Echoes of the Fifth Ward School Financing Debacle
District closing Bessie Rhodes; parents protesting before the board meeting tonight
District 65 plans to close Bessie Rhodes School of Global Studies and tonight at 6pm is holding one of the statutorily required hearings related to the closure.
Parents, caretakers, and community members have organized a protest that will walk to the District 65 Administrative Center. Here’s the info from their media release and a copy of their fact sheet.
WHO: Parents/Caretakers of students at Dr. Bessie Rhodes of Global Studies
WHAT: March from Dr. Bessie Rhodes School of Global Studies to protest the District 65 Board Hearing at Joseph E. Hill Education Center
WHEN: April 22, 2024 at 5:00 pm
WHERE: Dr. Bessie Rhodes School of Global Studies (3701 Davis St., Skokie)
In the fact sheet, they write;
The District broke its promise. Dr. Bessie Rhodes School of Global Studies (“BRGS”) was originally slated for closure only after District 65 promised that BRGS would move to the new Fifth Ward school and retain its bilingual curriculum. The Board, blaming budget pressures and financial shortfalls, determined that the Fifth Ward School would not be able to maintain BRGS and that the Fifth Ward school would only have K-5 and no guarantee of a bilingual curriculum. Despite this massive and unexpected shift, the Board continues to push for the closure of BRGS.
I believe this is true but I think it’s important to note the reason why the budget pressures and financial shortfalls happened;
The Administration misled both the Board and bond holders regarding bus savings from construction of the school. The true bus savings are $750k, however the lease certificate itself says $3.25m and even Board President Sergio Hernandez cited a completely silly number to the ISBE, that the savings would be $5m!
Neither the Board nor Administration did anything with the fifth ward school until it was far too late. From the period May 2022 until October 2023, the District had the funds but did absolutely nothing. They even gave each other awards in an empty field. Skokie built a brand new school in this time (Lincoln Middle School).
According to Dr. Turner’s memo, Dr. Horton was aware of the cost overruns before they even took the money in April of 2022!1 The implication is that the Horton Administration knew the school was impossible, literally as they were making promises to the Bessie Rhodes and Fifth Ward communities.
Also, during this whole time, the architects (Cordogan-Clark) were aware of the cost overruns (they were the ones generating the numbers) and didn’t tell anyone on the Board? Frankly, I don’t even understand how this is possible.
I hope people can appreciate how totally crazy this whole situation is. For one, the lease certificate was done to avoid having a referendum. The claim was that the bus savings were so great that it would cost the taxpayers nothing to pay an extra $3.25 million per year … it would be a wash. But this claim was proved false, so a referendum is required.
But at this point, they can’t put the lease certificate back in the bag and they have to spend the money or it gets taxed and they cannot spend the lease certificate on anything else. So they basically have to build something, unless someone sues to force a referendum or they figure out some financial tricks.2
Some Broader Financial Context
Over the last two years, I’ve ranted that the District needs a financial audit - well, they finally got it in the form of Dr. Grossi. You can see his slides from last board meeting. Consider me a fan boy.
Also, there have been many more layoffs than what I was sharing in my prior stories, including to the CREATE65 program and other Horton-era roles, such as Asst. Dir. of Culture and Climate. I’m glad they’re finally talking about stuff I was harping on in August 2023.
District 65 has three major short-term budget challenges:
The annual burn rate. D65 is projected to incur a deficit of $4,280,000 in FY25 if cuts aren’t made.3 By 2028-29, that deficit could be as bad as $17,000,000 in the red.
Referendum Savings. The 2017 Referendum generated significant revenue and the District still has $32,770,746 put aside.4 The deficits above will directly come out of this account. After that it’s Mad Max.
Paying for the construction of the new Fifth Ward school. D65 has been paying the architects but we still don’t have a hole in the ground. At the moment, the fund which houses the lease certificate money has $40,299,488.5 The projected construction expenses are around $48m, so we’re $8m (probably more) short.
And they have two major structural long-term budget challenges.
Maintaining existing facilities. D65 has more than $188 million in facilities work6 and really no way to pay for any of that, even with the budget cuts.
D65 teachers are compensated 20% less than comparable teachers in ETHS. At some point, the District is going to need to either financially (or morally) reconcile this, which could cost as much as $20 million (or sacrificing your “equity lens”).
For reference, District 65’s annual budget is around $150 million7. So when we’re talking about $188 million in repairs, that’s more than the entire annual budget.
You can read Dr. Turner’s original memo from the October board meeting, which mentions Bessie Rhodes closure;
The Board should also consider pursuing proceeds from donations and the future sale of the Bessie Rhodes school property to directly pay for Project costs or to replenish depleted fund balances.
The last question is: well, how much money is being saved through closing Bessie Rhodes? Is it worth the pain? I think there are two places to look:
Maintenance Records - There is a lot of work that needs to be done with Bessie Rhodes, but as the parents point out, this is true of almost every D65 school.
