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District 65 plans to close Bessie Rhodes school in 2024 and build a new school in the Fifth Ward. (Photo by Adina Keeling)

While the community buzzes about recently announced plans to build a K-8 Fifth Ward school, questions remain about how Evanston/Skokie School District 65 plans to pay for the new school. 

Addressing District 65 committee meetings on March 7 and 9, District 65 Chief Financial and Operations Officer Raphael Obafemi described a funding model he developed that Superintendent Devon Horton called “miraculous.”

Obafemi’s model involves the use of lease certificates to pay for the new Fifth Ward school, which the district estimates will cost $40 million to build.

Lease certificates are long-term financial commitments exclusively used for funding new buildings, Obafemi explained. 

The lease certificates would be paid back through the district’s operating budget using transportation savings resulting from the Student Assignment Project (SAP), which would redraw school attendance lines to create more walkable schools, he explained. 

Officials said that under the proposed plan, the district would save millions of dollars in transportation costs by no longer busing students, with an exception for early childhood students, students with individualized education programs and those with a dangerous route to school. 

This year alone, the district is projected to pay $6.3 million in transportation costs, Obafemi said. Horton added that transportation costs will increase in coming years due to inflation. 

In the last 10 years, the cost jumped from $2.5 million to $6.3 million, Horton said. 

“Anticipate 20 years out, what that would mean for busing,” Obafemi added. 

At the March 9 meeting, board member Joseph Hailpern said he feels much better investing that money in a facility and students’ experiences than in buses. 

The money saved will go towards the lease certificates, which will take about 18 years to pay off, Obafemi said. Annual debt service payments are estimated at $3.2 million per year for 18 years, and once the district pays off the debt, the district will own the building, he said. 

Obagemi added that lease certificates have been around for more than 20 years, and that other nearby school districts, including Sunset Ridge School District 29 and West Aurora School District 129, have also used these for new buildings. 

“This is not new,” he said. 

No referendum in store with funding plan

Typically, a school district would issue a general obligation bond for capital projects, including renovating old buildings and constructing new ones, Obafemi explained in a memo to the RoundTable. 

Obafemi said nearly 20 years ago, the district issued general obligation bonds, some of which were used to pay for technology upgrades. Some of those bonds still need to be paid back, even though the upgrades purchased by those bonds are no longer in use. 

Each school district in Illinois has a bonding borrowing limit, governed by the debt service extension base, Obafemi explained. The District 65 limit is maxed out until 2036, he added. 

“As a result of those decisions, it’s practically impossible for us to be able to issue additional bonds,” Obafemi said. 

The only way for the district to issue a bond, given that it’s reached the bonding borrowing limit, is through a referendum, or a district-wide vote, he wrote in his memo. 

If the majority of the taxpayers in the community vote in favor, the referendum request succeeds and the district can issue a general obligation bond, which would be paid out through an increase in property taxes, he said. 

With general obligation bonds, the district doesn’t directly handle the debt payment, Obafemi said. 

“That’s something that’s been burdened to the taxpayer to fulfill,” Hailpern added. 

Board Vice President Elisabeth “Biz” Lindsay-Ryan explained the board is opposed to a referendum because the ensuing bond would lead to a tax increase. 

“We really don’t want to price more people out of Evanston,” she said. “It’s already significantly challenging to afford to live here.”

A 2012 attempt to build a Fifth Ward school failed because the referendum request didn’t pass. In that referendum request, 45.21% voted in favor and 54.79% voted against. 

Addressing the community’s questions

Some community members have raised questions about the efficacy of lease certificates rather than a general obligation bond, Obafemi said. 

“As far as the interest rate, there’s a negligible difference,” he said. 

Both general obligation bonds and lease certificates are “underwritten based on the underlying credit rating of the issuing organization,” he wrote in his memo. 

With lease certificates, the subsequent loan is used as collateral to issue bonds, he wrote. The interest rate could fall anywhere between 0 and 3 basis points depending on market conditions, he added. 

Obafemi also addressed the Dr. Bessie Rhodes School of Global Studies building, which would be sold, according to the plan. Estimating very conservatively, he said the district would likely receive about between $2 million and $3 million for the building.

Obafemi said he received some questions asking why the money saved through transportation costs can’t go towards existing buildings. Lease certificates can only be used on a new construction, he explained.

Many community members feel the plan to build a Fifth Ward school and the conversation about lease certificates is rushed, Lindsay-Ryan said, but it’s common for changes this drastic to feel rushed because, in many cases, community members don’t pay attention until they themselves feel the impact.

“We did have this conversation about the lease certificates at an open meeting in July,” Lindsay-Ryan said. “We were very clear at that time our reasoning around not wanting to go to referendum.” 

