By EDWARD HUSAR
Herald-Whig Staff Writer
Quincy School Board member Stephanie Erwin sees Tuesday's passage of a $6.2 million working cash bond issue as a vote of confidence in the School Board's efforts to get the district out of debt and keep it out of debt.
"We've made history tonight," Erwin said, referring to how Tuesday's bond issue — which passed by a 4,197 to 3,060 margin, with 57.8 percent voting in favor — marked the first time in 43 years that local voters approved a tax issue in support of the Quincy School District.
The last successful referendum was in 1969 when voters approved a $7.95 million bond issue to finance the construction of a new Quincy High School.
Erwin, chairman of the board's Finance Committee, sees the vote as a possible momentum changer for the school system.
"This was truly a ‘yes' vote for the kids. It is a turning point for this district," she said.
Erwin said the public is apparently putting its trust in the School Board to do the right thing and be good stewards of the district's dollars. That means the School Board now must follow through with making $1 million worth of budget cuts at its meeting tonight as part of a three-year deficit reduction plan.
"We still have a tight budget, and we have to stick to our deficit reduction plan," Erwin said. "We have got to stick to our guns. We have got to make sure we don't overspend. We also must look for other ways to generate more revenue. We must live within our means.
"We've been given a second chance. The public is going to be watching us. They want to make sure we walk the walk and not just talk the talk. It's a new beginning, but we still have a tight road ahead of us."
Passage of the bond issue means the School Board can now proceed with a plan it adopted on a 4-3 vote in November to issue working cash bonds as a way to address $6.2 million worth of debt that's been plaguing the district. The plan called for earmarking $2.2 million to eliminate a carried-over deficit in the Education Fund and use the remaining $4 million to eliminate an ongoing $4 million shortfall in the district's checking account.
Superintendent Lonny Lemon said school officials will immediately begin contacting financial firms to proceed with the sale of the bonds. This will enable to district to put a quick stop to a $6 million line of credit that it approved several weeks ago to address a recurring cash-flow problem that surfaces every spring. Now, because of the passage of the bond issue, the district no longer will have to borrow money on a short-term basis from a local bank. Instead, it will draw from the working cash fund.
The district took out an $8 million line of credit last year but ended up borrowing only $4 million. The loan cost the district about $33,000 in interest paid out of the financially stressed Education Fund.
Passage also means the district will wipe away most of its deficit in the Education Fund, which stood at $2.2 million at the end of the 2011 fiscal year and is expected to reach $2.9 million by the time the 2012 fiscal year ends June 30.
However, Lemon agrees that the board must continue to keep whittling away at Education Fund spending by carrying out $1 million in budget cuts.
"This won't change anything with the deficit reduction plan," Lemon said.
Lemon said if the board doesn't move forward with the plan, as proposed, "we'll be back in the same boat" financially in just a few years.
"Kudos to the public" for passing the working cash bond issue, Lemon said. He said Tuesday's results can be viewed as a "vote of confidence" that the School Board is taking the right approach in handling the district's financial affairs.
"I'm very proud of this board, and the prior boards, for being financially responsible," he said.
He said the passage of the working cash bond issue shows the public wants to see the district get out of debt and stay out of debt.
"This is monumental. This (the Education Fund deficit) is something that's been going on for over 20 years," he said.
School Board President Bill Daniels agrees the School Board must stick with the deficit reduction plan, despite the welcome results of Tuesday's election.
"I certainly appreciate the confidence that the voters of Quincy have shown in this," he said. "We have to work every day to earn and maintain the confidence of the voters."
Daniels said the passage of the working cash bond issue "is going to put us on a more solid financial footing," but the board still must watchful with spending because of ongoing uncertainty over financial payments from the state.
Daniels said getting the working cash bond issue approved means the district won't have to borrow as much this spring to maintain a healthy cash flow. "We may have to borrow a little" to get by until the bonds are sold, he said, but once the bond proceeds arrive in the district's coffers, any short-term loan will be paid off quickly and the line of credit will be halted.
Daniels said this doesn't guarantee the district won't face more cash flow in future years.
"It all depends on how bad the state gets behind on its delayed payments," he said.
The state currently is somewhere between $3 million and $4 million behind on payments owed to the Quincy School District, Lemon said.
The School Board voted 4-3 in November to issue working cash bonds as a way to address the ongoing deficit and cash-flow issues it was facing. However, almost immediately after the board took that action, a local group, "Concerned Citizens of School District 172," launched a petition drive and gathered enough signatures to demand that the working cash issue be placed before voters.
The deficit reduction plan was developed at the request of the Illinois State Board of Education because audits showed the district had a cumulative deficit for two straight years in its four main operating funds — Education, Building, Transportation and Working Cash.
By simply following the plan as it was proposed — and by keeping a tight rein on spending for the next three years — the Education Fund was expected to reach a positive balance of $168,214 by 2015. But now, with the passage of the working cash bond issue, that fund is projected to have a $2.3 million balance by 2015 — provided the board stays on course.
One reason the working cash bond issue passed is that school officials assured voters they should not notice an increase in the district's tax rate if the issue passed — or even if failed, for that matter.
Business Manager Bud Martin said it's the intention of school officials to strive to maintain the district's tax rate at a steady $4 per $100 assessed valuation this year and in the future, if possible.
The tax rate for the 2011 tax year, which will affect tax bills paid this summer, is expected to come in right at $4 for the fifth straight year. The 2011 levy includes the recent refinancing of about $11 million in bonds at a lower interest rate that will save the district about $600,000 in interest over the next five years. The working cash bonds approved Tuesday will be paid off over five years starting with the 2012 tax levy, payable in 2013. Martin said this obligation can be blended into the tax rate by making adjustments to several other tax-rate funds that the district has some control over, such as the IMRF, Social Security and Tort funds.
— ehusar@whig.com/221-3378
Image Description: Darrel Beadle cast his vote in the primary election Tuesday at the Quincy University Hall of Fame room.(H-W Photo/Michael Kipley)
