To Repair and Improve Our High Schools, Vote Yes on April 9th

I am voting “Yes” for the $89 million referendum on April 9th to repair and improve Highland Park High School and Deerfield High School as District 113 doesn’t have sufficient reserves to fund this work and there is no other acceptable alternative plan. 

When this campaign started 2 months ago, the anti-referendum argument that Education First presented was “there is no need to do any major work to DHS and HPHS.”  People realized this argument was not true. So now the anti-referendum argument has changed to “yes, DHS and HPHS need major work but we don’t need a referendum as District 113 has loads of available cash and we can do this work for less.”   This argument, while appealing, is also not true. 

As evidence for their position, referendum opponents state that (i) as of June 30th, the District had $95 million in cash on hand, (ii) the District has $47 million in reserves and (iii) the District added $7 million in reserves each of the past 2 years.   From these facts, opponents concluded that (i) the District can use $25 million from reserves without jeopardizing its AAA rating, (ii) the District will continue to generate $7 million in excess cash flow over each of the next 5 years and (iii) all of the District’s pressing needs can be met for just $60 million under the Education First plan, or roughly 50% of what District proposes to spend.

As to the facts stated above, they are true but need some clarification.  At June 30th, the District’s cash balance peaks as June 15th tax receipts are received.  This money is then doled out by the District over the next 12 months to pay salaries and other expenses.  A better measure of financial strength is reserves. Reserves have gone up by $7 million each of the past 2 years – these increases were not planned or forecast  - they were largely the result of higher than expected payments from the State and Federal government coupled with lower than budgeted healthcare, special education and utility costs (see page 4 of the 2011 Comprehensive Annual Financial Report and 2012 Comprehensive Annual Financial Report). Over the next 4 years, reserves are projected to fall by over $8 million – put simply, the District does not expect to generate excess cash flow going forward (see page 9 of http://bit.ly/Yl1FwO).

Moreover, it would be very imprudent for the District to reduce its current reserves to $22 million – this would imply a reserve rate of just over 25%.   PMA, the District’s financial advisor, recommends at least a 40% reserve rate.  And, as part of the 18 month planning process for this plan, the Finance Study group determined, by a strong consensus, that “District 113 should maintain fund balances at or near current levels…and that the fund balance should not be used to fund capital projects.”  The reserves ensure that the District maintains its strong (AAA) credit rating and that we have funds for unforeseen events and circumstances (like your family savings account).

Commentators have noted that the Education First plan includes expensive items like a new Vo-Tech center which we don’t need (we belong to an 18 district consortium in Grayslake which provides state-of-the-art services to our students).  They also point out that the $60 million price tag is both unvetted and not updated to reflect any of analysis done by the District’s architects, Perkins and Will, during 2012.  An example of this is the cost of simply rehabbing the C building at HPHS and addressing the water infiltration issues there.  Education First says this would cost $2.3 million, Perkins & Will says it would cost $14.1 million (see Item 2D in Draft Conceptual Program budget at http://bit.ly/112awG8). 

How many other costs does this group have wrong? We’ve done an analysis of the flawed Education First plan and believe it would cost at least $116 million.(see http://bit.ly/11g3xJV).

Education First is offering this “plan” because they want voters to believe the illusion that “if the referendum is defeated, major work can still under taken immediately at both schools.”  Again, not true.  As Annette Lidawer, Board member said in a recent debate, “if the referendum doesn't pass we will not be able to do any large projects in the near future.”  Moreover, if the Board could undertake major improvements through reserves and operating cash flow, why would they go through the time and effort to call a referendum? 

The ideas presented in the referendum are going to happen. The issue in this election is “do we make these repairs or improvements now or do we wait another generation to do this work?”  I don’t think it’s fair to current and future students to delay this work and, as a property owner, I don’t think it’s in my financial best interest either.  So I’m voting Yes on April 9th.