1. ZBTHS DISTRICT 126 SCHOOL FINANCE & LEVY CONSIDERATIONS Audrey Liddle Zion Benton Township High School District 126 Business Manager-CSBO

2. SCHOOL DEMOGRAPHICS  Three Active Campuses  606,005 Sq Ft and 76.33 Acres of Land  Current Enrollment ~2,716 students; up from ~2,081 in FY2000  ZBTHS Campus, NT@ZB Campus, Pearce East Campus including Project Recovery, plus offsite special needs special education students  312 full-time staff members, 77 part-time staff members including bus drivers and bus aides. This numbers does not include substitute teachers, tech crew students, and seasonal workers.  Second largest employer in Zion  FY2014-15 annual budget of $42,334,971

3. DRIVING FORCES THAT IMPACT THE LEVY AND THAT MUST BE CONSIDERED  Revenues  Expenditures  State of Illinois Laws and Mandates  PTELL (Property Tax Extension Limitation Law)  Funding Prorations  Looming Pension Shift & Other Pending Bills

4. REVENUES  Local Revenue  School Fees –  Timing is fairly reliable, ~54% of students qualify for free lunch must have their basic registration, behind the wheel, and workbook fees waived per Illinois law.  Property Taxes -  Timing and collection is reliable for the District.  State Revenues  General State Aid  Prorated the last four years. Unreliable funding source that is received on a regular schedule. Current proration is 89%. Total loss because of proration over the last three years was ~$2.3 Million.  State Mandated Categoricals  Include funded mandates that are prorated, as well as unfunded mandates. The proration changes annually and these revenues are not reliable in their timing.

5. REVENUES - CONTINUED  Federal Revenues  Grants (Title I and Title II)  Other Grants  Federal grant funding is received as a reimbursement up to the approved amount, after the funds have been expended.  Reserves  Reserves are necessary because the timing of revenues is unreliable, however, expenditures must be paid on time. Lack of reserves would result in inadequate cash flow and borrowing to pay expenses, which would add additional expenses.

6. REVENUES - CONTINUED  Historical Declines in Revenue:  CPPRT – Declined to FY2006-07 levels  State Categoricals – Currently 10% below FY2006- 07 levels  Interest Income – 97% Decline compared to FY2006-07  Developer Fees – 100% Decline compared to FY2006-07

7. EXPENDITURES GOVERNMENTAL FUND ACCOUNTING  Specific and unique restrictions by fund (9 funds)  Salary  Benefits  Purchased Services  Supplies  Capital Purchases  Tuition  Because of fund restrictions, schools often do not have the flexibility to move money amongst funds, and therefore fund balances must be considered individually rather than in aggregate.

8. LEVY  Components of the levy are:  EAV  The Operating Funds  State Maximum Rate Limits  The majority of the district’s nine funds are subject to state imposed tax rate limits for purposes of the annual levy/extension process.  Although some funds do not have state imposed rate limits, they are still included in the overall total tax cap calculation.  Reaching tax cap limits results in a reduction in the amount of property taxes collected in comparison to the prior year for those funds.  The District anticipates reaching the state imposed rate limits for all individual funds by the 2015 levy. Given current state laws, those losses will compound in perpetuity for as long as the State of Illinois operates under the current levy laws.

9. LEVY - CONTINUED  Property Tax Extension Limitation Law (PTELL)  Public Act 94-976 – effective 6/30/2006  Allows taxing bodies to levy an additional 5% or CPI (1.5% for 2014), whichever is LESS over the prior year’s extension  Debt Service is not part of the capped funds. Levy is based on approved debt and the scheduled payments on file with the County  New Construction EAV is exempt from the tax-cap for the first year only

10. LEVY - CONTINUED  The final extension calculation is: EAV x Rate = Extension (Tax Dollars Collected)  For levy purposes we have to reverse the calculation: Extension ÷ EAV = Rate  The District does not control the calculation of EAV, which is a significant factor in determining the tax rate.  The individual fund tax rates are critically important to school districts because we function under state imposed rate caps.

