CONSOLIDATION FEASIBILITY STUDY

Completed by Lemont High School District 210

Consolidation Feasibility Report - June 2010

A report analyzing the potential consolidation of Lemont-Bromberek School District 113A and Lemont High School District 210, as well as the various components of a potential consolidation, was completed in October 2003. With recent economic concerns, the question as to whether District 113A and District 210 should consolidate has once again been posed. This report is intended to analyze updated information and address the issue of consolidation between the districts.

Illinois School Code Coterminous Requirement

The Illinois School Code governs school district reorganization. Articles 7A, 11A, 11B and 11D of the Illinois School Code recently were consolidated into Article 11E as a result of Public Act 94-1019. Generally, consolidation between a grade school district and a high school district requires that the two districts be coterminous (i.e., cover the same territory). District 113A and District 210 are not coterminous. Territory in DuPage County that includes Argonne National Laboratories is included within District 210’s boundaries, but not within those of District 113A.

In accord with the guidance documents provided by the Illinois State Board of Education (ISBE), the following options would address a lack of coterminous boundaries.

1. District 210 could seek to detach (i.e., give up) the property within its boundaries that is not contained within the boundaries of District 113A.

2. The two DuPage Country grade school districts – Cass District 63 and Burr Ridge District 180 – whose boundaries encompass the same property as District 210 could detach the property and give it to District 113A.

Detachment would have serious financial implications for any of the districts – District 210, Cass 63 or Burr Ridge 180 – because their boundaries encompass Argonne National Laboratories, which is federal property. Federal property does not generate property tax revenue; consequently, each of these districts receives impact aid funding annually from the federal government to compensate for a portion of the lost property tax revenue. For District 210, that revenue can range from $400,000 to $1 million in any given year, depending on federal fund distribution. In addition, detachment would require school district and/or taxpayer approval. The superintendents of Cass 63 and Burr Ridge 180 have indicated that they have no interest in detaching the property in question.

Another type of detachment option would be for Cass 63 and Burr Ridge 180 to detach from their respective high school districts (Hinsdale High School District 86 and Downers Grove High School District 99) and consolidate into a school district with District 113A and District 210.

This consolidation would have serious financial implications for District 210 because of an increase in enrollment and in transportation costs. Cass 63 and Burr Ridge 180 would send approximately 175 more students a year to Lemont High School, whose most recent school building addition was not based on the inclusion of those students. The addition of those students would result in the need for additional space, and consequently, an associated building referendum within approximately five years. In addition, transportation costs would increase dramatically with the need to transport students from the areas currently covered by Cass 63 and Burr Ridge 180. Finally, all of the school districts involved – Cass 63, Hinsdale 86, Downers Grove 99 and Burr Ridge 180, as well District 113A and District 210 – and/or a majority of their taxpayers, would need to approve of this course of action. Currently, Cass 63 and Burr Ridge 180 are not interested in detaching from their current high school districts to consolidate with the Lemont school districts.

Finally, a new option that may be applicable is an Optional Elementary Unit District, which is a hybrid consolidation. Under this type of reorganization, a unit district is formed from a high school district and any elementary district(s) who are “substantially” coterminous. This is defined as “districts (that) share the same boundary except for territory encompassing, for a particular district, (i) less than 25 percent of the land area of the district, (ii) less than 8 percent of the student enrollment, and (iii) less than 8 percent of the equalized assessed valuation of the district.”

At this point it is unknown whether this new option is applicable. It still involves the approval/interest of District 113A and District 210. Therefore, other elements and variables, which are detailed below, must be considered.

Financial Impact

In the case of District 113A and District 210, consolidation would have negative financial implications. As stated above, unless the coterminous issue is resolved to ensure the continuation of impact aid revenue for District 210 or the newly formed district, the result would be a loss of hundreds of thousands of dollars annually in federal impact aid funding.

In addition, there would be a serious financial impact related to certified staff teaching salaries. ISBE’s Guidance Document states, “When districts combine or consolidate, the teaching staffs tend to have their pay scales equalized by bumping everyone up to the highest-paid district’s level.” ISBE representation has indicated that it is not aware of any case when that did not occur. In the 2003 consolidation study, the cost of aligning District 113A’s salaries with those of District 210 was estimated at approximately $1.8 million. Prudent Man Advisors (PMA), the financial advising company currently used by both District 113A and District 210, has reexamined the cost of equalizing the pay scales. Using specific data from both districts, PMA has determined the annual additional cost to be $1,554,000. This cost does not take into account any non-certified staff cost increases, because salary data is not collected for non-certified staff. In addition, any additional costs associated with employee benefits are unknown at this time.

State Incentives

The Illinois School Code outlines incentives for school districts that consolidate. They include:

1. Payment for the difference in state aid for the first year of existence, if the entitlement for the new district is less than what it would have been that same year if the districts remained separate. It is not likely that a newly consolidated district would be eligible for this incentive, as the state aid would be approximately the same.

2. Payment for the difference between the sum of the salaries earned during the last year of separate districts and the sum of the salaries that would have been paid had all of the teachers been paid according to the highest salary schedule among the consolidating districts is offered by the state in the form of supplementary state aid payments, divided among the next four years.Though it is unknown at this time whether there would be a difference in these two sums, annual increases due to raises and collective bargaining agreements usually cause a natural increase from the last year of separate districts to the first year of a consolidated district. Though paid over four years, the payment would only cover one year’s worth of difference in salary. Additionally, this presumes that the State of Illinois has the funds to provide this incentive. Considering that the state does not have the necessary funds to make other kinds of payments to schools that are required by state and federal law, it is doubtful that this incentive program has any funding.

