Marengo High School ordered to pay back $364K in taxes after property owners sue

Marengo Community High School District 154 has been ordered by the court to pay back nearly $364,000 to taxpayers who filed a lawsuit claiming the district levied an “excessive” amount in 2022, according to court documents.

More than 400 plaintiffs – including residents, homeowners associations and businesses – filed a tax rate objection lawsuit against the school district in 2023 in McHenry County court. The complaint claimed the district excessively accumulated money in its operations and maintenance fund, resulting in an unnecessary maximum levy in 2022. Judge Joel Berg took the taxpayers’ side after a bench trial that was held last month. District 154 was ordered to pay back a total of $363,869.97.

At the time of its 2022 property tax levy, District 154 had over $4.5 million in its operations and maintenance fund and levied for nearly $2.4 million in 2022, according to the complaint.

“The average, annual three years, expenses undertaken by District No. 154 for O & M purposes, was $1,421,127,” plaintiffs’ attorney Timothy Dwyer said in the complaint.

A state law states an institution cannot have an accumulation of more than twice what is spent in a year, the co-counsel for the plaintiffs, attorney Jack Franks said.

Franks – a former longtime state legislator who then served four years as McHenry County Board chair – called the state law “very generous,” noting that “not many families have two times their budget sitting in their bank accounts.”

In his decision, Berg said the school district did not have justification to levy for the maximum amount for the operations fund and $2.5 million transfer from the education fund to the operations and maintenance fund was “unlawful.”

“Those were levied monies,” Berg said in the decision. “You can’t then take them and put them into a fund because of an accounting trick. Nothing in the administrative code allows that.”

The group of taxpayers also filed a lawsuit against Riley Community Consolidated School District 18, an elementary district that feeds into Marengo Community High School, for similar tax levy complaints. The district agreed to pay the plaintiffs an even larger rebate of $1.2 million in a settlement last year, according to court documents.

A count claiming there were similar excessive funds in District 154’s education fund was dismissed by Berg.

The lawsuit against both districts named McHenry County Treasurer Donna Kurtz as a defendant under the Illinois Property Code, because she is the one who distributes property taxes to the taxing agencies. Kurtz will issue the payment once the state’s attorney gives further direction, she said.

“It’s disappointing to see money taken away from schools,” Kurtz said. However she added that the “taxpayer still gets the short end of the stick.”

The district will not have to go back and recalculate for the following tax levy years because “the 2023 levy requested was already lower than an allowable rate based on the 2022 levy and so was the 2024 levy,” District 154 Superintendent David Engelbrecht said in an email to the Northwest Herald.

The judgment will not have a direct impact on District 154’s education fund, but “every financial impact on a school district has to be considered on how it impacts the overall budget and the students it serves,” Engelbrecht said.

Franks said he didn’t think the school district “did this on purpose. I think they received poor advice. It wasn’t something nefarious.”