With Illinois voters overwhelmingly favoring an amendment to the state’s constitution to sequester any funds earmarked for “transportation” for those purposes only, some Illinois school districts, including Riverside District 96, moved to empty the cash reserves in their transportation funds and move them into funds that can be used for education purposes.
Six days before the Nov. 8 election where the so-called transportation lockbox amendment appeared on the ballot, the District 96 school board voted to transfer $8.3 million from its transportation fund to its education fund, which is used to pay for day-to-day school operations.
Included in that total figure was a $3.5 million loan from the working cash fund to the transportation fund and a $2.4 million loan from the operations and maintenance fund to the transportation fund.
There is some speculation that the new amendment might not apply to school districts, but the language of the amendment is so broad that it appears to prohibit the transfer of any money related to “the use of vehicles.”
“Although it is uncertain whether the proposed amendment applies to school districts, the board believes that it is fiscally responsible to make this transfer before the vote on this amendment as a precaution to safeguard the fiscal strength of the district,” said school board President Jeffrey Miller after the board’s Nov. 2 vote to make the fund transfer.
The constitutional amendment, marketed heavily in TV ads as the Safe Roads Amendment, was pushed hard by road contracting firms and others involved in the construction of public infrastructure and clearly was intended to safeguard money set aside for those purposes.
“No one who voted for the amendment thought school districts were responsible for having to fill a pot hole or build an airport,” said David Sellers, the school district’s interim director of finance and operations.
Sellers has taken something of a leading role in determining just how much the amendment will impact state school districts. He has taken it upon himself to survey districts that rely heavily on their transportation levies to help fund education programs and is talking with a financial consultant from the bond counsel firm Chapman and Cutler to see if there’s an argument to make that school transportation funds shouldn’t be included in the lockbox.
“School districts have reason to worry, but we’re engaged in the process of determining how to avoid the inherent misconception that school districts are responsible for roads, railways, airports or transportation infrastructure.”
Each year, school district’s levy taxes to support four core areas of school operations – education, operations and maintenance, transportation and working cash. All of those funds, except the transportation fund, have their annual tax levy extensions capped by law.
As the total equalized assessed value (EAV) of property in District 96 has fallen since the real estate crash of 2008 – the district has lost 36 percent of its EAV, according to Sellers – the tax rates in the education, operations and maintenance and working cash funds have reached their legal ceilings.
For the past two school years, the school board has made transfers of up to $1.5 million from the transportation fund to the education fund to cover a budget shortfall. Facing the prospect of losing the ability to make that transfer after Election Day, the school board moved to make the move while it still could.
The loans to the working cash and operations and maintenance funds will have to be repaid by the transportation fund.
In order to do that, the school board is expected to ask for a 50.59 percent increase in its 2016 transportation fund levy, according to preliminary information discussed by the school board on Nov. 2. The board proposes levying about $4.1 million for transportation, which will be used to repay a portion of the loans.
The levies for education, operations, special education and maintenance and working cash are expected to be about 2 percent lower that they were in 2015.
However, once the loans made on Nov. 2 are paid off by the transportation fund, the school district will lose the ability to make any more transfers from that fund as long as school districts are bound by the language of the amendment0
This article has been changed to correct the amount of money the school district has transferred from its transportation fund to its education fund in the prior years. The coorect figure is up to $1.5 million.