33 Comments - The Captain - Tuesday, Jan 7, 20 @ 2:27 pm: I get the spirit of this recommendation but I think we all wish our local area had a rainy day fund too. I’m sure there’s a balance between those two considerations that well-intentioned people could come up with. - NIU Grad - Tuesday, Jan 7, 20 @ 2:28 pm: I imagine they would have to set a standard for what “excess reserves” are. A safety net is one thing…hoarding too much is a disservice to taxpayers. - ChrisB - Tuesday, Jan 7, 20 @ 2:32 pm: So they want to have a “Use It or Lose It” rule? That’s never backfired for government entities. - Give Me A Break - Tuesday, Jan 7, 20 @ 2:32 pm: Establish caps for how much a district can keep in reserve, including restrictions on how those reserves can be spent. After that, I suppose you could refund the taxpayer. - Demoralized - Tuesday, Jan 7, 20 @ 2:35 pm: Depends on how they define “excess.” If they are saying any reserves then I would disagree with the idea. It’s always good financial practice to have a reserve of funds. I would say at least 6 months would be reasonable. - SWIL_Voter - Tuesday, Jan 7, 20 @ 2:37 pm: Why should we encourage governments to save when we discouraging individuals from saving? The next recession is gonna be wild - Oswego Willy - Tuesday, Jan 7, 20 @ 2:39 pm: Rainy Day Fund can not exceed 150% of total operating costs of the last fiscal year. “Why?” You never know when a governor might hold a whole state hostage for a year. Sounds crazy, but it could happen… again. Narrator: Rauner held Illinois hostage for two years. ———————————— If the max is 150% of operating costs it will truly be a rainy day fund, not a squirreling of monies for the sake of squirreling Can’t guess if another Rauner would appear, but you can prepare. - Dan Johnson - Tuesday, Jan 7, 20 @ 2:43 pm: Two months is sufficient. Local governments can barely invest that money in a mutual fund and the taxpayers would do better with their own money than the local government’s bank account. Civic Federation has a position on it (I think two months, maybe six at the max). - Romeo - Tuesday, Jan 7, 20 @ 2:45 pm: Doesn’t this already exist? https://www.dailyherald.com/news/20180912/tax-cuts-in-18-school-districts-its-possible-thanks-to-referendums-on-next-aprils-ballot Essentially when the new ISBE funding formula came out, it prohibited hoarding of funds over 110% of the “adequacy level.” But the local voters had to petition and hold a referendum on it. Lisle taxpayers petitioned but lost the vote. In Valley View Community School District 365U, the school district hadn’t even come close to 85% of the adequacy level. So there were no tax savings for us in 365U, because we apparently aren’t being taxed enough. - Back to the Mountains - Tuesday, Jan 7, 20 @ 2:49 pm: Since the wealthy districts were so concerned about the distribution of state funds being equitable, lets sweep rainy day funds beyond a certain threshold and equitably distribute those, too. - thunderspirit - Tuesday, Jan 7, 20 @ 2:49 pm: There absolutely should be a rainy day fund. That fund should be between three and six months of expenses, and should require recordkeeping of when it’s been tapped into and why. Anything more than that should be refunded to the taxpayers and the levies adjusted accordingly. - Shemp - Tuesday, Jan 7, 20 @ 2:50 pm: This recommendation = (.) The actual problem (______________________________________) This recommendation gives new meaning to nibbling around the edges. - phocion - Tuesday, Jan 7, 20 @ 2:58 pm: Great idea - it should be mandated by state law. Sitting on top of more than 6 months of operating costs as a “reserve” is excessive. I would add another concept. Those taxing bodies located in municipalities that have TIF Districts are prohibited from increasing their share of property taxes commensurate with the TIF when that TIF expires. Too many schools, park districts, libraries complain about TIFs (even though they never lose out) and then when the TIF is gone and the taxing bodies receive a subsequent windfall, those same entities take the windfall and do not give the taxpayers a break on their current property taxes. - Tommydanger - Tuesday, Jan 7, 20 @ 2:59 pm: Hate to