Elmhurst District 205 School Board members on Tuesday unanimously adopted an overall levy of $95.8 million, an increase of 4.7 percent over 2010, which is based on a consumer price index of 1.5 percent and an amount for new growth.
A large portion of taxes related to new growth is coming from the Elmhurst Memorial Hospital properties, but that money—$1.4 million—will have to be returned if the hospital regains its tax-exempt status.
Board member John McDonnough pointed out that if the district has to return money to the hospital, it will have to do so with interest.
"The interest we'll have to pay on $1.4 million will exceed any interest we will earn (while holding on to the money)," he said. "This whole hospital thing is going to cost us money."
The district is levying more than it expects to receive from taxpayers in order to capture all potential revenue from new growth.
"We expect (to receive) more like 3.79 percent," assistant Superintendent for Finance Chris Welton said.
District 205, like other districts, is facing falling revenues and increasing expenses, Welton said. Interest income is down, state funding is unreliable and likely to decrease and federal funding is flat, while healthcare and other staffing costs, technology needs and energy costs have gone up. The district gets 84 percent of its revenue from property taxes.
"The district is a very service-intensive organization," he said. "Seventy-nine percent of the budget is related to staffing, and that is closely linked to enrollment and the needs of students."
Flat revenues and increasing expenses have resulted in "a structural deficit for schools," he said.
The tax cap limits taxing bodies' annual request for property taxes to 5 percent or the consumer price index, whichever is lower, plus an amount for new growth. It was put in place to force school districts and other taxing entities to get permission from taxpayers, via referendum, to receive more money.
"Our last referendum was in 2006," Welton said. "The district is attempting to stretch the amount of time between referendums with significant budget cuts and staff reductions over the past two years."
The district has achieved a net reduction of about $5 million in expenses over the last two years as a result of budget cuts and fee increases for students.
In related business Tuesday, the board heard a summary of its annual, independent financial audit. Welton said the district, for the fifth year in a row, has received recognition for its positive financial position. A summary of income shows a net increase of $4.15 million in the district's fund balance in fiscal year 2011.
"It was a positive financial year for the School District," Welton said. "This can only be achieved by hard work, budgeting and prudent financial decision making. We continue to comb through the budget to see what costs can be lowered."
But that is no consolation to Elmhurst homeowners like William MacDonald, who spoke during the tax levy public hearing.
MacDonald lives in a 1,500-square-foot, three bedroom ranch house on Madison Street. He told the board that in 1998, he paid $3,800 in property taxes, with a large portion of that going to the School District. In 2010, he paid $7,600 in property taxes, of which $5,200 was for the schools.
"That's a 100 percent tax increase in 12 years—more than 6 percent a year," he told the board. "According to the Federal Reserve Bank, inflation was 39 percent over the same time period. Why does education go up 100 percent and (inflation) go up 39 percent? It speaks to the fact that you haven't managed the (district) very well.
"Over the last 12 years, home values have collapsed, but the taxes you levy have not. Now you want to raise them again."
He said the action was "cruel" to taxpayers, and board members are not willing to ask the teachers to make any sacrifices.
"You are great advocates for the teachers union and administrators, but the taxpayers of Elmhurst have no advocate," said MacDonald, who was the only citizen to comment at the hearing.
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