11. LEVY - CONTINUED  Timeline  Levy must be filed by last Tuesday in December prior to the EAV being determined.  EAV and New Construction values are not released until late March.  Requires taxing bodies to estimate the EAV and the New Construction.  Estimating EAV and New Construction ultimately means that the Levy filed in December is also an estimate.  Under PTELL if you estimate the levy too high (greater than 5% or CPI whichever is less) it will not hurt the taxpayers, as you will only receive what you are authorized to receive under PTELL.  Under PTELL if you estimate the levy too low, you will only receive the amount you estimated. Because this amount is in the capped funds, it will mean a loss of revenue that repeats and compounds each year in perpetuity as long as the law remains in effect.

12. LEVY - CONTINUED  When filing the levy in December, the taxing body must allow room within the individual funds to accommodate the adjustments to the EAV and the New Construction figures that are not available until Spring.  The levy in December is NOT the final amount used to create the tax bills. It is a “maximum” only and is inflated because of the need to estimate and insure the ability to reallocate the actual extension amongst the various funds.  Last year, the District filed a levy in December showing a maximum increase of 4.9% to allow for movement between funds. This was needed because of the rapidly declining EAV.

13. LEVY - CONTINUED  When the final EAV was calculated by the county last Spring, the Board did not collect any increase in taxes from existing property. The Board did collect an increase over the prior year’s extension of approximately ½ of 1% on New Construction added to the tax roles. The Board did not collect the entire amount it was authorized to receive.  As part of holding property taxes flat, the Board of Education abated (did not collect) $500,000 of its debt service levy in order to avoid an increase in the tax collected without hurting the individual funds. Debt service abatements are the only abatements that will impact a single year without impacting future years.

14. LEVY - CONTINUED The District’s EAV has fallen from ~$911M in 2008 to $571M in 2013 (~37%). EAV is estimated to fall to $538M for 2014. Each reduction in EAV results in a corresponding increase in the tax rate.

15. LEVY - CONTINUED  Although the Board held its 2013 tax extension for existing property flat, the tax rate increased due to a 13.4% drop in the EAV.  Individual homeowners and businesses may have seen an increase or decrease in their extension because of EAV changes that redistribute the tax burden. These shifts are beyond the control of the District.  TIF Districts  Tax Appeals  State Approved Exemptions

16. LEVY - CONTINUED  The Board of Education intends to hold the final levy extension as close to last year’s existing property extension as possible by once again abating Debt Service Funds.  The levy being presented tonight does not include the abatement of the Debt Service as abatements are part of the Spring extension process.  If there are unanticipated increases in New Construction or decreases in the existing property equalized assessed valuations, those changes will affect the final extension in the Spring and those changes will be reviewed with the Board for a final decision.

17. LEVY - CONTINUED  Zion-Benton Township is one of the most negatively affected communities in Lake County as a result of EAV declines.  The next four slides provide details on falling EAV in Lake County and were provided by the Lake County Clerk’s Office.

18. 2011 TWP_ANTIO-9.9% TWP_AVON-8.0% TWP_BENTN-10.1% TWP_CUBA-6.2% TWP_ELA-5.9% TWP_FREMT-7.0% TWP_GRANT-7.5% TWP_LIBVL-3.3% TWP_LKVLA-7.4% TWP_MORRN-9.3% TWP_NWPRT-7.2% TWP_SHLDS-6.6% TWP_VERN-5.9% TWP_WARRN-6.1% TWP_WAUCD-7.3% TWP_WDFLD-5.8% TWP_WKGN-13.8% TWP_ZION-13.1%

19. 2012 TWP_ANTIO-5.1% TWP_AVON-13.3% TWP_BENTN-10.1% TWP_CUBA-5.5% TWP_ELA-5.9% TWP_FREMT-6.1% TWP_GRANT-12.0% TWP_LIBVL-5.9% TWP_LKVLA-7.5% TWP_MORRN-6.0% TWP_NWPRT-10.4% TWP_SHLDS-6.5% TWP_VERN-6.2% TWP_WARRN-8.1% TWP_WAUCD-9.3% TWP_WDFLD-6.6% TWP_WKGN-16.8% TWP_ZION-15.6%

