What Is The County School Facility Tax?

Over the past few months, you may have read some area newspaper articles referencing the "County School Facility Tax" (CSFT).  School Boards have a fiduciary responsibility to fully investigate any potential school funding source to determine if it would be advantageous for the constituency they serve.  Currently, the District #1 Board of Education is going through that very process regarding the CSFT.  To date, the District #1 Board has taken no position on the viability of the CSFT as a funding source for Coal City Schools.  However, they are continuing to gather feedback on the idea.  Our local newspaper reporters have done an excellent job of summarizing the CSFT, but I wanted to provide a little more detail regarding how the CSFT works.

The Illinois Legislature passed a law in October, 2007 which allowed a county to approve a sales tax to fund school facility costs.  The law allowed for a maximum sales tax of 1% in 1/4% increments.  The law was based upon a similar law that is currently in place state-wide in Iowa.  As originally written, the County Board had to approve the question being placed on the ballot, but in August, 2011, the law was amended to exclude this requirement.

Currently in Illinois, there are 18 counties where the voters have approved the CSFT, and it has failed in a little over 20 counties.

The two most important things to understand about the CSFT are what items are taxed and how can the resulting revenues be used by the public schools in the county.  If the tax is approved by the voters, everything in the municipal and county sales tax base is included with the following exceptions:

• Cars, Truck, ATVs
• Boats & RVs
• Mobile Homes
• Unprepared Food
• Drugs (including over-the-counter and vitamins)
• Farm Equipment and Parts
• Farm Inputs

School districts are limited by statute in how they can utilize the revenues collected via the CSFT.  They can use the funds for the following capital expenditures:

• Construction of New Schools (only with voter approval)
• Construction of Other School Facilities
• Additions & Renovations
• Ongoing Maintenance
• Architectural Planning
• Durable Equipment (non-moveable items)
• Fire Prevention and Life Safety
• Land Acquisition
• Energy Efficiency
• Parking Lots
• Demolition
• Roof Repairs
• Abatement of Property Taxes Levied to Pay Bonds Issued for Capital Purposes

School Districts cannot use the funds for:

• Salaries or Benefits
• Any Direct Instructional Costs
• Text Books
• Buses
• Detached Furniture & Fixtures
• Computers
• Moveable Equipment
• Operating Costs

There are three ways school districts can use the revenues from the CSFT.

1. Pay as you go capital projects. (new roof, windows, parking lots, etc.)
2. Issue new bonds for current capital needs (support bonds with sales tax)
3. Retire existing debt issues for capital purposes (abate taxes)

How is the CSFT revenue distributed?

• All of the revenue from the CSFT throughout the county is pooled together and then distributed evenly on a per pupil basis throughout the County.  Therefore, a student in Coal City would receive the same amount of funds as a student in Minooka.

So what are the potential benefits to the taxpayer in District #1?

• Based on the 2012 tax figures, District #1 would receive about $2.8 million per year from the CSFT fund.
• Currently, District #1 makes about a $3 million bond payment per year to pay the bonds associated with the building referendum that was approved by our voters in 2006.  If the county had the CSFT, the District #1 Board could use those funds to pay the majority of their annual bond payment.  This would result in a property tax savings of about $220 on a $200,000 home.
• About 40% of the sales tax received in Grundy County is generated from sales from people who do not live in Grundy County.  Therefore, people outside of our county would be helping to fund schools as opposed to the current funding method, which places the responsibility solely on property owners within the county.

What are the potential problems the CSFT could cause within District #1?

• The current sales tax rate within Coal City is 6.25%.  By raising the tax rate to 7.25% there is a chance that some could look outside of Grundy County for certain purchases.  Some of the current sales tax rates of neighboring communities outside of Grundy County are listed below.
• Braidwood                    7.00%
• Joliet                             9.00%
• Ottawa                          7.00%
• Kankakee                      6.25%
• Dwight                          6.25%

• The Village of Channahon has various "Point of Sale" agreements with businesses located in Cook County.  These agreements allow Cook County businesses to avoid paying the higher sales tax rates in Cook County by completing their "point of sales" in Channahon.  About 47% of the sales tax generated in the county comes from these "Point of Sales" agreements.  If the CSFT passed and the sales tax rate for the County increased, these Cook County businesses could set up their "Point of Sales" agreements in another location.

The only way this question gets placed on the ballot is if school boards representing more than 50% of the resident student enrollment in the county adopt resolutions.  If that happens, the Regional Suiperintendent must certify the question to the County Clerk to be placed on the ballot for a county-wide vote.

As previously stated, the District #1 Board of Education is still thoroughly investigating the idea of the CSFT and has taken no formal position on the issue.  Should you have any further questions on the CSFT, please feel free to comment on this blog.