Debt Service Extension Base Referendum. Hartsburg-Emden District #21. What is meant by Debt Service Extension Base? .
Hartsburg-Emden District #21
It is the amount the board can levy for principal and interest in a single year to pay off non-referendum limited tax bonds. For instance, if the board of education would sell $250,000 worth of bonds and finance them to be repaid over a period of three years, the total levy for each of the years would need to equal the annual payment.
The current DSEB is $0
This figure was based on the amount of outstanding bonds (debt) owed by the school district at the time “tax caps” came into effect in Logan County (1996).
The board of education cannot issue bonds (borrow money) with prior voter approval except health/life safety bonds.
Elections are held only at specified times every other year and may not always coincide with when the board would need additional revenues to operate.
The last bond issuance was in 1997 (approved by voters in November 1996) in the amount of $500,000 for the addition to the high school. The bonds were paid in full in 2007.
There is no immediate need and/or plan by the board to sell bonds.
Since 2008 when the recession hit throughout the United States, the district has relied on reserve funds to help operate the school system. The district has operated a deficit budget in 6 out of the last 7 years. The district has filed a balanced budget for this year (fiscal year 2014).
As of result, the Education Fund (75% of our total budget) has seen the fund balance decrease from approximately $500,000 in 2008 to approximately $65,000 as we started fiscal year 2014. The only real reserves now are in the Working Cash Fund (approximately $550,000) which a person may equate to your personal savings account. Monies can be borrowed from the Working Cash Fund but must be paid back. The problem with this is there is no revenue source to repay this interfund loan. The board is seeking to create another revenue source option and to establish a more sound fiscal position with the approval of the DSEB.
Revenues have increased only 1.05% over the past six years. This has occurred because the level of state funding has decreased by almost 50% over that time period. Fortunately, local revenues (property taxes) have increased at about the same rate due primarily to increased farmland values. The district has few options to increase revenues significantly.
For fiscal year 2014 the total expenditures in our Education Fund will be 4.25% less than they were in 2008.
This comes at a time when the district faces a mountain of unfunded state mandates, increased special education costs, technology demands, and annual inflation.
It is the position of the board that this figure represents a figure that would more than cover any short or long term needs of the district. The $500,000 represents a maximum figure and is not likely to ever be reached.
In reality, aren’t the voters of District # 21 being asked to put their trust in the board of education to authorize them to issue bonds (borrow money) in the future if and when they feel it is necessary?
Yes, voters will need to decide if the board of education has earned your trust.
Based on the current Equalized Assessed Evaluation (EAV) a tax increase of .25 (25 cents) would garner the district approximately an additional $89,500 in revenue. So, if the board sold bonds in the amount of $250,000 and were to repay them over a three year period a house worth $150,000 would see a tax increase of $122.76 for each of the three years until the bonds were paid off. After the three years the levy for bonds would be removed from an individual’s tax bill. If the board was to extend the repayment period then the annual levy would be less.
The question will read as follows:
Shall the debt service extension base under the Property Tax Extension Law for Hartsburg-Emden Community Unit School District Number 21, Logan and Tazewell Counties, Illinois, for payment of principal and interest on limited bonds be increased from $0 to $500,000 for the 2014 levy year and all subsequent years, such debt service extension base to be increased each year by the lesser of 5% or the percentage increase in the Consumer Price Index during the 12 month calendar year preceding the levy year?
Don Beard, Superintendent
Hartsburg-Emden # 21