 2016.”

    Very confusing but the basic point is there is a reporting lag time due to various calculations being performed at various dates.

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

    So what does that represent?

    It’s the amount that should be in the pension fund, but is not, as of a certain date.

    It is for work already performed.

    It is an amount calculated by actuaries who take into account life expectancy (mortality tables) and many other factors.

    It is a shortfall of assets in the pension fund.

    The major problem with a shortfall of assets, is the shortfall is earning zero investment returns.

    That makes sense when you think about it for a bit, because it’s impossible to have an investment return on something not present.

    In an mature pension fund such as TRS, the largest annual contribution should come from investment returns, not the employer or employee contribution.

    +++++++++++

    It is currently a state responsibility, and major state revenue sources include state income tax revenue, state sales tax revenue, etc.

    The #1 reason why the Democrats want to implement a progressive income tax (which would require a state constitutional amendment) is to generate more state income tax revenue.

    The biggest state debt is pensions.

    TRS is severely underfunded.

    TRS is currently about 40% funded.

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

    When you hear about a possible partial shift of the annual TRS pension contribution from state to local, they are not talking about this unfunded pension liability, but the annual contribution for the current year worked.

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

    $239M is a crazy big number.

    Big problem.

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