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Lack of board support why U-46 nixed bonds?
By Seth Hancock
The School District U-46 administration appears to have been unwilling to allow a vote on the proposed $50 million in new debt under a Qualified School Construction Bonds (QSCB) because it assumed it would not have been approved by the Board of Education.
At the board meeting on Monday, Jan. 11, U-46 CEO Tony Sanders pulled the proposal from the agenda without offering an explanation and with no discussion from the board. U-46 spokesperson Mary Fergus later told The Examiner the “bond issue was pulled because more board members expressed concerns.”
The QSCB application deadline has since passed, and U-46 would have had to pay back the bond during a 25-year period. It would have been low to no interest, the interest being paid by the federal government thus putting it on the backs of taxpayers across the nation.
The Examiner contacted all seven board members to ask if they would have supported the proposal and Phil Costello, Cody Holt and Jeanette Ward all said they would not have supported it. Those three have voted no on several proposals by the district since taking their seats last spring, including during a 4-3 vote on the current budget.
The board’s president Donna Smith along with Traci Ellis, Sue Kerr and Veronica Noland did not respond to The Examiner’s inquiry. Of those four, Kerr was the only one to have made any public statements showing hesitation to adding new debt when she asked the administration for a Fiscal Year 2017 budget that had a property tax increase but assumed no added debt when budget scenarios were presented at the Dec. 14, 2015 meeting.
Costello, who was in attendance via phone at that meeting when the QSCB proposal was first presented to the board, did not give a public comment for or against the proposal before it was pulled and the administration appears to have assumed he would have voted no as he told The Examiner he didn’t support it, “nor was I asked for my opinion.” He was also not informed that the proposal would be withdrawn until Sanders pulled the item from the agenda the night of the vote.
“Prior to accepting responsibility for any debt, I need to know that we have a viable plan for paying it back within our budget,” Costello said. “I was not made aware of the rationale for removing it from the agenda until it was announced during the meeting, but Mr. Sanders has expressed in the past that he would not let any action come before the board that did not have a majority of support so Mrs. Smith must have taken it off the agenda.”
Costello added: “I am confident that the administration felt that it was a worthwhile financing opportunity, but I do not believe that it would have fit within a comprehensive strategic plan for financing fixed assets that does not currently exist. I did not see the value proposition in this particular action.”
For both Holt and Ward, their opposition largely had to do with the current total outstanding debt held by the district which, including interest paid on that debt, is at $565.9 million according to U-46’s most recent audit report. Jeff King, chief operations officer, said a payment of $42.6 million would be paid at the start of this month at the Dec. 14 meeting.
“I fundamentally disagree with issuing new debt when our current outstanding debt, with interest, is already so high,” Holt said. “I promised the voters I would not ask them for one more red cent in taxes or increase their long term obligations by adding one more red cent of debt.”
Holt also did not like the bonds being sold as low to no interest as the taxpayers, just a wider swath, would still of had to pay the interest.
“I also think it is misleading to call these bonds interest free,” Holt said. “All bonds have interest rates, however in this case, taxpayers across this nation would have subsidized these bonds for 20 years of the 25-year life span.”
Ward also noted the federal government’s involvement in her reason for opposing the debt as asking for more money from the feds invite more mandates to be placed on how the district operates.
“I am against initiatives that unnecessarily increase or lead to increases in taxes on all levels, federal, state and local,” Ward said. “Further, federal money tends to come with strings attached (although there were none explicitly attached to this, except that it could not be used to retire other debt). Taking more federal money tends to invite more federal control.”
With this proposal for new debt now in the past, Sanders is still seeking more funding from outside sources. In his weekly message to staff from Jan. 15, Sanders used the Martin Luther King Jr. holiday as a chance to emphasize the district’s agenda.
Sanders used a quote from the civil rights leader, including a portion of an article King wrote titled “The Purpose of Education,” which read: “To save man from the morass of propaganda, in my opinion, is one of the chief aims of education. Education must enable one to sift and weigh evidence, to discern the true from the false, the real from the unreal, and the facts from the fiction.”
Sanders then went on to write that U-46 deserves more money from the haves in other districts across the state to redistribute it to the have-nots in U-46.
“One of the truths in Illinois that we must address is inequitable school funding,” Sanders wrote. “In the past two weeks I have been in meetings in regards to school funding. I will be participating in a larger group discussion with districts (those of wealth and those of poverty) on an evidence-based funding model on a regular basis as this legislative session begins.”