In Support of the Fifth Ward School

Please read before you post in the comments; also I argue for why closing other schools is an easy way out

The District 65 Board decided last night to continue with the plan to build a small K-5 fifth ward school (instead of a large one). You can read the Evanston Roundtable Story. I was there and spoke during public comments (I’m a better writer than a public speaker!) to shame the board for the lengthy grandstanding they do about equity, while speaking in support of the smaller school plan.

Yours truly going off script and YOLO’ing it - I need a haircut

Some facts about the lease certificate:

1. You cannot use the money for anything other than the school.

2. There’s no mechanism, within the terms of the certificate, to pay it back or cancel the certificate. You can’t “pay back the bonds” unless you can also dig up the $18.5m in interest the bank is expecting.

3. You also cannot let it just sit there and collect interest. Technically, I guess you could, but this would also be a material breach of the certificate and would create some real interesting IRS tax implications¹. Either way, even if you let it sit there, you’re still making the $3.25m payments which cannot come out of that fund.

I do not see any way to get out of the lease certificate. You are welcome to read it and if you find anything, please comment or email me.

Imagine you take out a lease on a car and lie on the application. You don’t get to say “oops I lied” and undo the lease when you change your mind - it’s not your decision to make. The Board in their haste to get an equity win, made a really bad deal. Their financial advisors, Raymond James, Dr. Horton and CFO Obafemi, guided them thru the process, including making false statements to the board along the way.

If you want to get into the weeds on this, join me. It is good bedtime reading.

• District 65 Lease Certificate

• IL Municipal Debt Reform Law - This is the law that governs lease certificates

• My Previous Story with like 6 Other Lease Certificates Available to View

With that said..

At some point, you have to be pragmatic. As someone once said, “You go to war with the army you have, not the army you might want.“ They’ve got the funds, they can’t put them back or sit on them, they have made a lot of promises, and this school is important to the neighborhood soliciting it. I don’t think the Board has much of a choice.

The worst case scenario was that the Board tries to do the $65 million dollar plan and inevitably ends up back in the same place they are now with an even bigger financial mess. I think the smaller plan is feasible² (as in they have all the money now) and satisfies the need of the fifth ward community. It’s a compromise and that’s the nature of politics.³

With that said, there absolutely needs to be accountability. The lease certificate payments are about $2.25 million dollars short from the bus savings, so the lies on the certificate come at a pretty hefty cost to the taxpayers. I believe it is material damage to the District. Raymond James and Dr. Horton need to absolutely be held accountable and that includes exploring litigation options.

Even worse, the voters were denied a right given to them by Illinois School Code, a statutorily required referendum for new school construction.

But again, I don’t see any way to exit this deal. Therefore, I think the safest route is the small school that serves the community and doesn’t include all the pet projects and certifications that board members wanted to jam in there. This school should be a win for fifth ward families, not board members’ political careers. After the last two weeks of meetings, I believe this to be the case now.

I’ve seen online a lot of bitter discussion that this is a zero sum tit-for-tat for Evanston children and implies that other schools are required to close .. but if you’ve seen the budgets, you know that this has financially very little to do with the fifth ward school. Look at the numbers below from a post a few months ago:

The numbers were dismal long before the past couple weeks’ revelations.

Administrator Cuts Need to Come First

I challenge the assumption that schools need to close. Consider the fact that the District currently spends over $12 million dollars on administrator salaries alone. This is more than 10x what the average Illinois District spends per pupil on administrators.

Or consider the last year of reporting I have done on consulting contracts to friends, kickback schemes, unnecessary teacher residency programs, free lunches for administrators, and so on. Yet, there isn’t a hiring or consultant freeze in the administrative building. Or look no further than July’s purchasing card statement, where the District is still spending thousands of dollars on food for “meetings.”

This notion that a school has to close because of the new school is a lousy narrative and the community should not accept this answer from the board. Closing a school is the easy way out. ⁴

1. I can’t even wrap my pea brain around the tax implications of a public body generating revenue from an investment product paid for with a loan, with the sole purpose of the product being to generate revenue.

2. Reminder: Skokie just finished Lincoln Junior High for $44.6m and it is 124k square feet.

3. Also, I find it actually a relief that we can compromise as a community again. I feel like our local politics got so shattered by the 2016 election and paranoia that followed, that this feels like a return to normalcy in a way. Just regular politics again.

4. In full disclosure, I strongly believe that an Evanston value is that every kid and every family in this town has a walkable neighborhood school. I realize this is not technically 100% possible but it is a goal we should seek to attain and keep.