The Lyons Township Trustee of Schools treasurer’s office, commonly known as the TTO, and Lyons Township High School District 204 are embroiled in a contentious lawsuit in which the treasurer’s office claims that District 204 hasn’t paid its bills to the TTO for at least 13 years and owes it a little more than $4.6 million.
LTHS officials reject the allegations in the suit, which was filed three years ago and is now in the discovery phase.
And it hasn’t been cheap for taxpayers. TTO board President Mike Thiessen estimated that TTO has already spent about $900,000 on the lawsuit, while LTHS Superintendent Tim Kilrea estimated that LTHS’s legal fees in the case have amounted to somewhere around $150,000.
LTHS has rebuffed the TTO’s offer of settlement talks or mediation.
“We want to prove that we’ve done nothing wrong,” Kilrea said. “We intend and we expect to win.”
The whole lawsuit may come down to what the meaning of the word “accept” is.
TTO officials claim that LTHS owes the TTO $2.8 million because they say LTHS did not pay its share of the TTO’s operations for more than a decade.
The lawsuit also claims that LTHS received close to $1.6 million in excess interest income from the TTO and that the TTO paid just over $500,000 to cover audits for LTHS.
All school districts in Lyons Township share in the cost of running the TTO, according to a formula based on their revenues.
“Up until about 2013 they had not paid their financial services pro rata bill to the TTO since 2000,” TTO Treasurer Susan Birkenmaier said. “We feel it is our responsibility to try to recover those funds.”
However, LTHS officials say that they had reached an agreement with the Lyons TTO under which the TTO would give District 204 a credit for work that the district did itself.
“In 1999 the treasurer’s office and the LT board reached an agreement that said since we’re not performing those things, we’ll pay you for performing those services,” said Kilrea.
LTHS officials point to a March 21, 2000 meeting of the Lyons TTO board in which the three-member board voted 2 to 0 to “accept the proposal given to the Lyons Township Trustees of Schools by Cook County High School District 204” according to the minutes of the meeting.
The paragraph before the record of the vote outlines an agreement whereby the TTO would absorb costs LTHS incurred by LTHS to do its own payroll, accounts payable and computer processing costs.
The agreement came after years of complaints by LTHS officials, who felt they paid too much to be part of the TTO and didn’t need the TTO’s services. They were threatening to leave the TTO.
TTO officials argue that the March 21, 2000 vote is inconclusive and that the meaning of the word “accept” is unclear.
“The language that our board has is their minutes says that the proposal they presented was accepted, so the interpretation of the word accept is what is at crux of the disagreement I believe,” Birkenmaier said.
Birkenmaier said the minutes reflected that the TTO wanted to make sure that workman’s compensation costs were covered for LTHS employees and that evaluations of the District 204 employees handling payroll and bill paying functions were forwarded to the TTO.
Thiessen downplayed the vote in 2000, questioning whether the agreement was even valid.
“That’s not a contract,” said Thiessen, who was not on the TTO board in 2000. “Those contracts have to be board-approved by both boards. At the end of the day, they didn’t do a board vote on this. Their finance committee cannot do anything that’s binding.”
Thiessen says that the District 204 Board of Education never formally approved any agreement with the TTO.
LTHS officials point to correspondence from former TTO Treasurer Robert Healy and to the TTO noting the precise amount of the charge-off each year. For example LTHS’ share of the costs of the TTO bill for the 1999-2000 was $165,476. In July of 2000, District 204 sent the TTO a check for $59,073 to satisfy its share.
“We do our payroll, we print our checks and bring them over to them and they run them through a printer with the signature on them and we’ve doing this for decades,” Kilrea said. “It’s not like this just started.”
Since the TTO filed suit against LTHS in 2013, LTHS has begun paying more to the TTO, but they still do not pay their entire fee. In the most recent year, the TTO billed $395,000, but LTHS paid only $250,000.
“They’re billing us for legal fees to sue ourselves, but they’re also billing us for some software costs for software that we don’t have access to,” Kilrea said, pointing out why LTHS did not pay its full bill.