Lindsay-Ryan added that while the district wants to hear questions and concerns, community members need to move on from the assumption that a change to the district’s structure would create harm that didn’t exist before. 

“Folks are absolutely harmed by our current system,” she said. “We are trying to solve that problem.”

Adina Keeling

Adina Keeling is a photojournalist and reporter, covering city news, sustainability, schools, and art. She also investigates mental health systems and environmental injustices in Evanston, and puts together...

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  1. The board needs to share with the public the difference in all-in costs of issuing lease certificates vs. municipal bonds. Neither the board or Raymond James (advisor) has done this. Taxpayers deserve to know.

  2. The argument for building this $42M campus in the 5th ward is that black and brown students living in the ward have been bussed out and deserve a neighborhood walking school. There is nothing inherently wrong with this argument. What I don’t hear anyone talking about is the marked change the 5th Ward is undergoing. As older people sell their homes or their heirs sell off, so many of these homes are being bought, rehabbed,flipped or lived in by the new owner. Vacant land is being developed into new residential housing. Property values in the ward have skyrocketed. And yes, the racial demographics of the ward are changing. In ten years, what will the ward look like? Will building this top of the line school actually accelerate gentrification in the ward, as non-black and brown families who wish their children to attend a shiny new school move in to the area in a newly constructed or rehabbed home? And what about the majority of the students who attend other d65 schools? Don’t they deserve a new building? Do they at least deserve much needed repairs on their existing school buildings? Every day, there is another thing the district has to pay. Whether it is the $500k in increasing healthcare costs for district employees (apparently due to cancer), the potential $600k tab for school crossing guards that the City wants the District to pick up, or the $300k the District must spend because the ratio of black students with emotional disabilities is too high and they are now mandated by law to try to rectify that. The administration is bloated, the Covid funds have been used up, reading specialist positions that are so crucial in helping narrow the achievement gap were virtually all eliminated due to lack of funds, the list goes on and on. The district will not save enough money on bussing to cover the cost of this school. There will still be bussing needed for a large area of the 5th ward, whose students live south of Emerson and east of Green Bay. These “miraculous” financial vehicles planned for funding is just a rendition of robbing Peter to pay Paul. It’s ghost money. And once the Administration finishes the media rounds and patting themselves on the back for “righting historical wrongs”, they will be out the door. Is the fiscal devastation left in their wake going to be another historical wrong? It’s time to give the citizens of Evanston their voice on this. There has been suppression of opposition to this plan by the Board at meetings where citizens need to go through an onerous process to ask a question before the meeting, and even then, not all those questions get answered. Even if you don’t have children in d65 (and many, many families are leaving the district), you really need to pay attention to this. A strong school district helps increase the value of Evanston- we all have a stake in this.

  3. Oh now they are worried about people leaving because They ruined the town and everyone already left and will continue to because of using current tax dollars on pre-segregation

  4. Any funding mechanism that strikes someone as “miraculous” deserves intense skepticism and careful interrogation. And how do we pay for this project if the “miracle” does not come to fruition? And what about all of those “exceptions” that would require bussing to continue including “early childhood students, students with individualized education programs and those with a dangerous route to school”? The major artery (Emerson St) through the new schools’ likely boundary lines is an official truck route. That sounds dangerous to me and I suspect to most other families with elementary school children. Hence, is it really reasonable to assume the millions of dollars in savings put forward in this proposal?

  5. The board is avoiding a referendum only because it knows it won’t pass – they have presented no justification for a new school other than the commonly using phrase of “righting” a 60 year old wrong. Using lease certificates to build a new school is a questionable use of Local Government Debt Reform Act, section 17(b) which they are saying negates school code 10-22.36 which clearly says a referendum is required to “build” a school.

    The reality is that the board’s expenses since Horton started are out of control. Saving $2 to $3 million a year on transportation when they are spending nearly $150 million is negligible. This is a district that has a record number of administrators when enrollment is plummeting. The district’s current budgeted expense growth is 9% this year when taxes are growing at 3%. The spending is quickly depleting the the funds raised in the 2017 referendum – far more quickly than voters realize. By the time the school is finished, Horton and his administration will likely have moved on from Evanston but voters will be facing another referendum to clean up the financial mess the board and his leadership has left.

  6. I would be very hesitant to embrace a funding mechanism that the superintendent labels, “miraculous.”

    Remember, that a few years back it was revealed that he owed the city of Chicago $60,000 for fines related to failed real estate investments:

    It is has never been reported whether he satisfied his debts to Chicago.

    Also, just a couple months after he was hired to be superintendent, he registered a corporation in Missouri as a vehicle for real estate investments: https://opencorporates.com/companies/us_mo/LC1730037

    It is unclear what his real estate company is involved in, but when the district is proposing real estate sales and acquisitions, there needs to be some transparency with regard to the superintendent’s opaque investment vehicles.