After Illinois law changed, a tale of two school bond plans

Adobe Stock

A 2024 Illinois finance law that changed school bonding rules is starting to hit home for taxpayers. 

The law, House Bill 4582, loosened restrictions on school bonds, enabling school districts to authorize bonds without voter approval under certain circumstances.

HB 4582 became effective in July 2024, and in September, a provision kicked in that said no referendum would be required to construct classroom buildings if the school board finds by resolution that the building expands pre-K or kindergarten space in the district.

Two Illinois school districts where the new rules are playing out, Effingham and Evanston, illustrate both the breadth of the changes and the disparate reactions in different parts of Illinois.

Effingham Community Unit School District 40 spans Effingham and Clay counties in central Illinois, and sits about 89 miles southeast of Springfield. 

Effingham is a solidly red county that is represented almost exclusively by Republicans at the local level, according to Ballotpedia. Its median household income is $59,932, and 11.2% of its population lives below the poverty line.

Clay County has similar voting patterns and is largely represented by Republicans at the local level, per Ballotpedia. Its median household income is $52,167, and 16.8% of its population lives below the poverty line.

This spring, the Effingham Unit 40 school board began considering plans for $55 million of bonds to fund a new school for kindergarten through second grade, WCIA reported. Under the new law, the bond measure would not require a public referendum.

The plans provoked a backlash in Effingham, where residents mobilized to call for a public vote. They launched a Facebook group. They gathered signatures, with over 100 volunteers going door to door and organizing drive-through petition signings.

Opponents gathered thousands of signatures — 2,855 in about a month on one petition, and 2,814 on a second one, according to Shannon McClurg, a petition organizer. 

Effingham County has 34,602 residents, according to Census data.

"The issue isn't about the funding. The issue is about our right to vote, and they took that away from us," McClurg told The Bond Buyer. "It would have gone up for a vote if Gov. Pritzker would not have signed a bill into law last year."

At a special meeting on June 30, the board backed down and reversed course on its bond plans, which would have raised property taxes. 

School board members did not respond to multiple emails requesting comment. Superintendent Andrew Johnson did not respond to phone messages seeking comment left with his secretary.

"In our community, we've already voted down the 1% retail tax four times," McClurg said. "So I'm going to guess that the community would also vote down an increase in their property taxes. (But) they didn't even give us an opportunity to have that discussion."

The school board now plans to go on a retreat and re-examine its goals, according to McClurg. 

The school district had about $18.1 million of general obligation bonds outstanding at the end of fiscal 2024, according to a disclosure report posted on the Municipal Securities Rulemaking Board's EMMA website.

The debt carries an underlying A-plus rating from S&P Global Ratings. Its 2019 GOs were wrapped by BAM Mutual for a AA rating. The outlook is stable.

"The school district is on a downward trend," McClurg said, arguing that less than a third of students in the district can read and write at grade level. "If you tell me it's about the buildings, I'll kindly disagree."

According to the state Board of Education's Illinois Report Card on Effingham Unit 40, the district spends about $15,000 per student. It has a 19% rate of chronic absenteeism.

In 2024, about 38% of Effingham students reached proficiency on English language assessments, and roughly 26% were proficient in math, both below statewide levels. About 62% of students were proficient in science, above the statewide level. 

According to a 2024 report by the School Finance Indicators Database, Illinois ranked 42nd out of the 48 states included in the rankings for equal opportunity, with an opportunity gap of negative 102.4 points.

"The largest gaps (most unequal opportunity) tend to be in states… where statewide adequacy is relatively high, but where wealthier districts contribute copious amounts of local property tax revenue to their schools," the report notes. "This exacerbates the discrepancies in funding adequacy between these districts and their less affluent counterparts."

McClurg said more money won't improve student outcomes in Effingham.

In 2024, the median salary in Effingham Unit 40 was $43,099, according to GovSalaries.com.

"I think there need to be fresh eyes on this topic," McClurg said. "We (in Illinois) have the highest property taxes, second to New Jersey, in the country… It's not a money thing."

Illinois and New Jersey vie for the highest property tax percentage rates in the U.S., according to the Tax Foundation, though with its lower property values, the median Effingham County taxpayer paid a little more than half the median payer in New Jersey's least taxed county.

Bonds for long-term capital projects allow districts to spread out costs over time, but are not without risks, including compounding interest and a repayment obligation that doesn't contemplate future economic changes, said Weade James, senior director for K-12 education policy at the Center for American Progress, a nonpartisan, progressive-leaning policy think tank.

"Voters are taxpayers, and they ultimately assume the financial burden for district-approved bonds," James said by email. "Educating the community about local school infrastructure needs, alternative short-term and long-term solutions, and financing methods will help to ensure that taxpayers fully understand the benefits of investing in school facilities, as well as the risks of deteriorating public schools."

That education includes explaining to students, future taxpayers, how they benefit from the investment in improved facilities, she said.

In a November 2024 report, James advocated increased investment in public school education across America, noting a scarcity of teachers and an aging stock of public school buildings, with 38% of schools built before 1970 and the average public school facility 49 years old.

"The dilapidated conditions of public schools have been well-documented, and these conditions, including poorly ventilated buildings, are causing health risks for students amid the rise in extreme heat," James wrote.

School districts also need to attract qualified teachers. James noted that low job satisfaction — 16% of teachers said they would recommend the job to others — is driving many teachers to leave the profession. 

"Research suggests two main reasons for the high teacher vacancies: low pay and unfavorable working conditions," she wrote. Adjusted for inflation, "teachers are being paid 5 percent less than they were 10 years ago."

In the northern suburbs of Chicago, Evanston School District 202 also has a proposal to issue bonds that would raise taxes under terms of HB 4582. The district said earlier this year it wants to issue $15 million in bonds to fix HVAC violations in Evanston Township High School's gym area, according to Evanston Roundtable.

The 2024 finance law loosened the rules around school fire prevention and safety bonds, allowing districts to exempt taxes levied to fund those bonds from the property tax extension limitation law.

The bonds would only need to be approved by the school district board and the Illinois State Board of Education.

Evanston has a population of roughly 76,000, according to Census data. (District 202 also spills into neighboring Skokie.) A Democratic stronghold, its median household income is $95,766 and 11.9% of its population lives below the poverty line.

In 2024, the median salary for District 202 was $91,283, according to GovSalaries.com.

According to the Illinois Report Card on Evanston District 202, the district spends an average of $28,000 per student. It has a 21% rate of chronic absenteeism.

About 58% of the district's students were proficient in English language assessments, and 45% were proficient in math, both above statewide levels. Roughly 66% were proficient in science, also above the statewide level.

In District 202, there has been no backlash over the bond plans. Searches of Facebook and Nextdoor turned up no protest posts. 

"With public education funding consistently declining, K-12 schools face a range of complex and competing priorities," said CAP's James. "To address these challenges, school districts, state leaders, and lawmakers at all levels must work together to identify infrastructure needs and develop cost-effective, sustainable solutions."

James also noted the importance of community involvement, "to ensure local voices, including the perspectives of teachers, are heard, and to build support for proposed plans," she said.

Effingham's McClurg said the school district there issued bonds in the late 1990s to build a new high school that opened in 1999. When the district later found someone who could fix up the old high school building, converting it into the space where the junior high is now, she said some locals were suspicious: "It's a trust issue," she said.

"It's about the kids, and we are failing the kids in this state," she said. "The community was not behind the bond issue."