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On Dec. 15, the District 65 School Board decided by a 6-1 vote to adopt a resolution of intent to issue an additional $20 million in bonds to finance building projects and technology purchases (the “Resolution”). Mary Brown, chief financial officer of the District, said in a Dec. 6 memorandum, “Additional bond sales are needed to fund the next phase of life/safety building projects and future technology purchases.”

Dr. Brown recommends that $10 million of the bonds be issued in February 2009 and $10 million in January 2010. She said the bond proceeds would be used to fund a total of about $14.3 million in building projects to be undertaken in the summers of 2009, 2010 and 2011 and to fund about $5.1 million in technology purchases in the springs of 2010, 2011, and 2012.

No bids have been submitted for the proposed work and no contracts have been entered into for the work.

Mary Rita Luecke cast the sole “no” vote, saying she preferred to limit the resolution of intent at this time to $10 million.

Issuing the Bonds Without A Referendum

The District says the Resolution will give it authority to sell the bonds at any time within the next three years without a referendum, unless within 30 days of published notice of the Resolution, 10 percent of the registered voters in the District sign a petition asking that the issue be submitted to a referendum.

Sections 19-8 and 19-9 of the School Code authorize a school district to issue bonds for “the payment of claims against any such district” if certain conditions are met. First, the school board must adopt a resolution setting forth and describing the claims in detail, declaring that the claims were authorized for proper school purposes, establishing the validity of the claims, and stating the district’s intent to issue bonds to pay such claims.

Second, the district must publish a notice of its intent to issue the bonds in a newspaper of general circulation, and advise that if 10 percent of the registered voters in the district sign a petition requesting that the matter be voted upon in a referendum, then the matter will be submitted to the voters in a referendum. If no such petition is signed, the district may issue the bonds without a referendum.

The Resolution adopted by the District 65 School Board on Dec. 15 states the District is authorized under Section 19-8 of the School Code to issue bonds to pay “claims constituting the costs of funding school fire prevention, life safety, security, air quality, software, internal communications, special needs accessibility and related projects of the District…”

The Resolution also states that such claims “are hereby found, determined and declared to be presently outstanding and unpaid, were authorized and allowed for proper school district purposes and constitute valid and binding obligations of the District.”

According to a memorandum of Dr. Brown, the District does not intend to use the bond proceeds to pay for amounts due for past work already performed or past purchases already made. Dr. Brown’s memorandum states the District intends to use the bonds to pay for future building projects and future technology purchases.

When asked if Section 19-8 authorized the District to issue bonds to pay for future building projects and future technology purchases, the District’s attorney, Darryl Davidson, told the RoundTable that this procedure could be used to issue bonds to pay for future expenses if a school district had a plan in place to make the expenditures and if there was an identified need to incur the expenses.

“It’s legal and appropriate for the District to do this,” he said. “I firmly believe this is an appropriate legal and cost effective method for the District to use to do its financing.”

Mr. Davidson added that Section 19-8 was commonly used for this purpose.

In order to trigger a referendum vote on whether to issue the bonds, a petition would have to be signed by not less than 4,292 voters (10 percent of the registered voters) in the District within 30 days of the publication of the notice.

For additional information concerning the building projects and the impact on property taxes, see the Dec. 1 issue of the RoundTable.