Quincy Reporter

Community Consolidated School District 181 Board of Education Finance and Facilities Committee met Dec. 12.

Here are the minutes provided by the committee:

The Board of Education Finance and Facilities Committee meeting of Community Consolidated School District 181, DuPage and Cook Counties, Illinois, was called to order by Board Member and Finance Committee Chair Sinead Duffy at 5:00 p.m. on Tuesday, December 12, 2023.

Roll Call

Finance and Facilities Committee members present were Sinead Duffy, Margaret Kleber, Hector Garcia, Mindy Bradford, Meg Cooper, Ellen Dunlap (remote), Mike Duggan, Rich Giltner, Jerry Mejdrich, Lois Mejdrich, and Catie Norton.

Guests:

Mr. Matt Hannigan and Mr. Jeff Schroder from PFM and Scott Duenser from the District’s independent auditing firm, Wipfli

Pledge of Allegiance

Mindy Bradford led the Pledge of Allegiance.

Public Comment

No public comments.

Approval of Minutes

Sinead Duffy made a motion to approve the minutes from the November 7, 2023, Finance Committee meeting. Meg Cooper seconded the motion. The motion carried.

Celebrations

Ms. Bradford noted the following celebrations:

● Demand Response - The District participates in an energy curtailment program during peak usage periods. In return, the District is offered final incentives for participation. During this fiscal year, the District received approximately $1,700 in payments for participation.

● ACFR - This is the 20th year that the District has completed the Annual Comprehensive Financial Report

Discussion Topics

Investment Update

Mr. Jeff Schroder and Mr. Matt Hannigan provided an Investment Program Update. They reported on the current market themes:

● The U. S. Economy

○ Stronger than expected growth, supported by a resilient consumer

○ Inflation that remains above the Federal Reserve’s target range

○ Personal savings and consumer debt have returned to pre-pandemic levels

○ GDP remains robust

○ Wages have caught up to inflation in large part

○ The Fed’s projections for growth and employment are more upbeat

● Fed pauses again in rate hike campaign

○ The Fed held rates steady at the September FOMC meeting

○ The Fed’s most recent “dot pilot” indicated one more rate hike for 2023 and set the stage for interest rates to remain “higher for longer”

○ Interest rates reached their highest level since 2006-7

● Treasury yields across the curve rose during Quarter 3. Sticky inflation, a “higher for longer” market consensus, increased Treasury borrowing, and reduced Treasury holdings by China and Japan weighed especially on the long end of the curve.

● Long Term Portfolio

○ Total Market Value as of September 30, 2023 = $10,006,840

○ Duration = 1.73 years

○ Yield at Cost = 3.47%

○ Yield at Market = 5.24%

○ The district’s long-term portfolio has outperformed the related benchmark by 39 basis points since inception (March 31, 2022)

● Short Term Portfolio

○ Total Market Value as of September 30, 2023 = $52,455,137

○ Duration = 0.15 years

○ Yield at Cost = 5.29%

○ Yield at Market = 5.35%

○ The district’s short-term portfolio has outperformed the related benchmark by 22 basis points since inception (December 31, 2021)

● Due to the fact that the yield curve is still inverted (meaning that shorter-term investments are paying higher returns than longer-term investments, which is not the normal experience), our portfolio continues to be more heavily weighted to short-term investments with an eye toward moving additional funds to longer-term investments as the yield curve is expected to return to more normal levels.

Mr. Giltner asked what the net return was for both the short-term and long-term portfolios after fees. He also asked for an understanding of the value in the long-term portfolio based on what was presented.

Full-Day Kindergarten Bid Update

Mike Duggan, Director of Facilities, shared the summary of the full-day kindergarten bid update:

Status: Timeline:

● December 18, 2023:District Architect to complete bid documents and deliver them to the District for review December 18, 2023 Review and approval of all bid documents by the District and publishing of bid packages to potential bidders.

● January 18, 2024: Bid opening

● February 6, 2024: Present recommendations for acceptance of successful bids at the Finance and Facilities meeting.

● February 12, 2024: Present recommendations for acceptance of successful bids at the Finance and Facilities meeting. Present recommendation for the hiring of an Owner’s Representative.

Bid Packages:

Oak School:

Over the years, two classrooms near the main office were repurposed into smaller collaborative workspaces. The plan is to regain those two classrooms during the remodeling of that area of the building in the summer of 2024. After that demolition, four new classrooms and two smaller office rooms will be added to the south end, all for occupancy in the fall of 2025. Oak should be the single focus for a Contractor. ($5.8M).

