District 27 faces tough funding choices

[MARCH 13, 2003]  Sometimes there are no really good choices.

Lincoln Elementary School District 27 board faced that dilemma Wednesday evening at a special meeting to discuss ways to close the nearly $3 million funding gap between the money needed to build a quality junior high school and the funds at hand.

The board asked Kevin Heid of First Midstate Inc. to put together figures on several bond alternatives, but on close inspection the board found disadvantages to each plan.

Two of the plans Heid presented, debt certificates and alternate revenue bonds, do not raise taxes for district residents; the disadvantage is that they must be paid off from district revenues.

According to Superintendent Robert Kidd, the district is in good financial shape now and could afford the yearly payout, which would average from $300,000 to $350,000 depending on the type and amount of the bonds. However, noting the dire financial condition of the state of Illinois, which could affect the state aid school districts get, and the faltering economy, Kidd said he had reservations about pledging to use the district's operating funds to pay off a 20-year bond issue.

He said he favored a third type of bond, a funding bond that would raise the district's tax levy by 25 cents per $100 of assessed valuation, because it would provide a guaranteed revenue stream to pay off the bonds, and the district's operations would not be threatened.

However, board president Bruce Carmitchel said he believed the duty of the board was to act in the best fiscal interest of the taxpayers. After weighing the pros and cons, he proposed the board give first consideration to the alternative revenue bonds.

"If we have the ability to do this [pay for the bonds out of operating funds] is it fair to ask taxpayers for an increase?" he asked.

After lengthy debate, board members voted unanimously to give first consideration to the alternative revenue bonds rather than the funding bonds that would raise the tax rate.

Board member Stephen Rohrer hesitated longest before voting yes. He said he was concerned about the risk the district was taking using operating funds, noting that the future of the economy was a "big gamble" and the district would be renegotiating teacher contracts in a few years.

Heid said there could be "other options down the road if this isn't working," such as issuing Working Cash Fund or funding bonds to pay off some of the debt.

The alternative funding bonds do carry a provision under which the district could levy additional taxes, if the revenue dedicated to paying them off should be inadequate.

Heid said these bonds have been issued since 1988 and he knew of only one district that had gone to the tax levy.

Kidd said the possibility of raising taxes to repay the bond was remote. "The world as we know it would pretty much have to come to an end," he said.

Although the board voted to pursue the alternative revenue bond option, the decision could still be changed, as the extra money will not be needed until late in the year. Heid will attend an April 8 board meeting to continue helping the board make a final decision.

According to a printout provided by First Midstate, the alternative revenue bonds could be issued for either $2,935,000, which is the district's debt limit, or $3,300,000, a figure over the debt limit.

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The $3.3 million is the extra money the district would need to build a 54,000-square-foot junior high with a three-story classroom wing, a gymnasium and a stage and provide new furnishings, fixtures and equipment. However, Kidd said the junior high has many new desks and other furniture that could be moved to the new building.

Carmitchel said he favored staying with the debt limit of $2.935 million, but the board postponed the decision on the actual amount.

Paid over a 20-year period, the $2.935 million would require setting aside $314,000 dollars a year for repayment; the $3.3 million bond would require $352,500.

Heid cautioned the board that the bond would be a "first lien" and would have to be repaid no matter what the district's operating costs were. He suggested pledging the repayment funds from the district's building fund and if necessary from state aid.

Both the alternative revenue bonds and the funding bonds that Superintendent Kidd favored allow the residents of the district to request a referendum. A public notice must be printed, and district residents can then petition to put the bond issue to a vote. Heid said 10 percent of district residents would have to sign the petition for a "back door referendum" to be held.

If residents do petition for a referendum, the district would have to drop the alternative revenue bonds, Kidd said, because the next election is not until the spring of 2004 and the district will need the money before that time.

If the district finds it cannot issue the alternative revenue bonds, it can fall back on debt certificates.

One advantage of the debt certificates, which are also paid out of operating funds, is that they are not subject to the "back door referendum," Heid said. However, they are more expensive, having a higher interest rate, and can be issued only up to the debt limit of $2.935 million.

"We do a lot more alternative revenue bonds than debt certificates," Heid said. "My advice is to try to issue alternative revenue bonds first. Why should the community pay extra interest if they don't have to?"

He said this is a good time to issue bonds of any kind because interest rates are at "rock bottom" lows. The low interest rates would be locked in for the entire 20 years of the bond issue.

The board is facing this dilemma because actual costs for building the new Central School and estimated costs for the junior high are higher than anticipated. Originally costs were estimated at a total of $12.4 million for both buildings. A state grant gave the district $8.3 million, and the district passed a bond issue of $4.1 to make up the difference and be eligible for the grant.

