The Case for a District 65 Referendum this April

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