Walker School:

The only available space to add on at Walker is the second floor. When the building was built, a section of the first floor was constructed with no second floor above it, but structurally able to support an addition there in the future. The plan is to make a small addition (800 sq ft) to each of the two first-floor classrooms to make them comparable in size to the existing kindergarten rooms and move the art and music rooms to the added area on the second floor along with one newly constructed classroom. Walker should also be the single focus for a Contractor. ($5.9M).

Elm and The Lane Schools:

Both schools are single-story, with the additions being constructed at the end of a hallway. At The Lane, two classrooms and two small bathrooms are being added. Due to the terrain, the addition's location will impact the play area behind the school. Extensive grading and paving to minimize that impact are components of the plans for this school. At Elm, one classroom is being added to the end of a hallway. Some grading and paving will be necessary to retain proper access to the play area behind the school. Additionally, the hallway that is being newly constructed will have to be usable for the fall of 2024 to maintain access to that wing of the school. Since Elm and The Lane are relatively straightforward, and both are east-side schools, a combined bid is being sought for these two schools. ($3.5M total).

Monroe and Madison Schools:

At Monroe, a storage room and one single-story classroom with a small bathroom are being added to the end of a hallway. This classroom will be used as a kindergarten room. At Madison, due to the existing terrain, a three-story addition will be constructed onto this two-story building. The kindergarten room will be located on the first floor; an upper grade will occupy the second-floor room, and the lowest level will be a storage or mechanical room. An older staircase will be removed, and a new one will be built to access the addition. This stairway will be required to be accessible and safe for student use in the fall of 2024. Similarly, Madison and Monroe are both west-side schools, so a combined bid package for these two schools ($5.5M) is being prepared. This $20.7M total is for construction costs only. The most current total project estimate is $26.4M, which includes FF&E, fees, and contingencies.

Owner’s Representative:

The administration spoke with three potential owner’s representatives. An introductory letter to each, explaining the project and introducing them to David Patton, the District Architect, has been sent out to 4 potential owners' representatives. Once the potential candidates have had a chance to review the project's scope and discuss it with Mr. Patton, they will present their proposals for cost and scope for the District to consider.

Financial Considerations:

The most recent architect-recommended budget amounts indicate that the project cost will be $26,385,400. These numbers are architect estimates only and will be refined. They will continue to become more accurate once the bidding is completed and contracts are awarded in January.

These estimates are comprised of the following:

● Demolition as required

● New Construction

● Required renovation

● On and off-site work (grading, utility, stormwater, and landscaping)

● Furniture, fixtures, and equipment (allowances)

● Architectural, other soft costs, and escalation

● Contingencies (Design, Bidding, Escalation/supply chain and construction)

Per a question, Mr. Duggan confirmed that there were no complications with the Villages other than Walker School will need a few more parking spaces.

Summer Project Bid Update

Mike Duggan, Director of Facilities, shared the summary of the Summer 2024 Capital Projects:

Architect Projects

● HMS - Settlement Cracks

● Madison School MRC Remodel

● Prospect School - Resurface North Parking Lot

● The Lane School - Resurface Playlot

In-House Projects

● Monroe School - Moisture Mitigation and flooring replacement

● Monroe School - Playground poured in place surfacing being added

● Prospect School - Playground replacement

● Madison School - Playground poured in place surfacing being added to complete the playground

● The Lane School - LED Retrofit and replacement

● Walker School - Playground replacement

● The Lane School - Playground poured in place surfacing and grading being added to complete this project

● Madison School - MRC Remodel

Sub-Totals in House/Co-op - $1,855,000

Plus Architect Projects - $361,760

Grand Totals - $2,216,760

Mr. Mejdrich asked what is the expected lifespan of a playground. Mr. Duggan indicated that it is between 15-20 years.

Annual Financial Report (AFR)/Annual Comprehensive Financial Report (ACFR)

Ms. Catie Norton introduced Mr. Scott Duenser from the District’s independent auditing firm, Wipfli, who completed the annual audit for the fiscal year ending June 30, 2023. The Annual Financial Report (AFR) was completed and submitted to the state and DuPage ROE prior to the extended December 15th deadline. He said the AFR is a Microsoft Excel workbook that details the District’s financial information from the audited fiscal year. Along with the Annual Financial Report, the District also produces the Annual Comprehensive Financial Report.

The Annual Comprehensive Financial Report (ACFR) is a much more detailed report of the district’s governmental funds and provides historical details related to property taxes, demographics, and the District’s post-employment liability, in order to provide additional transparency to the community.