Board members were unpleasantly surprised when bids well over estimates began to come in, and the board had to work hard to cut costs on Central School.

"I can't say it's the fault of the bad economy. We just didn't guess right on the price," Carmitchel said.

The board had opposition to demolishing the old schools, particularly Central School, from a group called Save Our Schools, but the referendum for the bond issue passed by a comfortable margin.

Board members said they are aware they may have opposition to any plan to raise money to complete a quality junior high building, but they intend to give the public complete information on whatever alternative they choose to raise the extra funds.

[Joan Crabb]

Blagojevich outlines bold agenda to bring change, move the state forward

State of the State address includes proactive initiatives for job creation, education, prescription drugs and public safety

[MARCH 13, 2003]  SPRINGFIELD -- Offering a "new approach for governing," Gov. Rod Blagojevich on Wednesday used his first State of the State address to urge members of the Illinois General Assembly to join him in enacting an agenda to improve the quality of life for the people of Illinois.

While acknowledging that the state faces unprecedented challenges, including its largest budget deficit ever and an ethical crisis in state government, Blagojevich maintained that a unified, bipartisan approach to problem-solving is needed.

"As we deal with the fiscal crisis, we cannot lose sight of our goal of making Illinois a better place," Blagojevich said. "I refuse to accept the notion that in tough times government must abandon the commitment to give people the tools to build a better life. Times of uncertainty and struggle are when people need us the most."

The proposals he outlined during his speech to a joint legislative session mark the expansion of an aggressive agenda he has carried out during the first eight weeks of his administration, which have focused heavily on the need to quickly bring reform to state government.

While continuing to cite the importance of such efforts to change "business as usual" in Springfield, the governor emphasized proposals to address people's concerns in four core areas -- jobs, education, public safety and prescription drugs for seniors.

Within those four areas, the initiatives highlighted by Blagojevich included the following:

Blagojevich announced legislation to create the Illinois Opportunity Fund to attract private investment to the state. The $200 million fund in private investments embodies Blagojevich's innovative plan to bring much-needed venture capital to the state. If passed by the legislature, Blagojevich said, the fund could be functional within one year.

The governor said that the fund "will help jump-start industries and focus on new technologies that have the potential to not only put people back to work, but to create the sort of jobs that will attract young people to our state."

Nanotechnology, the manipulation of matter at the atomic level, is an area in which Illinois currently is a national leader and one of the many areas of opportunity Blagojevich said he would target for expansion.

"There will be no more missed business opportunities," he said, citing the fact that although the Web browser was developed at the University of Illinois in the early 1990s, other parts of the nation benefited more from the economic activity associated with the Internet.

The venture capital program notably would be used to enhance the state's agriculture economy, to help farmers' commodities be used for ethanol and other value-added products.

As part of the venture capital plan, the governor announced the creation of six new Centers for Entrepreneurship. The first of the centers could be operational in two months, he said, and 20 centers could be in place within two years.

"There are countless entrepreneurs across the state with good ideas who just need a chance to show what they can do," he said, explaining the purpose of the centers.

The centers will supply training, tools and resources to provide 400 $5,000 business planning and development assistance grants to entrepreneurs.

These centers will be located in Rock Valley College in Rockford, the University of Illinois at Urbana-Champaign, the University of Illinois at Chicago, Western Illinois University in Macomb and at Southern Illinois University campuses in Carbondale and Edwardsville.

To help workers on the brink of poverty obtain economic independence, the governor announced his support of legislation to increase the minimum wage from the federal standard of $5.15 per hour to $6.50 per hour to protect the value of the dollars earned by hardworking families.

In addition, Blagojevich said: "It's time for women, who make up more than half the state's work force, to receive equal pay for equal work, instead of just 69 cents for every dollar a man makes."

The governor said that 20,000 new jobs could be created in Illinois through the use of clean coal technology to revitalize a coal mining industry that has suffered for the last quarter-century.

He pointed out that financial incentives totaling $800 million are available to encourage power companies to invest in advanced coal technology that can burn Illinois coal and meet or even exceed clean air standards. Using this technology, power companies in Illinois can burn Illinois coal more cleanly than they burn coal from Western states and create thousands of coal mining, construction and ancillary jobs in downstate Illinois. The state also will aggressively market the technology to power companies across the nation.

To provide every Illinois child a chance at success in school, Blagojevich announced his plan to lay the foundation for universal preschool.

"Every educational expert agrees that the earlier a child begins to learn, the better his or her chances are of succeeding," he said.