Real Estate Appraisal Records - I’ve heard numbers that range from $1m to $5m for the land that Bessie Rhodes sits on. In the records above, you can see they flag that the appraisal value was $4-5 million in 2023. I haven’t seen a copy of that appraisal, yet.
So, is this worth the pain? I don’t know? I have a hard time believing the property is worth that much, since it would require demolition and re-zoning but I also am not a real estate guy. But I do feel confident that we wouldn’t be having this conversation had the District pursued the proper financing strategy with the fifth ward school (a referendum). They took an additional $3.25 million dollar debt payment and Bessie Rhodes seems to be the casualty of that.
Let me know in the comments what you think or come say hello at the march tonight, I’ll be there I’ll be there. I won’t be able to stay for the Board meeting, however.
An April 2022 budget of $55,892,034 for a 108,649 square foot building or an alternative design and cost of $46,522,603 for a 103,395 square foot building. The lease certificate was signed in May 2022.
This happened a few years ago in Wheaton and they ended up holding a referendum.
It is worth noting that the fifth ward school lease certificate payment is about $3.25m, a majority of that deficit.
According to February 2024 schedule of investments.
This comes from the Feb 2024 D65 Investment Schedule. There were supposed to have been some wins from interest on the money but the payments to the architects (Cordogan and Clark) are eating that up quickly.
The $188 million number was from 2022, two years ago during which nothing additional was done or really even considered.
Almost all the revenue is locally funded. The 2023 Tax Levy amount for D65 was $138,101,000.
In reality, 2-3 schools will ultimately be closed. The BOE and Admin are withholding truths; treating the community like children. They think we’re dumb (at worst) or just apathetic (at best). And I for one am so freaking tired of it. Many of us have taken big hits trying to wake up this town —but in truth, I’m not sure this community cares in big enough numbers to take back control. Maybe certain groups will wake up when their school is shuttered, but by then —what does this district look like? Holes, asbestos, mice infestations, lack of air circulation (hello COVID & fed $$ —ever wonder where those millions went?!), ADA compliance? Who cares, right. Whatevs….and don’t even get started on the screwed up curriculum situation and the lack of any meaningful progress for our most vulnerable student cohort showing up at ETHS’ doors not even close to anything resembling grade level…. I mean seriously, Tom & subscribers, what the hell is wrong with people in this town?! What is it going to take??!
There is so much to say on this topic:
1. I had a Zoom conference with Dr. Horton and Dr. Obafemi shortly before the vote to proceed with the 5th Ward project. They were at that point projecting only $1 million from the sale of Bessie Rhodes. I am pretty sure that was also stated in various Board meetings prior to the vote. Of course, market conditions change and both of these gentlemen have shown themselves to be liars of the highest order, so take that for what its worth. Anyone planning on the sale of BR providing meaningful funding should look elsewhere.
2. I have said it before and will say it again - how Cordogan Clark still has the contract for the project is completely beyond me. At a minimum, they should have let the Board know before they signed the lease certificates that the $40 million budget was not going to cut it. There were also multiple other opportunities for them to speak out as Horton continued to tell lies about the project, but they let him continue to spew nonsense about the project. They probably also should have told the Board that before they borrowed money for the project they should do some of the homework for the project like site suitability studies (the punchline to that story is that the soil conditions are subpar, adding something on the order of $6 million to the price tag). If I had a vendor that led me down the path the way that CC has, fired is a way too gentle word to describe how they would be gone. Instead they are billing this project out the wazoo and are trusted advisors to the District. I don't get it.
3. Sergio Hernandez's duplicity has not gotten nearly enough attention. He signed a letter to ISBE stating the transportation savings was going to be $5 million as part of the process of applying for an award. As we all know now, that number is actually $750K. In fact the entire D65 transportation budget was less than prior to 2022. (Source: https://evanstonroundtable.com/2024/02/12/district-65-prepares-for-budget-cuts-that-are-going-to-be-hard/) The net outcome of selling the 5th Ward financing project that was that D65 got an award, the communications team at D65 rolled out a press release right before the last election about all the awards the District was winning (nothing to see here ... ) and he snuck by John Martin.
4. The cost of the new building is $48M, they have $40M in the bank. No one is talking about how they are going to cover the hole between what they have and what they need to spend. That is something that they need cash for to pay contractors as the bills come due. My guess is that they will raid District reserves but so far, no one is talking about it.
5. There will be multiple school closures coming over the horizon. The District is talking about "consolidation" in public. The simple fact is that what they are going to do is going to change neighborhoods forever and this something that deserves robust public discussion. It will instead be delegated to the SAP Committee which is really a facade of public involvement.
6. The Board has no interest in seeing kids return to D65. Ed Finkel wrote an article a few weeks ago in the Roundtable where Sergio Hernandez claimed that they were doing outreach to families that left to bring them back. I am, ahem ... skeptical on that. The way that they are achieving reductions in expenses is through attrition. They don't need to replace folks who leave if there aren't students for them to teach. If people start using the schools that they are paying for again, that would be a disaster.