Marengo High School plans controversial $3.3M bond to fund building repairs, upgrades

Marengo High School District 154 announced plans last week to issue a 10-year working cash bond with a principal of $3.3 million to fund building repairs and upgrades for the high school.

Liz Henning, a former member of the district’s board, said that the bond should not be issued without first consulting taxpayers.

“It’s basically legalized stealing because you are making the people pay for something that they had no input on,” Henning said.

Henning said she is collecting signatures on a petition that she hopes will persuade the board to add a referendum on the bond to the November ballot. Her goal is to have 1,006 signatures by Monday, when District 154 will hold a public hearing to discuss the bond.

District 154 Superintendent David Engelbrecht said the public hearing will include a presentation on the bond and how it will be used, followed by an opportunity for comments or questions from members of the public who live within the district.

Given that the Marengo High School building is 17 years old, district officials are hoping to fund $7.78 million in building repairs, replacements and upgrades over the next 10 years, according to a presentation posted to the district's website.

To cover the cost of building repairs, the school has proposed the issuance of a working cash bond with a principal of $3.3 million and an expected interest rate of 2.28%, according to the presentation.

Henning was a member of the District 154 board from 1997 to 2019, including serving as president of the board for a few years. She was on the board when the district held a referendum to gauge voter support for the issuance of the construction bond to build the Marengo High School building more than 20 years ago, she said.

“I worked very hard at that, and it was my face on it,” Henning said. “And so now, when they’re trying to backdoor this bond, it’s not sitting well with me.”

The 20-year construction bond issued in 2001 expires in December, which would decrease the district’s tax levy by 0.8% for 2021, resulting in an estimated tax reduction of about $219 for every $100,000 in assessed home value.

According to the district’s proposal, the 2020 working cash bond would require a 0.1% increase in the tax levy for an added cost of about $27 per $100,000 in assessed home value. With this added cost, the district’s taxpayers still would see a net decrease of 0.7%, or about $192 per $100,000 in assessed property value.

Regardless of the fact that taxpayers would see a net decrease on their property taxes levied by the district, Henning said she thinks voters should have the right to make their voices heard on such a large expenditure.

“The one thing about working cash bonds is that they can be used for anything,” she said. “They can say they’re going to use it for maintenance of the building, but that money is not tied to that, so I have concerns about that.”

With the widespread financial stress caused by the COVID-19 pandemic, Henning said, many local families may need the full deduction on their property taxes now more than ever.

“Especially during this time, when there’s so many people out of work, so many people wanting to leave the county and the state – they need real estate tax relief,” she said. “They need it, and they deserve it.”

Engelbrecht said the board understands the economic impact that the pandemic has had on the community and related challenges regarding property tax payments.

“Even if the board does pass the nonreferendum bond, immediate action is not required, and they would have up to three years before moving forward with the sale of the bond,” Engelbrecht wrote in an emailed statement. “However, interest rates in the future may not be as favorable as they are at the current time.”

Illinois School Code on bond issuance

Engelbrecht wrote that there are a few types of nonreferendum bonds a school district can issue, a working cash bond being one of them.

“The principal amount cannot exceed 85% of the taxes allowed to be levied for educational purposes for the current year, plus 85% of the last known personal property replacement tax entitlement,” Engelbrecht wrote.

For District 154, the 2020 levied amount cannot exceed $367,509, and the principal of the bond cannot exceed $3.3 million. According to the district’s presentation, the 2020 working cash bond is toeing the line of the threshold requiring a voter referendum.

This is not the first time District 154 has issued a nonreferendum working cash bond, Engelbrecht wrote. The most recent one was approved by the board in August 1991 without being placed on a ballot.

According to the Illinois School Code, a referendum would be necessary if the school district were to go over the debt limitations outlined above.

According to Section 21 of the Illinois Bond Issue Notification Act, if there were to be a referendum, the school district would have to provide the public with a description of the project, how long the bonds would be outstanding, the total debt service to be paid on the bonds as well as the average annual property tax amount needed.