His plan would begin by reaching every at-risk 3- and 4-year-old child in Illinois within three years. There are an estimated 25,000 at-risk 3- and 4-year-old children in Illinois.

Pointing out that educational initiatives are dependent on students having quality teachers, Blagojevich announced the creation of the Illinois Future Teacher Corps, a new scholarship program that would provide scholarships to students who agree to teach in Illinois public schools. These scholarships will address the expected need for 44,000 teachers by 2006 and help attract teachers for hard-to-fill posts.

Under the program, $5,000 annual scholarships would be available to juniors and seniors in college who agree to teach for five years in Illinois public schools in either shortage subject areas, such as reading, science or early childhood, or in geographical regions of the state experiencing teacher shortages. Scholarships of $10,000 per year would be available to those students who teach in both subject and regional shortage areas.

Speaking as a father himself, Blagojevich cited the important role that parents play in their children's education and the challenges that they face.

"Our message to parents is unequivocal -- we support you," he said.

Blagojevich announced several initiatives to enhance parental involvement in education. First, he said he would have legislation introduced to expand the amount of unpaid leave time parents can take from work to attend school activities, such as meetings with teachers or counselors, from the current eight hours per year to three days per year. To demonstrate that he is leading by example, he pledged to sign an administrative order that would enable state employees to immediately use the expanded leave time.

Blagojevich also announced that he would sign a proclamation calling on all Illinois schools to adopt the National PTA standards for parental involvement, focusing on more frequent communication between teachers and parents. To further facilitate that goal, he announced the creation of a new Web-based system to enable parents to access information via the Internet regarding their children's classroom activities, homework and attendance. He added that the administration would explore cost-effective mechanisms, such as setting up voice mail for public school teachers to make it easier for parents to communicate with their child's teachers.

Blagojevich announced that the state will take a major step toward addressing the concerns of seniors who are finding the cost of lifesaving medicines simply too expensive.

"The phrase 'sticker shock' does not begin to describe what so many people feel when they go to the pharmacy," he said.

He announced that he will sign an executive order this week to create a special advocate who will be assigned the task of negotiating a better deal on the nearly $2 billion in prescription drugs currently purchased by the state. He criticized the state's meager 1.7 percent rebate on drug purchases -- the worst in the nation -- and noted some states receive a rebate 10 times more generous.

Under his plan, all nine state entities that purchase prescription drugs would coordinate purchasing activities in order to leverage the state's purchasing power.

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To further reduce the financial burden shouldered by seniors, Blagojevich urged lawmakers to work with him to legislate the creation of a discount card for seniors. The program would enable seniors to pool their purchasing power, and the state would negotiate discounts that seniors could access for all over-the-counter drug purchases.

In the hopes of covering drugs for all conditions, rather than a select few, the governor said that he will fight for federal funding to fully expand the Circuit Breaker program. Last year, the federal government provided funding to expand coverage for most Circuit Breaker participants, but 50,000 seniors were not included. Blagojevich pledged to work with the state's congressional delegation for the expansion.

In addition to his efforts to enhance seniors' access to prescription drugs, Blagojevich announced plans to expand the state's FamilyCare program, to provide health insurance to up to 300,000 working parents within three years, and to provide coverage to more than 20,000 children by expanding KidCare. He explained that the state has lost as much as $150 million in federal funds because of a failure to fully invest in these programs.

Blagojevich pointed out that this year more than 35,000 offenders, a record number, will be released from Illinois prisons, and half of those would likely be re-incarcerated within three years.

His new initiative, Operation Spotlight, would double the number of parole agents over four years from the current 370 to 740 and tighten supervision standards so that parole agents are required to have more regular contact with parolees once they are released. The plan would empower parole officers to make swifter arrests and impose graduated sanctions, such as electronic monitoring, to discourage criminal activity.

Citing the fact that the majority of criminals in Illinois prisons are incarcerated for drug-related offenses, Blagojevich called for the gradual reopening of Sheridan Correctional Center for use as a national model drug offender rehabilitation facility.

Illinois leads the nation in drug abuse, drug addiction, drug overdoses and deaths, and 25 percent to 50 percent of Illinois' prison inmates were arrested for a drug- or drug-related crime. Under the plan, Sheridan would become the nation's first prison that monitors and treats drug offenders both in prison and when they are re-entering the community.

"Illinois leads the nation in drug-related crimes," the governor said. "We should lead the nation in drug crime prevention."

Declaring that it is time to stop a dangerous trend in drug use, the growing prevalence of so-called club drugs, such as Ecstasy, "before it becomes an epidemic," the governor announced a new effort, Project X, that would enhance current federal, state and local law enforcement efforts.

