The Examiner U-46 News Feed

U-46 referendum asks taxpayers for more debt

By Seth Hancock
  Voters in the upcoming April 4 election will be asked if School District U-46 should issue new debt, totaling $179 million.
  The district claimed it can issue new bonds without increasing the property tax rate on the debt service portion of its annual levy when the Board of Education approved of placing the referendum on the ballot at a special board meeting, on Dec. 19, 2022.
  Former Superintendent Tony Sanders noted at the time the district still plans to ask for the highest tax levy allowed under the law for the corporate/special use levy as usual as the district has no plans to reduce spending. This year’s budget was the eighth straight with spending hikes along with enrollment declines, and spending has increased 62 percent and enrollment has declined 13.5 percent over the last decade.
  District officials admitted that if the referendum fails property tax bills will decline as current debt is paid off, but Sanders said the district should remain in perpetual debt.
  Sanders said: “It would behoove future boards to continue to ask voters to continue that… to make sure that the bond debt continues to remain at that viable level.”
  The district stated, in a memo, that the new debt “would be paid back in 20 years” with the debt service levy annually remaining just above $30 million (about where it currently is at) through 2032 if the referendum is approved, dropping below $20 million after that through 2042. If opposed, the debt service levy will drop below $20 million next year and around $15 to $17 million thereafter until being fully paid in 2032 wiping out the debt service levy completely.
   Of note is the district is estimated to receive an additional $4.7 million in property tax revenue annually, which equates to $94.4 million over a 20-year period, on the expiration of a Bartlett tax increment finance district, according to a Freedom of Information Act request by a Bartlett resident to the Wayne Township Assessor.
  Although claiming the debt can be issued without affecting the tax rate, Sanders admitted that’s with “all things relative.”
  Of further note, bond market interest rates are volatile and have been trending up, as the U.S. Treasury data shows the 20-year treasury rate at 3.9 percent which is up from the near 1 percent rate three years ago. No questions were asked by the board about where interest rates need to be at to maintain a flat debt service tax rate.
  The Examiner did ask the district about how much of the potential $179 million referendum funding would go to retire current bonds and what is the expected interest rate differential between any current debt being retired and the potential new debt.
  “If approved by the voters, the $179 million bond will fund new projects to make safety and security improvements, renovate and replace infrastructure, add classrooms for early childhood education, improve accessibility, and construct STEM labs” said Karla Jiménez, director of school and community relations. “None of the $179 million proceeds will be used to retire/refund current outstanding bonds.”
  Jimenez added: “The interest rate the school district will pay to service its bonds is known once the new bonds are issued. The interest rate used to estimate the cost of the proposed $179 million bond is 4.73 percent, which includes a large interest rate cushion given market uncertainty.”