Engelbrecht pointed out that although a referendum is not legally required in this case, District 154 still took the liberty of providing this information to the public in the form of the bond presentation, which was posted online and will be presented at the public hearing Monday.

Henning said the only reason district officials made the proposal public was because she “raised such a stink.”

“Otherwise, they were going to just kind of let it slide through and hope nobody would notice,” she said.

Proposed building repairs and upgrades

The building repairs and upgrades the district has planned over the next 10 years will keep Marengo students and staff safe while preventing damage that could be more costly in the long run, Engelbrecht wrote.

“The district utilized architectural and engineering services to identify needs and costs associated with repairs and maintenance beyond that already identified by school personnel,” he wrote.

A roof replacement – the largest line item of the proposed repairs – will cost about $3.58 million and is being considered because of an increasing number of holes and small cracks in the roof. The district’s maintenance staff has been repairing these holes itself as the cost of contract labor has doubled, according to the proposal.

The current rooftop units are the originals, and they only have a 10-year life span. According to the presentation, replacing them will cost about $1.15 million.

The district also hopes to resurface the school’s parking lot and roads around the school, which will cost about $825,000. The exterior walls of the building are beginning to crack, which is allowing water inside. Repairing the walls will cost about $241,000.

The school will need to replace the controls on its water softeners as well as one of its water heaters, as the parts no longer are available to repair it.

Four of the school’s original boilers will need to be replaced soon as parts are hard to acquire because of the systems’ age, making it potentially more expensive to continue repairing the boilers rather than replacing them. Replacing the boilers along with four boiler circulation pumps and 18 hot water system pumps would cost a total of $635,000.

The weight room floor also will need to be repaired because there are cracks in the concrete. According to the presentation, cracks in the concrete are running out from the weight room to the balcony area. The cost to repair the weight room and balcony area floor is about $52,000.

The concrete sidewalks surrounding the high school have begun to crack and settle unevenly, which could be hazardous to students. The estimated cost for repairs is $30,000 this summer and $75,000 over the next two years.

Available sources of funding

District 154 plans to levy the school’s operations and maintenance fund to pay for as many of these repairs as possible, but as of the end of May, the fund had less than $676,000.

“Although we could use our fund balance for some of the repairs, it would be a very short-term plan due to the millions needed,” Engelbrecht said.

If Marengo High School pulled money from other fund balances, it could cover up to $5 million of the proposed repairs, which still would leave $3 million of the project unfunded. Engelbrecht said the district will continue to seek energy incentive programs as well as maintenance and state grants as alternate forms of funding. However, he maintained that the working cash bond is the most sensible way to fund the building repairs.

“There’s another viable way out there for all the schools in the county to have a revenue stream that will suffice them from now to the end of time,” Henning said.

She was referring to a county school facility sales tax – a countywide sales tax of 1% on all retail purchases, with a few key exceptions, which would be distributed based on the number of students in each school.

“This is not a viable option for a single school district to implement, as it requires school district boards that represent at least 51% of the student enrollment within the county for initiation,” Engelbrecht said in response to this idea.

The county school facility sales tax was created in 2007 as a supplemental funding source designed to make Illinois school districts less reliant on property taxes, according to a 2019 doctoral project written by Jason Henderson, a specialist in education administration at Southern Illinois University at Edwardsville.

“It’s a more fair, equitable way to fund these things because everybody’s paying for it, and actually visitors to the county are paying for it,” Henning said.

Either way, Henning said, the district should not be rushing to push a working cash bond through in a time of economic hardship.

If Henning is able to get at least 1,006 signatures on her petition before Monday, Engelbrecht said board members can either proceed with the petition’s request by placing a referendum on the November ballot or they can vote not to proceed at all.

Members of the public who live within District 154 can sign Henning’s petition at Homestead Millwork, Karsten’s Tire & Auto and Flatlander Market in Marengo.

District 154 will hold a public hearing to discuss the working cash bond at 7:15 p.m. Monday at the high school.