Blazing New Trails - Connexions

Experiences with PTELL in Six Illinois School Districts: Leadership Perceptions and Student Performance 289
Cash reserves accumulated in limited-use funds. Two of the participating districts
had tax bases that were decreasing. This created a situation in which those districts had to
raise the overall tax rate to maximize the levy. Statutory and voter-established rate limits on
some of the funds forced these school districts to use the restricted-use funds, such as Tort
and the funds used for Social Security and pension payments, as a means of maximizing the
tax levy each year. Unique to Illinois, these funds do not have a tax-rate limitation imposed
by statute or by voters, and the tax rate imposed in each of them is affected only by the
overall limitations placed on the total levy by PTELL. While these funds were limited in their
use, the tax rate in each fund can increase to whatever level is allowable under PTELL. This
fiscal practice resulted in a growing level of cash reserves in funds that are very limited in
how they could be used.
A total of three school districts involved in the study featured the practice of
increasing restricted use funds as a means to capture all possible property tax revenue each
year and to ensure attainment of the highest allowable base for the next year’s levy. The
superintendents involved in this use of the restricted purpose funds recognized that it wasn’t
the “best use” of public tax dollars but they felt it was necessary to ensure that their
respective levies would be maximized in each successive year. One superintendent in a
district with a declining Equalized Assessed Valuation (EAV) said:
If one increases their levy each year by the cost of living, their income
continues to go up even as the assessed value goes down. But, to do that, the
tax rate has to go up and the only funds that can be used to collect those funds
are Tort, Illinois Municipal Retirement Fund (IMRF), and Social Security.
In another district, also with a declining EAV, the superintendent revealed that the district’s
most recent levy requested more revenue in the Tort, Social Security and IMRF funds than the
district possibly needed. She explained, “If I didn’t have to worry about the base eroding, I
wouldn’t have to take so much.”
PTELL limits the growth of property tax revenue of school districts and other taxing
bodies. Absent new construction EAV, as the property values increase over time, the
limitation imposed by PTELL will result in an erosion of the overall tax rate. Therefore, the
tax rate allowable in the Tort, IMRF and Social Security funds will be limited. The districts in
the study that made the most use out of the three limited-use funds had a decreasing EAV,
resulting in significant jumps in the total tax rate. The levy in these districts reflected the need
to maximize the total tax dollars taken in and did not reflect the actual needs of the school
district to pay for expenditures from the Tort, IMRF and Social Security funds.
The last pre-PTELL tax levy maximized taxes and tax rates. The available
literature on PTELL revealed newspaper accounts of governing bodies making maximum use
of the last levy that would be passed before PTELL went into effect (Ratcliffe, 1999, April 5;
Sanderstrom, 2001). This restriction also occurred in four of the six districts in the study.
School boards adopted levies that maximized all allowable tax rates. Boards in some districts
approved working cash or life safety bond sales. The bond payments were “front-loaded” to
push the highest tax rate and total levy amount into the last pre-PTELL levy. Working cash
and life safety bonds, absent an appropriate petition by the district’s taxpayers, may be issued
without a referendum. Under PTELL, that is still true for any working cash or life safety bond
issues that will not cause the district to exceed the total taxes extended to service the bonded