muddy the waters, but as long as we’re talking about the balance sheets of public education systems in Illinois, maybe we should ask if a 1.5 billion endowment balance at the U of I is excessive given its public mission. - OneMan - Tuesday, Jan 7, 20 @ 3:01 pm: Good Golly I wish my district had that issue. - Anyone Remember - Tuesday, Jan 7, 20 @ 3:02 pm: Back to the Mountains ” … lets sweep rainy day funds beyond a certain threshold and equitably distribute those, … .” After Blago / Quinn, fund sweeps should be illegal. Rebate the “excess” to those who actually paid it. - Oswego Willy - Tuesday, Jan 7, 20 @ 3:05 pm: === Good Golly I wish my district had that issue.=== Yep. Agreed. SD308 is still owed money (I think?) from the state, let alone our tax levy. The board is trying, plus all the building of buildings is over. - Anonymous - Tuesday, Jan 7, 20 @ 3:05 pm: == 150% of total operating costs of the last fiscal year… You never know when a governor might hold a whole state hostage for a year.== Point taken, but Illinois schools are about 60% sourced by local (property) taxes, so a (non-Rauner) Governor can only do some much damage. In higher ed, the standard is to have about 60 days working capital in the reserve to cover this sort of thing. I can see why this might be a bit low (the University as a whole also keeps a reserve), but I can see no reason why a school district should have more than a full FY of expenses in the reserve. - Oswego Willy - Tuesday, Jan 7, 20 @ 3:08 pm: I was waiting for this; === Point taken, but Illinois schools are about 60% sourced by local (property) taxes, so a (non-Rauner) Governor can only do some much damage.=== All true. The argument I *am* making is that’s the only real wild card, “today” on the formula, is that way. If there ever is property tax relief, this won’t need to be changed too. Measure twice, cut once. - Amalia - Tuesday, Jan 7, 20 @ 3:10 pm: might be a formula to determinesthe rainy day fund so that the give back amount can leave a reasonable amount. can’t give back all of it. plan for bad times is a good thing. - DarkDante - Tuesday, Jan 7, 20 @ 3:15 pm: ==Measure twice, cut once.== I agree, we shouldn’t set it artificially low (so that $$$ flow from reserves rather than taxes) or articificially high (to save the rich districts from having to spend down reserves), but rather at a sensible level that reflects fiscal reality (property tax fatigue, possible interruptions in state funding). I simply think a 150% level is far too high, even given our repute for topsy-turvy finances. - Say What? - Tuesday, Jan 7, 20 @ 3:21 pm: So the entity that has proven beyond a reasonable doubt that they either cannot, or will not, balance its’ own budget is going to set the rules for other duly elected bodies? In the name of “you have too much $$$ on hand”? No thank you. - Sue - Tuesday, Jan 7, 20 @ 3:22 pm: The State has no business dictating the size of rainy day funds for local govt bodies. Maybe we all should be like the State and have like 5 days worth of reserves. Reducing the size of reserves doesn’t address the expense requirements the State has imposed thru Teacher pensions. No one should be taking financial advice from Springfield - here is a Solution- maybe JB should just donate his 3 billion over to the State- maybe it would force him to go on a spending diet - Oswego Willy - Tuesday, Jan 7, 20 @ 3:26 pm: === Reducing the size of reserves doesn’t address the expense requirements the State has imposed thru Teacher pensions.=== (Sigh) - Annonin - Tuesday, Jan 7, 20 @ 3:26 pm: Once upon a time there were districts with more than a year in reserve. Better idea. let’s just mandate that 80 dates is enough time to teach the darlings each year and slice the spending accordingly - Blue Dog Dem - Tuesday, Jan 7, 20 @ 3:40 pm: The albatross that is hanging on Illinois’ neck is property tax. The non-fair tax proceeds will be spent and no property tax relief will be had . This is our doomsday scenario. Sorry to be so pessimistic,but neither Republicans or Democrats have the fortitude for this heavy lifting. - Boone's is Back - Tuesday, Jan 7, 20 @ 3:43 pm: I like the concept behind it but think that the practice of it needs to be reworked. What about mandating language about the level of reserve funding before asking for a bond referendum or levy increase on a ballot initiative? - TheInvisibleMan - Tuesday, Jan 7, 20 @ 3:46 pm: === plus all the building of buildings is over.