20. 2010-2012 TWP_ANTIO-15.0% TWP_AVON-21.3% TWP_BENTN-20.2% TWP_CUBA-11.7% TWP_ELA-11.8% TWP_FREMT-13.1% TWP_GRANT-19.5% TWP_LIBVL-9.2% TWP_LKVLA-14.9% TWP_MORRN-15.3% TWP_NWPRT-17.6% TWP_SHLDS-13.1% TWP_VERN-12.1% TWP_WARRN-14.2% TWP_WAUCD-16.6% TWP_WDFLD-12.4% TWP_WKGN-30.6% TWP_ZION-28.7%

21. EXAMPLE OF IMPACT OF FUND LIMITS As EAVs decrease, levy rates increase. If at limit, rate can’t increase. Fixed rate x declining EAV = declining revenue. Rate xEAV=Extension 0.550%$775,000,000$4,262,500 0.550%$600,000,000$3,300,000 Willard Rooks Helander Lake County Clerk

22. HOW DO WE RESPOND?  We must abide by and work within the PTELL laws and try, if possible, to influence the legislature to change the laws to remedy issues.  We must try to make decisions that do not tie the hands of future Boards, or that compound negatively in perpetuity.  We must try to find a balance between the needs of our taxpayers and the obligation to provide a quality education to our students, which is also key to maintaining property values in our community.

23. WHAT HAS THE DISTRICT DONE TO INCREASE REVENUE AND REDUCE EXPENDITURES SO FAR  Negotiated Elimination of Certified Staff Salary and Longevity Schedules  Negotiated a Restructuring of Health Insurance Benefits  Restructured Transportation Department Salary Schedule  Delayed Capital Expenditures Wherever Possible  Reduced Departmental Budgets  Established In-House Credit Recovery Program

24. WHAT HAS THE DISTRICT DONE TO INCREASE REVENUE AND REDUCE EXPENDITURES SO FAR - CONTINUED  Utilized ARRA community reinvestment funds to remodel and return Special Education Programs to District at Pearce Campus  Reduced Utilization of Special Ed Tuition Programs  Reduced positions through consolidation or elimination.  Refiled General State Aid (GSA) Claims  Secured Multiple State Maintenance Grants  Participating in Energy Curtailment Program

25. WHAT HAS THE DISTRICT DONE TO INCREASE REVENUE AND REDUCE EXPENDITURES SO FAR - CONTINUED  Participates in CLIC (Collective Liability Insurance Cooperative) to reduce property and liability insurance expenses  Participates in IUPC (Illinois Utilities Purchasing Cooperative) to purchase energy on the futures market to avoid spikes in utility costs  Participates in LRBC (Lake Region Benefit Cooperative) a self funded health insurance cooperative to reduce health insurance costs and share risk with 8 other school districts  Provides transportation services to Zion District 6 and shares routes to reduce expenditures between both districts  Provides transportation services to Zion Park District

26. ONGOING CHALLENGES  Proration of General State Aid – 95% for FY13; 89% for FY14 and FY15  Proration of State Mandated Categoricals  Timing of Revenues versus Expenditures  Declining EAV causing rates to clime and District to reach state maximum limits  Extension freezes – compounding losses  Expenses are not frozen  Unfunded Mandates  Pending Pension Cost Shift  Adequacy, uncertainty, and inequity of State Funding

27. 2014 LEVY  Total Levy without Debt Service is $27,699,302  Represents ~3.6% Increase over prior year actual extension  Levy inflated because of estimated EAV and New Construction  The final extension that generates the 2015 tax bills will be determined in Spring. The Board’s goal to keep property taxes virtually flat for existing property will require that the Board once again abate in the Debt Service Fund.

28. OUR GOAL To be fiscally responsible to our taxpayers and to maintain quality programming for our students while navigating ongoing, difficult economic times.

29. Contact Information: Mrs. Audrey Liddle Business Manager, CSBO Phone: 847-731-9751 Email: Liddlea@zbths.orgLiddlea@zbths.org