District 95 Financial Dashboard

LZ95 Financial Overview

Located northwest of Chicago, Lake Zurich Community Unit School District 95 encompasses an area of 19.4 square miles serving the communities of Lake Zurich, Deer Park, Hawthorn Woods, Kildeer, unincorporated Lake County, and North Barrington.
 
District 95 is a community unit school district that serves students ages Pre-K—22.
 
The District annually completes a five-year long-range plan to anticipate and address the revenue and expenses of the District. The District’s assessed property values for 2020 have increased for the sixth year in a row. During the current fiscal year, the District had a full bond rating review where Standard and Poor’s reaffirmed the District’s AAA bond rating.
 
The communities served by the District strongly support the District; this was illustrated by passing a building referendum for $77,600,000 with 69% of the electorate approving the referendum. $37,600,000 of these bonds were issued in June 2020. The District has a stable workforce and has a labor agreement with the District’s certified staff through the 2021-2022 school year. The fiscal year 2021 budget is balanced on an operational basis.
 
The District will continue spending referendum dollars from the Capital Projects Fund where revenue was received in prior fiscal years. The District has strong fund balances to weather an economic downturn from the COVID-19 pandemic. The District has adjusted assumptions to financial projections in a post-COVID world to develop realistic financial plans. The District is carefully monitoring and adjusting expenses to accommodate the additional pandemic-related expenses.
 

2021-2022 Budget

 
The Board is required to adopt the FY22 fiscal year budget by September 30th each year. The Board is required to have a budget hearing before the Board adopts the budget. This year the public hearing and approval of the budget took place on September 23, 2021.
 
The official budget requires that “On Behalf Payments” from the State be included although these are not recorded on the District’s financials. The “On Behalf Payments” expense is estimated and budgeted on the revenue and expense sides for a net impact of zero dollars. The budget represents a set of reasonable assumptions and plans for what could happen. Many of the direct budgetary impacts of the pandemic have been addressed and these budget line items have returned to normal pre-pandemic levels. Some revenue sources such as athletic admissions and facility usage continue to be reduced for the pandemic. On the expenditure side, the District has new, post-pandemic expenses related to the additional custodial cost for extra cleaning, contact tracers, and additional staffing for classroom capacity limits.
 
The District has completed issuing all the general obligation and debt service bonds related to the referendum-related work. A transfer of $4M from the Operations and Maintenance Fund to the Capital Projects Fund has been budgeted. Overall, the budget is a deficit budget due to the construction-related expenses. Without the referendum expenses and transfers, the budget would be a positive budget of $3,134,220.
 

2021 Levy

 
The Board of Education is annually required to adopt an estimation of the taxes to be levied not less than 20 days before the adoption of its final levy. The tax levy resolutions shall be filed with the county clerk by the last Tuesday in December.
 
District 95 is subject to the Property Tax Extension Limitation Law or “tax cap” which limits the amount of taxes a district can extend regardless of the district’s need. The growth in the tax extension is limited to a 5% increase or the Consumer Price Index (C.P.I.) whichever is less, plus new construction. The C.P.I. for the 2021 levy is 1.4%, which is under the 20-year average. The taxes extended for District 95 are based on the Equalized Assessed Valuation (EAV) of the district and the Consumer Price Index (CPI).
 
Another key component in determining the total EAV and the taxes that can be extended is new property values within the District. New construction is important to a district since this property comes to the district at its full value, not calculated in the limiting rate. This year the tentative information from the county assessor indicates that the District will have $10,198,327 in new construction. This preliminary information is anticipated to be adjusted in the spring when final calculations are issued.
 
Combining anticipated new property value with the decrease in value for existing EAV the estimated EAV for the district is $1,728,379,633 or an increase of about 0.43% as compared to an increase of 0.60% last year.
 
The CPI, estimated change in existing EAV, and the value of new property are used to create an estimate of the tax extension for the 2021 levy. It is estimated the district will receive approximately $82,123,656 excluding Bond and Interest. The total including Bond and Interest is $89,179,905. It is estimated that the total tax rate will increase from $5.091187 to $5.159741.
 
The actual levy figure that the Board will be asked to adopt will be more than the levy extension estimated to be received by the District. First, as previously discussed, these figures are based on estimates. Second (and more importantly), the levy is adopted by individual funds and not in the aggregate, the higher number in the individual funds allows the district to make adjustments to allocations when the final levy is received in April based on changes in revenue received and budget decisions for Fiscal Year (FY) 2022. While the requested levy is more than the District anticipates receiving, the taxpayer is protected by the tax cap and the District cannot exceed the total available extension based on the CPI plus new construction. The levy recommendation is $84,529,463 not including Bond and Interest. This is $2,405,806 more than the estimate of what we will receive. This extension is 4.99% over the prior year. This amount is below the Truth in Taxation threshold so the Truth in Taxation procedures will not need to be followed for publication in the paper. While not required, the Board may still have the levy hearing before the December board meeting as an opportunity for the public to address the Board.