The Case for a District 65 Referendum this April
🎉 Please read before you blow me up in the comments!!
In Illinois, school district referendums work like this:
There is a law called PTELL, which limits how much Districts can increase the tax levy per year: the minimum between the inflation rate (CPI) or 5%.
If you want to ask for a larger increase, you have to pass a referendum. It’s not a one-time thing - the increase is added to the base, so the increase will be forever.
Here’s a table of tax levy increases per year, you can see the big spike in 2017 related to the referendum which passed 80-20.
So when a referendum passes, the entire tax levy goes up by some big percentage. The Board then has to decide how to allocate those additional funds going forward. You can read the resolution passed by the Board in April 2017.
However, subsequent to this, the 2019-2024 Boards and the Horton Administration ignored the resolution:
The reading specialists were fired by Dr. Horton to be replaced with "collectivist, equitable approach to interventions beyond just reading for students” - it’s unclear what that actually means, if anything.1 And the fund balance stuff requiring > $1 million/year contributions was blown out two years ago - they’re well in violation of this policy.
A referendum is also required by law for building construction - District 65 had a referendum for the Foster School in 2012, which failed. The whole lease certificate financing scheme was specifically designed to bypass a referendum. The current Board President, Sergio Hernandez essentially admits this in a letter to the ISBE, the same letter where he cites a nonsensical bus savings of $5 million dollars.
This work has been a dream and a vision for many in the community for decades. Without the tenacity and creativity of the Finance Team, it would not be possible. Many efforts to build a neighborhood school in the Fifth Ward have failed. Most recently, voters defeated a building bond referendum in 2012 and an operating rate increase in 2017. History was made in April 2022 when the Board of Education voted 7-0 to approved building the Fifth Ward School under the team’s finance plan.
Referendums are pretty common, in November 2024 there were 20 of them on the ballot across the state. To add a referendum, the Board needs to pass a resolution authorizing it to appear on the ballot - the deadline for the April 1, 2025 election is January 13, 2025 - coincidentally, the date of the next Board meeting.
With all that said, I think District 65 should hold a referendum.
Before you chase me out of town, hear me out.
First a note on timing: After the April 1st 2025 elections, there won’t be another referendum opportunity until the 2026 mid-term primaries. These are your next three shots:
April 1, 2025: Municipal Election
March 17, 2026: Gubernatorial Primary Election
November 3, 2026: Gubernatorial Election
Illinois does permit school district referendum elections in the primary cycle, so the next chance is a full 15 months away from today. So if you don’t hold a referendum now, you have to wait until tax year 2026.
Trump’s Department of Education (or not)
A week after the deadline to put a resolution on the ballot is inauguration day for Donald Trump. What types of things has Trump suggested doing to local education funding? Let’s take a look at Project 2025’s section on Education:
Federal education policy should be limited and, ultimately, the federal Department of Education should be eliminated.
That’s like the first sentence on the section about education! What does this mean to District 65 if the GOP follows through to eliminate the Department of Education? Well, District 65 gets about $9-$10 million per year from Uncle Sam. Here’s a breakdown from the reporting Dr. Grossi presented last fall.
The federal money that District 65 receives goes towards programs like:
McKinney-Vento Funding for Homeless Youths
IDEA Act Funding for Special Education Students
Every Student Succeeds Act (ESEA) Title 1 Funding for low-income kids
The funding is not general money but instead restricted for programs related to the most vulnerable students and it’s statutory, meaning that elimination (in theory) requires an act of Congress. However, the GOP controls both houses of Congress and has the desire to end these programs. Even if they don’t, Elon and Trump are out there talking about using impoundment to just stop cutting checks, even if the spending is authorized by Congress. That would be bad!
The prior Trump Administration specifically targeted District 65 and was litigating over diversity training as recently as January 2021. That case is currently closed, however the Trump people are going to get another four years to take a crack at it. It is hard to imagine the federal government impounding all educational funding. But it’s not hard to imagine Trump and the GOP impounding funds to places they don’t like or that have, say, LGBT curriculum they’re opposed to. That’s like Elon Musk’s whole thing!
If March rolls around and President Trump declares that all the Department of Education money for District 65 is impounded - that’s $10 million bucks that District 65 is going to need to locate, on top of the existing budget issues. If they can’t locate those funds, it’s going to be tragic for special education, homeless, and poor kids. At some level, you have an almost moral imperative to put it on the ballot, at least as insurance against national calamity.
