Last year, District 200 issued a press release stating that the $14.46 million school construction grant it received “was originally earmarked for construction” and could be used for Jefferson Preschool. But District 200 has changed its tune, and now says it won’t use one dime of the grant to rebuild Jefferson, because “multiple school renovations in the 90s were partially funded by cash reserves.” It says the school construction grant has instead “reimbursed District reserves.”
In other words, the District 200 School Board has decided that increasing its checkbook balance is a higher priority than rebuilding Jefferson Preschool.
But this is the wrong answer for three reasons.
- District 200 already rebuilt its reserves, and then some – only to draw down over $40 million in reserves, not in the 1990s, but in the last decade to fund deficit spending.
- The reserves are already enough – even without the grant money, they have doubled in the last decade (far outpacing budget growth), and the District’s bond rating was reaffirmed based on the reserve level that existed before the grant money arrived.
- The District’s own financial advisors say that the reserves will grow on their own, more than the amount of the grant money, if the Board sticks to its own financial plan.
First, voters should remember that the District has already “reimbursed” itself – with over $74.1 million of new money going into its Working Cash Fund reserves in just the last decade, long after “the 90s” ended. Where did that money come from – and why does the District want still more?
In 2002, the District had $10.3 million in the Working Cash Fund. Since then, it has borrowed money by issuing bonds for Working Cash purposes: $11 million in 2002; $19.5 million in 2004; and another $20 million in 2009. All of those bonds were issued without a referendum, and they add to the property tax burden because they are not subject to the tax cap. As if that weren’t enough, the District also collected an additional $8.1 million for the Working Cash Fund from its regular property tax levies, and earned about $3.9 million in total interest (interest rates on savings used to be higher). Throw in the $11.6 million “reimbursed” from the construction grant, and District 200 should have $74.1 million in reserves.
District 200 actually has only $33.5 million left. The rest of the money – over $40 million – has gone to subsidize the Board’s deficit spending.
Second, when District 200’s bond rating was reaffirmed last year, the Standard & Poor’s analysts said the rating reflected the District’s “strong reserves level in its working cash fund” – in April, before the grant money was added. In other words: District 200 already had strong reserves before adding the grant money. There was no need to divert it as an additional “reserve.” In 2002, the District had $10.3 million in reserves for a $131.1 million budget (excluding debt service). In 2012, reserves (without the grant) were $21.9 million for a $146.5 million budget.
And third, District 200’s own financial projections show that reserves will continue to grow – provided, of course, the Board maintains fiscal discipline. Fiscal discipline is easier when there isn’t a big pot of extra money available to spend in the meanwhile. According to the District’s five year financial plan (available here - page 16 of the presentation), by 2017 the District’s reserves will grow by more than $17 million, exceeding the total amount of the school construction grant.
Bottom line, there’s no good reason to vote for a tax increase April 9 when District 200 has adequate reserves PLUS the money needed to rebuild Jefferson sitting in the bank.