This is the 20th year that the District has completed the ACFR. Below are some financial highlights from the ACFR:

● Unmodified opinion.

● Revenues exceed expenditures overall by $4.9 million in the governmental funds

● Long-term debt decreased by $24.3 million between 2022 and 2023.

● Total capital assets increased by $2.6 million between 2022 and 2023.

● The end-of-year net position was $23.2 million.

● Total revenues for 2023 were $98.7 million. Program-specific revenues in the form of charges for services, grants, and contributions accounted for $19.4 million or 19.6% of total revenues.

● General revenues accounted for $79.3 million or 80.4% of total revenue. General revenues consisted of tax revenues of $73.7 million, other local revenues of $3.1 million, and state aid not restricted to specific purposes of $2.5 million.

● The District had $85.5 million in expenses related to governmental activities of which $19.4 million were offset by program-specific charges, grants, and contributions.

Annual Statement of Affairs

Ms. Catie Norton, Director of Financial Services, shared that the Illinois School Code Section 10-17 (105 ILCS 5/10-17) requires school districts/joint agreements to complete the Annual Statement of Affairs (ASA) and publish it in a local newspaper. The ASA uses information from the FY 2023 Annual Financial Report and must be completed by the due date, even if the Annual Financial Report is incomplete.

The report includes summary information found in the Annual Financial Report, enrollment information by grade level, number of certified and non-certified employees and the tax rate by fund in order to provide transparency to the community of important financial and statistical information. After December 15 annually and upon 10 days of prior written notice to the district, ISBE can discontinue payments to the comptroller on behalf of the school district if the agency has still not received the ASA (or if the district is otherwise not in compliance). This FY23 ASA report for the district has been completed, published in the Hinsdalean, and posted on the District website, so the district is in full compliance with all requirements and all state payments will continue uninterrupted.

Property Tax Relief Grant

Ms. Bradford shared that according to the Illinois State Board of Education (ISBE), the Property Tax Relief Grant (PTRG) was created with the passage of Evidence-Based Funding and modified by Public Act 101 – 0017. The grant provides school districts with high tax rates relative to other school districts with an opportunity to lower the property tax burden on local taxpayers with the state replacing a portion of foregone tax revenue with state funds. There will be $49.3 million in new Property Tax Relief Grants (PTRG) available state-wide for FY24 ($49.7 million had been provided in FY23).

Eligible districts are determined on a ranking of a value that is their Adjusted Operating Tax Rate divided by the Average Operating Tax Rate for districts within each organization type. To determine grant awards, ISBE calculates the district’s Real Adjusted EAV amount multiplied by a factor that varies by organization type. Then that value is multiplied by the Local Capacity Percentage Multiplier. This value is equal to 1- Local Capacity Percentage.

CCSD 181 would be eligible for $1.993M in maximum tax abatement and $379K in grant funding (2-year abatement requirement); however, based on the calculation above, the district is 742/851 in terms of the districts prioritized for the program. For FY23, 130 districts applied for the Property Tax Relief grant, and CCSD #181 was ranked 125 on the funding priority list. The $49.7 million in FY23 funding was exhausted after the 32nd-highest prioritized district’s request was partially funded. That district had an Operating Tax Rate (OTR) that was 1.5 times the average for its organization type. As a frame of reference, CCSD #181’s Operating Tax Rate for FY23 was .7 times the average for Elementary School Districts. The District will complete the application.

Items for Recommendation

Monthly Financials

Ms. Bradford shared the following information related to the November 2023 Monthly Financial Reports:

● Operating funds Year to Date:

○ $51.4 MM: trending favorably

■ Includes relief to the taxpayers and purchase of the district office building

○ Revenue $34.7 MM: trending on track

○ Expenses: $24.1 MM: trending on track

The committee agreed to bring the Monthly Financials to the Board meeting for approval.

Resolution of CCSD 181 Providing for the Tax Levy for The Year 2023

Ms. Bradford shared that the Tax Levy is an annual request by the District for property taxes to fund approximately 90% of the District’s operating funds. The State of Illinois Property Tax Extension Limitation Law is designed to limit the increases in property tax extension (total taxes billed) for non-home rule taxing districts. The PTELL does not "cap" either individual property tax bills or individual property assessments. Instead, the PTELL allows a taxing district to receive a limited inflationary increase in tax extensions on existing property plus an additional amount for new construction, newly annexed areas, and recovered TIF valuations. The limit slows the growth of revenues to taxing districts when property values and assessments are increasing faster than the rate of inflation. As a whole, property owners have some protection from tax bills that increase only because the market value of their property is rising rapidly. The "limiting rate" is calculated, for each taxing district, by the county clerk to implement PTELL. The sum of a district’s rates extended for those funds subject to the PTELL cannot exceed this limiting rate. After calculating preliminary rates for the funds, the county clerk will compare the sum of these rates to the limiting rate. If this sum exceeds the limiting rate, the county clerk will reduce each rate proportionally, unless instructed by a taxing district to reduce them in a different way.

