Unit 5 likely to issue more bonds, as temporary fix to structural deficit – WGLT

Unit 5 again plans to use working cash bonds to cut into its structural deficit, now at $13 million. But several board members said Wednesday it’s time to stop relying on that kind of temporary fix.

At its meeting, the board voted unanimously to take early steps toward issuing up to $46 million in bonds, which would help out for fiscal years 2023-2025. It marks the third time in recent years the school district has turned to this kind of sale as a budgeting tool.

Also at Wednesday’s meeting, the school board adopted a $131.7 million property tax levy for 2021, with a projected tax rate slightly lower than last year’s. The board also approved spending about $1.3 million on life-safety projects, and members heard about the district’s ongoing busing challenges.

The last two times the board approved working cash bonds, the district first looked at the money needed, then set the bond amounts. Each time, the decision resulted in an increased tax rate.

“This one is very different,” said Unit 5 finance chief Marty Hickman. Instead, the priority was avoiding an increase to that tax rate.

But the resulting effect is that even if the board does issue the maximum $46 million, the revenue still wouldn’t be enough to maintain the district’s programs at their current levels, he said.

“It will help us stabilize things for the next three fiscal years (2023 to 2025). But we will need cuts at the same time,” Hickman told the board.

Wednesday’s board vote only is the first step in the bond proposal.

“It’s not actually approving the issuance at this point,” said board member Barry Hitchins.

Back in 2019 – when the Unit 5 deficit only was about $6 million – murmurs began about pushing for a tax increase referendum. Now, as the structural deficit grows, in tandem with more staffing and program needs, the district leaders need to make tough choices — where to make cuts, and whether to seek a referendum. Such a vote would ask voters to decide whether the education fund’s tax rate cap should go higher.

“Even with (these bonds) — essentially, a Band-Aid that we are trying to employ — there are going to have to be some very hard and strategic decisions that we’re going to have to make, in order to make sure that’s sustained beyond” this short-term fix, said board member Alan Kalitzky.

As part of Wednesday’s meeting, PMA Securities’ Bob Lewis offered a detailed presentation on the latest proposal for working cash fund bonds, as part of a financial plan for the district. He noted the timeline suggested 2024 elections could be a logical point for the referendum question to return to Unit 5 voters.

Lewis said in February, the board could vote on whether to authorize the sale of bonds. If approved, the district could see the revenue by April.

If the total amount was pursued, the district would see an estimated $45.5 million in net proceeds for staffing classrooms and school district programs, said Lewis. Using current interest rates, the district could expect to pay a favorable $2.1 million in interest, he said.

The median home EAV in McLean County is about $186,000. If this bond proposal gets the official OK this spring, that would would see a related tax increase of $3 in 2023, and $10 in the two years after that, said Lewis.

Unit 5 intends to transfer the working cash bond revenue to its Education Fund, which has the deficit, Hickman told the board. But, he noted, as proposed, leaders would have flexibility in how to use that revenue.

Board adopts annual tax levy, no tax rate increase

Also at Wednesday night’s meeting, at Normal Community West High School, the board unanimously approved this year’s $131.7 million tax levy, as proposed. That’s about 1.3% higher than last year’s $130.4 million levy.

The district estimates a slightly lower tax rate than for 2020. But Hickman cautioned that doesn’t necessarily mean a homeowner’s taxes will be lower. It all depends on a property’s equalized assessed valuation (EAV), he said.

The proposed levy assumes a 3.78% increase in property (EAV) throughout the district. That’s higher than the actual 1.75% increase the district expects, said Hickman. But setting the figure higher allows the district to capture more revenue.

Using the higher EAV, the rate would go from last year’s $5.64 per $100 of EAV to $5.58 per $100. That’s a 6-cent drop. Hickman said a likelier scenario is a decrease in the 2.5-cent to 5-cent range.

Despite that decrease, whether a homeowner will pay more or less in taxes varies, he said. It depends on the value of the property. School districts don’t set EAV, noted Hickman. That’s determined by state, county and township assessors. Because Unit 5 is situated across several townships, the numbers aren’t the same for everyone.

The levy is important to Unit 5 because it represents about 60% of the district’s main revenue funds for 2021-2022, Hickman said during his presentation. The state only provides about 20%.

Busing issues continue

Unit 5 continues to struggle with managing its buses this fall. During November, one of every 10 routes brought students to school after start times.

Superintendent Kristen Weikle told the school board on Wednesday that the problem lies in the inability to have enough drivers on hand.

Among Illinois’ more than 800 school districts, Unit 5 is among the 15th largest. Weikle said the same issue is plaguing many districts.

One possibility is shifting to earlier pickup times, to keep the three levels – elementary, junior high, and high school – running on time. Another option would be to eliminate bus service for fifth-grade band practice, eighth-grade foreign language class, and using buses for extracurricular activities.

Other districts have even eliminated some routes, requiring parents to drive students – or then offer those students excused absences, Weikle told the board.

Having enough bus drivers on staff is the issue, she said. The district as a whole reflects the national labor shortage, as it continues to try to hire more teaching assistants and substitute teachers and custodians, said Weikle.

Specifically regarding bus drivers, Weikle said transportation company First Student has hired 28 drivers since June, and has seven candidates in training.

School bus drivers must have a commercial driver’s license, which adds to the job retention challenge, said Weikle, noting local employers are competing to hire those CDL-holders.

Winter COVID surge here

Weikle also said the district, like the community as a whole, is seeing a surge in COVID-19 cases this winter.

With that has come a related increase in contact cases having to quarantine at home, she said. Although there has been a push in some school districts to use a program known as test-to-stay to avoid quarantines, Weikle said Unit 5 can’t afford to cover the cost of that program.

“Right now, we don’t have the staff capacity,” especially as COVID-19 cases increase, she said. Weikle said the program is complicated with layered days of testing, and only a 30-minute window to log results.

In the test-to-stay scenario, students exposed to a COVID-positive student can remain in school only if they regularly test negative, and have no symptoms. But the Unit 5 chief said the complexity of the program, including strict requirements on filing test results, would make it impossible in the district of about 13,000 students.

Board member Jeremy DeHaai later said he understands that during this surge, it isn’t possible. But he wants the administration to push for the testing program.

“I’d like to see us try to move to that sooner, rather than later,” said DeHaai.

More than $1 million in spending adjustments OK’d

As part of its consent agenda, the board OK’d approved spending about $1.3 million of the district’s fire, prevention and safety funds toward amended project costs at five schools.

According to board materials, the bulk – about $1.1 million – is needed for extra costs associated with the Chiddix Junior High School geothermal and HVAC project. The rest is for projects at Parkside Junior High, as well as Pepper Ridge, Fox Creek, and Benjamin elementary schools.

In other business, the council:

  • Renewed the district’s insurance for 2022, through the Suburban School Insurance Cooperative Program. The $942,973  insurance premium is 5% higher than the previous year.
  • Approved a $115,000, 6-year contract with Intelligent Marketing USA to rent a pair of Turf Tank robots. The line-marking devices increase efficiency, and reduce staff overtime, according to board materials.
  • Approved a pay rate increase for the E-Sports coach position; and created an assistant E-Sports coach position.
  • Heard a presentation about Unit 5’s career and technical education programs, including the district’s partnership with the Bloomington Area Career Center.