The Existing Budget Issues
District 65 has a severe short term cash crunch. I’ll be the first to tell you that is entirely of their own making - I’ve been complaining about this for two years now. Look at this slide from November:
Fund Balance is a nice way of saying “all the money” Forget about reserves, the reserves that existed a few years ago are gone. This is operating money, stuff used to pay teachers, busses, and so on.
At the January 13th meeting, the District will be presenting the Structural Deficit Reduction Plan (SDRP) - you can read some of the materials available now on the District’s SDRP website. But, even the best case - making the big cuts will take time: layoffs won’t happen until the end of the year, building closures take some time, realizing property sales takes time, and the clock is ticking. According to the presentation from November, we’re not looking at any building closures until the end of Fiscal Year 2026 (June 2026). By then the District may have to take out short term (tax anticipation warrants) loans to stay afloat.
Best case, if they can squeeze by until June 2026 with short term financing - close schools to save money and get the budget under control, things can be stable going forward. But then you still have all these issues:
I think some of these issues will be addressed in the January 13 Board meeting - for instance, there’s evidence they’re already getting some of the costs under control this year:
But the elephant in the room is the $189 million in capital improvement needs. The buildings desperately need love, and I can’t imagine any SDRP addressing this issue if the current objective is don’t go bankrupt. Whether this year or not, they will eventually need to hold a referendum for capital improvements.
I wrote about this in the Roundtable, while advocating for consolidation - if you compare District 65 to ETHS, we fund both districts about the same now (mostly due to the decline in enrollment at D65). In school year 2023:
District 65 = $22,379.29 per pupil
ETHS = $22,694.88 per pupil
Yet, District 65 has 17 campuses and ETHS has one. In the modern era of high capital and transportation costs, District 65 is at a severe structural disadvantage. I think the ideal solution (for many reasons) is to consolidate, but in the short term, District 65 badly needs any facilities improvements, while ETHS funded their latest one using alumni donations.
I don’t think there is any downside risk to asking for this capital improvement referendum now versus a year or more down the road. There’s nothing to stop you from asking for it now and then again in two years, for instance.
Impact on Board Election (4/7 Seats!)
There are 15 qualified people running for Board which is an insane luxury. As a voter, I want these folks to be in the position of saying, “Yes, vote for me and the referendum and here is how I plan to spend/restrict the money” or “No, vote for me but not the referendum because I have a better plan.”
Even better, if four candidates come up with a joint plan and say, “Vote for the four of us, and the referendum and here’s a draft of our resolution and we’ll have a board majority on day one” - that would be nice. As a voter, that’s the position I want the District to be in! Maximal democracy!
The next Board needs to come up with a comprehensive facilities plan that almost every other Board, including the present, has punted on. This gives them the resources ready to do it - meaning they can actually start making plans, bidding work, and so on. It would be nice to have a Board say, “In two years, we’re going to replace a wing of Nichols using this fund — here is the plan 4 years out from bidding to completion, please execute this plan, Superintendent”
Downside Risks (Fool me once..)
I know that someone is typing up a comment right now, “Tom, you are on crazy pills! I don’t trust District 65 - we had the 2017 referendum and built up a $30 million dollar war chest and then the Board (mostly via Dr. Horton) pissed the money away on Fully Loaded Ford Explorers, a resort in Atlanta, Steak Dinners in LA, $23,000 at the Grecian Kitchen, six-figure kickback schemes to Dr. Horton’s friends, $50,000/month personal security details, half-work contracts to ex-cons, $1 million dollar curriculum we don’t want to use, a 150% increase in administrators, a $2.5 million dollar disastrous teacher residency program, and now is in violation of their own referendum resolution! What’s to stop this from happening again and the next Board just using this money to patch holes and make no changes?
The primary answer is: you, the voter. Stop voting for people who are OK with these kinds of spending shenanigans, run for Board, or start a Substack! Things don’t have to be terrible. At least 15 people agree with me on this, right now.
The secondary answer is, the State of the Illinois. Things are really bad that even with the additional referendum money, if they don’t make significant expense reductions, this will only kick the can on a state takeover for a few years. Like, look at that FY28 projection in the chart below. -$36 million dollars fund balance - that’s material!
No referendum is going to fix a negative that big. There needs to be serious systemic changes, which hopefully we can start addressing with the deficit plan starting next Monday.
Let me know what you think in the comments or email me: tom@foiagras.com
In retrospect, I wonder if the reading specialists could’ve sued to keep their jobs under that 2017 resolution, which authorized them?
There is an excellent case to be made based solely on the finances that a referendum is needed. There is also a good case to be made that homeowners should back it given what a state takeover of the schools would likely do to everyone's property values.