The Finance Department has Estimated Equalized Assessed Value of DuPage County and Cook County. The projected Equalized Assessed Value is estimated to be $3,074,060,962 or a 4.9% increase from last year’s EAV of $2,929,710,303. Cook County and DuPage County have a combined projected new construction to be $24,860,151 or a decrease of - 15.2% from $29,324,143.

Financial Impact:

The District is able to project the limiting rate and the extension limit based on the following factors:

● 2022 extension w/out Debt Service = $72,186,266

● The district will request and is entitled to receive a 5.0% (CPI) increase over the 2022 extension (per PTELL)

● EAV is projected to increase by 4.93%

● Estimated EAV = $3,074,060,962

● Estimated New Construction = $24,860,15

● Estimated Limiting Rate = 2.47%

● Estimated Total Tax Rate = 2.57%

● Projected Extension Limit (without debt service) = $76,408,544

Ms. Bradford explained that the numbers are based on Preliminary Estimated Equalized Assessed Values (EAV). The county does not have all exemptions and appeals determined by the time taxing bodies’ levies are filed on the last Tuesday). Therefore, she said it is good practice to ask for more than the extension limit. This allows the school district to capture the amount they should receive. However, being a PTELL (tax-capped) district, the district will only receive the extension limit. The district will also have time to make decrease Levy adjustments or Abatement amounts in February after projected numbers are given before the extension is signed off in March.

Administrative Recommendation:

The total requested 2023 Levy for Operating Funds will be $76,723,704.

Levy Calendar:

● 12/18/2023 – Public Hearing & Levy Adoption

● 12/19/2023 – File Certificate of Tax Levy with the offices of Cook and DuPage County Clerks

● 12/19/2023 – Post-2023 Levy presentation on the District website

● 12/26/2023 – Last Tuesday in December filing deadline

● 02/06/2024 – Finance Committee Meeting - Projections, Levy/Abatement Amount

● March 2024 – Business and Operations Signs off on final Tax

The committee agreed to bring the Resolution of CCSD 181 Providing for the Tax Levy for The Year 2023 to the Board meeting for approval.

Resolution Expressing Official Intent Regarding Certain Capital Expenditures to be Reimbursed from proceeds of an Obligation to be Issued by the District

Ms. Bradford shared that the District is anticipating the issuance of Debt Certificates to fund the Full-Day Kindergarten construction project. She noted that the current timeline projects that the Debt Certificates will be issued in June 2024, with proceeds being received in July 2024. The timing is designed to maximize the spend-down time required to allow the district to retain arbitrage profits.

The District currently anticipates incurring both soft and hard costs for this project. Soft costs include architecture/engineering fees, planning permits, legal fees, project administration costs, etc. These costs may be incurred at any time and may be reimbursed from future obligation proceeds with no additional action required. Hard costs refer to direct construction-related costs, including material and labor costs. Spending on hard costs requires the Board of Education to adopt a formal resolution to express the intent for these capital expenditures to be reimbursed from the proceeds of an obligation to be issued in the future. The resolution can be applied to expenditures that have been paid within the 60 days prior to the Resolution as well as those that will be paid after the passage of the Resolution but before the obligation proceeds are received.

The District expects to reimburse Full-Day Kindergarten-related expenditures with proceeds of a future obligation. The maximum principal amount of the obligation expected to be issued to reimburse the expenditures is $26,438,000.

The committee agreed to bring the Resolution Expressing Official Intent Regarding Certain Capital Expenditures to be Reimbursed from Proceeds of an Obligation to be Issued by the District to the Board meeting for approval. Future Agenda Items

● Monthly Financials

● School Fees

● Resolution to Prepare Tentative Budget

● Full-Day Kindergarten Bid Approval and Award

● Summer Project Bid Approval and Award

● Quarterly Financials

● Food Services Presentation (Quest)

● District Office Building Update

Adjournment

Sinead Duffy motioned to adjourn at 6:10 p.m. Meg Cooper seconded the motion. The motion carried.

https://go.boarddocs.com/il/hccsdil/Board.nsf/files/CZDRA26C5C90/$file/2023_12_12_Fin.%20and%20Fac.%20Com.%20Mtg.%20Min..pdf