=== Your neighbor to the south in plainfield - D202, just decided to build a new school with no referendum. They claimed they had enough cash on had to build the new building with no voter approval for issuing bonds to finance the building. Keep in mind, this district has seen a decline in total enrollment of well over 10% in the past few years, and just last year the same district was complaining that they didn’t have enough money because of “the state”. They didn’t go into detail, but that was their complaint. So consider yourself lucky if your board isn’t building. Because as proven by the district immediately adjacent to you, demand for new buildings clearly isn’t what drives the desire for building them. - Willey Coyote - Tuesday, Jan 7, 20 @ 3:50 pm: If taxpayers wish to have reserve funds rebated, they only need to vote school board members into office who promise to do so. This is a locally controlled issue that the state has no business in! - Shemp - Tuesday, Jan 7, 20 @ 4:32 pm: This report is such a waste. Tinkering with the Appeals process as recommended is treating the symptoms of a much larger problem. Cleaning up appeals doesn’t shrink the amount of property tax, it only redistributes it. Increasing exemptions is just the same, it’s rearranging the chairs on the deck. The overall burden just gets shifted to the rental sector and the economic development sectors of commercial and industrial. This reports only solution under “Attacking Rates” is to share industrial and commercial rates across the County for schools. THIS is supposed to put a dent in rates? Really??? The pension subcommittee of the groups only proposal, other than passing the bill already passed to consolidate, was to look at amortization calculations. The only way you lower the amount needed to pay pensions through “alternative methods of amortization” is to underfund your current contributions/kick the can down the road through underfunding. You want to tighten TIF, fine, tighten the definition of blight, but shortening the TIF to 10-15 years is neutering one of the few tools a downstate community has when trying to redevelop empty box stores and malls or abandoned factories that were once the center of commerce or employment in smaller areas. Whoever thinks that downstate TIFs are realizing their full needs in ten years as indicated in the report isn’t taking a good look at the right downstate TIFs. As to consolidations, such as merging drainage districts into municipalities, the report does acknowledge it’s not so simple. What it does ignore is when you move employees from small units of government into larger ones, the reality is the larger units pay more for labor per hour. That’s a very real reality whether it’s a drainage district to county, townships to county, etc. The comparables in public labor contracts show bigger organizations pay more. Thus, in many cases there has to be sufficient overhead savings to save on the labor side at the end of the day. And for good measure, after promoting consolidation, the State recommends we leave assessments to the Townships, but also increase their training requirements as if this will create cost savings. If anyone had half a brain, they’d be tying a property tax swap into the progressive income tax to get buy-in. - G'Kar - Tuesday, Jan 7, 20 @ 4:52 pm: The CFO of my community college argues that three months worth of reserves is the fiscal standard. - Shemp - Tuesday, Jan 7, 20 @ 5:04 pm: 3 months should be minimum. Bond rating agencies like it if you have more. Better bond rating = lower interest = taxpayer savings. - zatoichi - Tuesday, Jan 7, 20 @ 5:26 pm: If you are going to set a reserve limit, will that be followed by mandated payments by the state for any unpaid bills exceeding some time or volume limit. The long history of pension vacations/unbalanced budgets makes serious reserves a requirement when working with the state on anything. Sorry, comments for this post are now closed.