In a previous post, I questioned how District 150 was able to transfer $6.3 million from a debt service fund to operations and maintenance. I posed this question directly to the district and received this answer today:
The applicable section of the School Code is: 105 ILCS 5/10-22.44 (Transfer of Interest) which states in pertinent part: “To transfer the interest earned from any moneys of the district in the respective fund of the district that is most in need of such interest income, as determined by the board. This section does not apply to any interest earned which has been earmarked or restricted… This Section does not apply to any interest earned on any funds for purposes of [Retirement], [Tort Immunity], [Fire Prevention], and [Capital Improvements]. Interest earned on these exempted funds shall be used only for the purposes authorized for the respective exempted funds from which the interest earnings were derived.”
I also asked how the district is earning interest on money that is supposed to be repaying the district’s debt. “In other words,” I asked, “I’m assuming the only way interest could be earned is because there is excess money sitting in the debt service fund – and apparently a lot of it to earn $6.3 million in interest! Why is there so much excess in that account? And why isn’t it and any interest it has earned going to pay off bonds instead of being transferred to operations and maintenance?” They responded:
Taxes levied to repay debt, generally, are received during the months of June through December of a given year with bond (and interest) payments being made in December (of the then current year) and the following June (of the year in which the taxes were collected). The nearly six month lag in time between the receipt of taxes and the disbursement of the same (for bond principal and interest payments) yields income it having been invested. It is this “investment income”, accumulated and compounded over a period of many years, that was transferred; in other words, the interest was not earned in one year on “…excess money sitting in the debt service fund – and apparently a lot of it to earn $6.3 million in interest!” The last recorded transfer, and then only partial transfer, of interest income occurred in 1997. The interest income was not earmarked or restricted for the purposes of paying bonded indebtedness.
This has been quite (ahem) educational for me. I never knew the district only paid bond debt twice a year while receiving tax income continuously. Nor did I know that they could invest that money in the meantime and rack up millions of dollars in interest income over the years. Nor did I know that said interest income could be used for anything.
Nor did I know that 105 ILCS 5/10-22.44 superseded this other part of the school code (105 ILCS 5/1E-80):
All moneys on deposit in the debt service fund shall be held in trust in the debt service fund for the benefit of the holders of the Bonds, shall be applied solely for the payment of the principal of and sinking fund installment, redemption premium, if any, and interest on the Bonds, and shall not be used for any other purpose.
See, this is why I’m not a lawyer. When I, a mere layman, read a statement like, “All moneys on deposit in the debt service fund…,” I think that means all moneys on deposit in the debt service fund. If I were a lawyer, though, I would know that it doesn’t really mean all moneys on deposit in the debt service fund. It means all moneys except interest earned on deposit in the debt service fund. I also thought that when two provisions of a code were inconsistent with each other that the more restrictive one applied. But that’s apparently not the case here.
The question I didn’t ask, but should have, was why they needed an extra $6.3 million in their operations and maintenance fund in the first place.
Need is due to the reduction in receipts from state and local sources that has adversely impacted our cash flow.
Jim,
That’s a fancy way of saying spending more than they earn. OTOH their source of funds is akin to skipping the mortgage payments to buy food – a rather short sighted planning that will have to be repaid.
Take a few more trips to California. The trust in the current administration is quickly going down, down, down.
It is my understanding that the trip to California was not paid by District 150, but that has not been confirmed by them. It’s all the people they rehire that has to be expensive! How many admins and consultants, but they can’t put two more security guards at Manual…
I, also, believe the trip was not paid for by District 150. Terry Knapp and later Rachael Parked asked the question at last week’s board meeting–I don’t know why Hinton chose to keep the information secret for the time being–I would think 150’s PR would be helped if the public knew that the trip was not paid for by taxpayers.
I agree about the consultants. It defies logic to hire retired administrators as consultants–when they hire replacements for them at the same or even higher salary. At least, I think the district should provide job descriptions detailing what these consultants are expected to accomplish and what they actually accomplish. I wonder if the figure that I regularly hear is not correct–$500 a day???? Hopefully, that just a rumor.
It’s interesting that Manual has always had only two security guards on duty at a time–so now why does the new and improved Manual need more security? More security guards will not solve the problems. What happens to the misbehaving students in the deans’ office is what will solve the problems. Also, my guess is that all the schools–not just Manual–need more security (until the real solutions are instituted).
Why the need for additional funds in operations and maintenance – poor management! Frivolous equipment purchases, poor building maintenance, cell phones to take home for every custodian and maintenance person, lack of effective physical plant leadership and extremely poor and unqualified supervision.
Sharon, I thought Manual had over 300 new students this year compared to the past.. perhaps I received information that was not correct.
I just wrote a story for the Community Word–not sure if it will be published. But I asked for all the statistics through FOIA about enrollment of 9th grade academy.
There are 140 7th & 8th Graders; there are 166 9th graders (enrollment normally was 180-190 at beginning of year); I actually don’t know the 10th – 12th enrollment–I didn’t ask for those figures but I doubt that those grades have an increased enrollment.
The addition of the 7th & 8th graders is the only factor that increased enrollment. But 9th enrollment is down–so there are possibly 100-150 new students–only because of the 7th & 8th grades.
However, Manual’s enrollment is still much below the other high schools. Rumor (probably more than rumor) has it that PHS has had a rash of fights this year–they probably need more security, too.
Besides security doesn’t really prevent fights–just intervenes when fights occur.
This shows me that D 150 needs to be more transparent about its spending/finances — Adam A. and the people supporting forthegoodofillinois[dot]org are doing that throughout the state.
Thru FOI, they are getting schools and other local gov’t to post their ‘check register’ so to speak, on the internet. I think that would be a good thing to start down here.