I don’t know about you, but every time the topic of money (levies, tax abatement, fund transfers or anything else to do with finances) comes up in board meetings, I feel like a secret language is being used which I do not fully understand (is it Elvish? Klingon?). I mean, I can look up the terms and understand the words that are used, and by doing so, I can slowly chip away at the information that is presented. But by no means would I say that I have a clear picture. Having asked several questions and finding myself still perplexed, a friend suggested I just put the questions in a blog post and see if anyone else can provide some clarity. Or at least commiserate. *grin*
This first question I have asked many times over the past few years; can a Unit 4 5th grader present the finance information to the community? Whether it be in the context of a public hearing of a new budget or abatement, I want to know if a 5th grader can not only understand the information, but then also communicate it back out to the community in a language and style that is easy to digest. A few years ago I chatted with Matt Foster and developed a sample Sankey chart of the FY14 budget – for me, visualization helps a lot. This is just one step towards better understanding. I have also asked that jargon like “levy” and “abatement” not be used to explain “levy” and “abatement”.
On the topic of levies, I have queried board members about how the district settles on a tax levy amount (the “ask”). From what I gather, the district attempts to make an informed, educated guess about how much money is coming in via the tax rolls, and sets a levy amount that they know to be slightly over the amount they think they can take in an effort to “capture” any new taxes. The reason they submit a guess is that the Champaign County Clerk ultimately decides what the tax levy will be (based on the EVA, or “economic value added”), and due to an unfortunate timing of events, entities that levy taxes, by law, must submit their levy amounts even though the amount of money collected by taxes is not known until several months later. So in essence, levying entities in a “home-rule government” (Unit 4, MTD, Forest Preserve, etc – Parkland is not constrained by “tax caps” or PTEL, as a counter example) either declare some artificial maximum tax rate that will later be tuned down by the County Clerk, or if they set an amount that is less than the maximum, they “lose” the difference when taxes are actually collected. It’s all pretty stupid – I don’t know who wrote the laws that muck things up like that. But this brings me to my second question: why not just always levy for one billion percent? (Yes, 1,000,000,000%) Or choose some other completely arbitrary number that will always be “maximum”. Because in the end, no matter what number the district settles on, they always want it to be some (at the time) unknown “maximum”. It seems to me that this would at least make things a bit less confusing – you just basically skip all the nonsense and tell the County Clerk to assign the highest number possible. Until the laws change. (I settled on 1B% because it is absolutely ludicrous – it reflects the silly dance we do every year)
And finally my last question for today. What role do the various funds (ie, Fund 60, Fund 61) have, and when money is moved from one fund to another, exactly what is the intended purpose? I believe there is a document on the Unit 4 website that describes some of the funds, but at this time I cannot find it. More importantly, when there is a public hearing, currently all the documentation is presented in “State Form”, a format that is sent directly to the State for legal purposes. It is exceptionally hard to make sense of, and I have no idea why monies are moved from one fund to another.
I had the privilege of speaking with Gene Logas several times when he was the CFO at Unit 4; after one of those chats, Mr. Logas published several informative and helpful documents that are still listed on the “Finance department” section of the Unit 4 website, in particular, “Where Does All the Money Go?” and “Property Tax Lesson“. I applaud the district for going through the trouble of putting check registers, yearly budgets and many other pieces of information on their website. This is an excellent step towards transparency! The next step is helping taxpayers understand the information.