However there are two big barriers to a successful referendum even if one were to be placed on the ballot: trust and perceived value.
When the referendum passed in 2017, there was strong support for wanting to maintain what people believed with some justification, were excellent schools. Over the last several years, the District has seen enrollment decreases which cannot be justified by low birthrates, as much as the Board would like to cling to that fantasy. More and more families are biting the bullet and paying both our enormous tax bills and private school tuition because they do not think that the District is getting the job done. That makes it hard to justify throwing more money at the District.
The other obvious issue is one of trust. The community as a whole doesn't trust the Board and/or administration to use the resources they are given wisely. Building up trust is going to be a prerequisite to a successful referendum.
There are a lot of ways that trust can be rebuilt, but if Sergio Hernandez cares about the long term viability of this District, stepping down effective the first meeting of the new Board would be an excellent first step to rebuilding the trust with the community.
Why do I think having Sergio continue on the Board would be something that would impair the rebuilding of trust?
1. He was on the Board for all of the events that have caused the loss of trust which is the problem, from the sacking of Paul Goren to the hiring of Devon Horton and all of the issues that have been well-documented on this blog and elsewhere. After the 4 incumbents leave the Board at the end of this election cycle, he will be the sole remaining Board member who was here for all of the events, and President for a good chunk of them.
2. He was a part of the process of authorizing the lease certificates for Foster School without asking any of the basic questions to determine whether the transportation savings that were supposed to fund them were actually real. Because the transportation savings were fiction, we will be paying $3.25 million a year in tax dollars to investors that should be going to pay our teachers and provide an excellent education to the kids in our community. It is a real, ongoing harm that no one should forget about.
3. He submitted the letter to ISBE claiming that there were actually $5 million in transportation savings. This ultimately led to ISBE giving an award to D65. The real number is more like $750,000. Whether this was a lie or just evidence that he didn't know the details - neither is a good option.
4. As Board president, he knew that Dr. Horton was looking to obtain employment elsewhere and kept that secret until after the 2023 election. Turnout was awful, but certainly would have been higher had the community known that selection of a new superintendent was going to be on the Board's agenda. He came out ahead on John Martin by +/- 450 votes. Did keeping that bit of information to himself help him come out ahead? Hard to say, but it is a pretty clear Dr. Horton first, community second moment ... with more to come. Read on!
5. He was part of putting Dr. Horton on a payment plan for the $25,000 buyout from the contract with D65. There was no good justification for doing that, and of course, we know that Dr. Horton didn't honor the payment plan put into place.
6. After Dr. Horton left, he went on a spending spree with the District's p-card. The money was paid back. Nothing public was said about it, but the Board knew. After Dr. Horton had moved on and paid back the District money that he had helped himself to, the public learned that Dr. Horton hadn't honored the payment plan he was given. Sergio signed a letter waiving thousands of dollars in late charges with the admonition that this should "disabuse" him of the idea that he could continue to do so. At the time he signed that letter, he knew of Dr. Horton's post-employment misadventures with the District's p-card - but the community didn't. Knowing that makes this bit of posturing all the more empty.
It takes a certain amount of courage and integrity to recognize that you are part of the problem and not the right person to be a part of the solution. Time for Sergio to come to that realization.
I don’t know where you guys are getting the six-figure jobs from, especially those of you lucky enough to have TWO six figure job earners in the household. SO MANY OF US AREN’T. So the moneyed people pay for slick advertising and yard signs and full page ads in the local rags and the poorest among us are so disenfranchised they don’t vote. So the poorest get hit with this tax, either with rent increases or property tax increases. At a time when the houses for sale in the 5th ward (you know, the majority minority ward that needs the most help???) are now selling for minimum asking price of $450k. Let that sink in. Houses that 6-8 years ago sold at $200k are now selling for $400k plus. How in the hell can anyone sit there and say this is ok? People talk out their asses in this town. The only affordable housing in this town is going to be the housing Evanston residents pay for and the city buys or builds. I’m not voting for ANYTHING in d65 until we see a whole new board and a new super and some concrete plans. Not the plan a maybe candidate has that maybe will get implemented- I want to see the plan on the books. Because lots of people have said lots of things to get elected, but the reality differed considerably. I get that we need money, but I don’t think we should vote for things that will seriously negatively impact many existing residents immediately until we see where the new regimes (national and local) take us. We also don’t need more fear mongering re: Trump. Everyone thought America as we knew it was going to end last time, but here we are. Let’s take a deep breath and not make hasty decisions. After all, once you give a Board a mechanism to get “free money” off the backs of the people, like you said- there’s nothing to stop them from doing it again and again.