Blagojevich's plan would triple the investment in the Club Drugs Task Force and allow the Illinois State Police to detail more agents to specifically work on targeting Ecstasy and methamphetamines. The plan would focus efforts on college campuses, which are key targets for dealers. This initiative will involve undercover operations and increased resources targeted to college campuses to crack down on drug abuse and drug dealers.

Citing the fact that use of Ecstasy among teens has increased 71 percent since 1999, Blagojevich's plan also calls for a statewide awareness campaign to inform both parents and their children about the dangers of these illegal drugs.

The governor announced the creation of a national model Statewide Terrorism Intelligence Center, to be based in Springfield, which would provide 24-hour, seven-day-per-week access for terrorism-related intelligence queries for all law enforcement agencies. The center would serve as a focal point for both state and federal database inquiries and would establish a centralized repository for incoming data, which will be analyzed, assessed and shared with law enforcement agencies.

- - -

The governor recognized that he presented an ambitious agenda to legislators in his speech, and his proposals carry a price tag of $88 million.

"This agenda and these proposals are not only worthy, they are achievable and they are affordable," he said. "With a nearly $5 billion deficit, I don't propose them lightly. But these are not only investments we can afford to make, these are investments we can't afford not to make."

Blagojevich again repeated his promise to balance the budget without an increase in the income or sales tax. "We cannot burden the taxpayers with the full weight of fixing the mess created by those who led them astray," he said. "But we also cannot punish the taxpayers by using this crisis as an excuse for inaction."

In addition to the policy initiatives in the four key policy areas, Blagojevich also spoke of the need to continue to "first restore the ethical and fiscal integrity of our state."

Since taking office in January, Blagojevich has taken steps to closely examine state expenditures -- even those that are the result of long-established spending practices -- and bring much-needed reforms to state government to restore people's faith in their leaders.

In late February, he called on departments and agencies to cut, on average, 10 percent in administrative costs, a move that could save $30 million this year and $125 million in fiscal year 2004, and he placed an additional $1.7 billion worth of this year's operations costs, grants and capital projects in reserve.

He also unveiled an innovative plan to refinance the state's pension obligation and apply approximately $1.9 billion to the deficit.

Blagojevich has called for major reforms of the state's current lineup of boards and commissions, eliminating 11 boards through executive order and announcing legislation to cut all pay at another 11 boards, eliminating stipends and per diems, cutting 120 seats and consolidating another four boards into two.

Earlier in his administration, he froze payments for legislative member initiative projects, imposed a hiring freeze on all agencies, called for measures to reduce administrative costs at state universities, prohibited agencies from acquiring new cars, and canceled costly lobbying contracts with Washington, D.C.-based firms.

The governor appointed a special investigator for employment to review whether high-paying positions held by term appointees and others are essential to state government.

Last week, the governor announced reforms intended to prevent repeats of a situation where employees of the previous administration cashed in on unused vacation time for one-time payouts of as much as $90,000. Blagojevich issued an administrative order that limits about 3,000 state employees to carry over no more than five vacation days per year.

Blagojevich said that, in addition to steps that he has already taken to mandate ethics training for state employees and develop new whistle-blower protections, he will work with Attorney General Lisa Madigan to enhance these efforts by creating a new Board of Ethics to help restore integrity to state government. The board will take swift and fair disciplinary action in cases of unacceptable behavior by state employees.

"We must begin by giving the people of this state a reason to start believing in Springfield again. Business as usual will not do," he said.

Blagojevich added that he would return to the same chamber next month to present a full and comprehensive plan to balance the state's budget.

[Illinois Government News Network
press release]

Bomke responds to State of State

Funding reforms needed first

[MARCH 13, 2003]  SPRINGFIELD -- Schools, health care, crime and jobs topped Gov. Rod Blagojevich's first State of the State address to lawmakers Wednesday. Sen. Larry Bomke, R-Springfield, wants to know how the governor plans to fund these programs.

"Governor Blagojevich talked about a lot of good ideas for new programs in his speech," Bomke said. "What he didn't talk about was how to pay for it. We simply don't have enough information to move forward on most of these plans right away. While I certainly approve of his goals, if they come with heavy tax increases, I'm not sure this is the best direction for Illinois or the 50th District."

Bomke was particularly disappointed the governor made no mention of education funding reform.

"Education funding reform is long overdue for downstate Illinois," Bomke said. "Governor Blagojevich did not mention this in the State of the State, but I am hopeful it will come up in his budget message in April. We haven't had meaningful education reform since Gov. Edgar, and this is certainly something that has to come from the executive level. I would hope the governor takes steps to address this next month."

[News release]

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