3. Payment for deficits in a combined fund balance for Education, Operations and Maintenance, Transportation, and Working Cash funds, if it is less than the other district’s combined deficits, are made in a single supplemental state aid payment to the reorganized district. It is not possible to determine if this would be applicable to a potential consolidation between District 113A and District 210 because the fund balance totals for the year prior to consolidation are unknown at this time. In addition, even if it is applicable, the fact that the state does not have the necessary funds to make other payments to schools that are required by state and federal law makes incentive program payments very doubtful.

4. The State of Illinois offers to pay an incentive of $4,000 for each certified employee who is employed by the district on a full-time basis for the school year in the form of a supplementary state aid payment for one to three years. This payment only would be made for a maximum of three years, while the increased certified teaching staff costs of $1.5 million would remain permanently for the newly consolidated district. As with other incentives, this is reliant on state funds being available, and the current financial condition of the state makes that highly unlikely.

Any of these incentives would be helpful under some circumstances, but there are a number of potential problems. The incentives would not equal the $1.5 million annual increase in certified teaching staff salaries; the incentives are temporary, while the personnel cost increase is permanent; the incentives do not cover the necessary salary increases for non-certified personnel, or other cost increases; the incentives may not be applicable to this situation; and the state’s current financial condition makes any incentive payments highly unlikely.

Consolidation Process

The Illinois School Code outlines the process for consolidation. The process has changed since 2003, and is more streamlined than when the earlier consolidation study was conducted. In accord with Article 11E (created as a result of Public Act 94-1019), this is the framework for consolidation:

A feasibility study may be conducted to assess options and collect data;
A petition is filed with the Regional Office of Education;
A hearing is held to consider the petition;
The Regional Superintendent makes a decision to approve or deny the petition
The State Superintendent reviews the information and makes a decision to approve or deny the petition; and
If approved, the Regional Superintendent certifies the public question, which is put to voters on a ballot.

This process may be completed by a school district or a citizen. If a citizen initiates the process, he/she is encouraged to seek information and interest from the involved school districts. A citizen’s petition must be signed by at least 50 legal resident voters or 10 percent of the district’s legal resident voters (whichever is less). The petition must include certain information, such as a division of assets and liabilities, and must designate ten individuals who officially are referred to as the “Committee of Ten.” This Committee of Ten acts as the attorney for the petition and oversees all of its related activities.

In the case of District 113A and District 210, this process becomes more complicated. Cook County’s Regional Superintendent resigned his post on May 7, 2010, and there is no acting Regional Superintendent. In addition, the Illinois State Legislature has voted to abolish the Suburban Cook County Regional Office of Education. It will take several months to dismantle the office, but in the interim, it is unknown who would handle any consolidation requests.

The viability and interests of the individual districts are considered by both the Regional Superintendent and the State Superintendent when reviewing a consolidation petition. Any citizen effort to petition for District 113A and District 210 to consolidate will face difficult challenges. The viability of District 210, as well the lack of support from both District 113A and District 210 because of the negative financial implications from consolidation, are two examples of factors that would be a detriment to a citizen petition for consolidation.

School District Reorganization History

ISBE provides a document outlining the history of school district reorganizations since 1983. Besides consolidation, there are several types of reorganization, including annexation, conversion and deactivation. In 1983, there were 1,008 school districts in Illinois. In 2010, Illinois has 870 school districts.

ISBE’s school district reorganization history indicates that only 55 school districts have consolidated throughout the state in the last 17 years. Of those 55 districts, none were in DuPage County, and only one was in Cook County. The district in Cook County that consolidated was Lemont-Bromberek School District 113A in 1990.

This historic information supports the fact that consolidation is a process aimed at assisting small districts that are not viable and cannot provide a full academic program. Typically, these districts are found in rural areas of the state and not in the suburban area.

Conclusion

There are several reasons that consolidation between school districts might be considered.

The primary reason to consolidate is to ensure the viability of the educational program that a school offers. Lemont High School District 210 offers a full educational experience for students in all required core academic areas, as well as numerous elective areas. The district’s student achievement, as measured by state and national tests, is excellent and continues to improve. Lemont-Bromberek School District 113A also offers a full core academic program, and its students have posted excellent test scores.

Financial viability is another consideration. District 210 continues to utilize a conservative financial approach to spending and a proactive budgeting process to manage the district’s resources during these difficult financial times. However, all of District 210’s fund balances are positive with reserves, and the district’s financial rating is excellent, as evidenced by the fact that its Moody’s bond rating was recently upgraded to Aa2. While District 113A is on the state financial watch list, it has taken all of the necessary actions to successfully reestablish financial stability. Consolidation would not improve any debt issues for District 113A, because in accord with the Illinois School Code, its debt would remain its own, even after consolidation.

Another advantage of consolidation can be improved articulation between the middle school curriculum and the high school curriculum. District 113A and District 210 are engaged in numerous ongoing articulation efforts, including a joint Curriculum, Instruction and Assessment Committee, which includes parents, teachers, administrators and Board Members from both districts.

There is an initial barrier to any potential consolidation between District 113A and District 210, because the two districts are not coterminous as required by the Illinois School Code. Consolidation does not present a savings for the Lemont community, even when one considers potential state incentives (which may or may not be available) and any potential savings from a reduction in administrative positions. The potential loss of federal impact aid funding and the cost of aligning salaries far exceed any financial savings or incentives. The reasons consolidation is normally considered are not applicable to District 113A and District 210. Therefore, this report reaches the same conclusion as the 2003 report. Lemont High School District 210 should not pursue consolidation with Lemont-Bromberek School District 113A.