More Bad News: Cook County Tax Mess to Cost District 65 over $1 Million

Also, District 65 to consider forensic auditor tonight

Couple more things on the District 65 meeting tonight, in addition to my complaint regarding the termination of the SACC Summer Program.

Back in November, the District 65 Board agreed to issue an RFP for a forensic auditor fiscal years 2021 through 2024 for the following subjects:

• A. Contracts above $25,000 - procurement compliance and Board approval checks

• B. No-bid contracts - documentation and justification review

• C. Transportation contracts and expenditures

• D. Administrator stipends and related documentation/approvals

• E. Accounting and financial practices review (risk-based testing)

• F. Compliance considerations related to Board policies and procedures

• G. Review of the 2022 Lease Certificates transaction (including Zions)

• H. Written report and presentation of findings to the Board

The bids have come in and you can view them below:

• BDO USA, LLP: $55,225–$73,650 (185–250 hours at $295/hour blended rate)

• Crowe LLP: $145,000–$165,000 (hourly rates up to $750/hour)

There was speculation in the comments about the cost of hiring a big four firm and whether there is sufficient juice to squeeze from the orange. Let me know what you think in the comments.

Cook County Tax Mess cost D65 >$1 Million

A secondary consequence of burning all the reserves (recall that during the Horton era, District 65’s reserves went from almost $36 million to less than $10 million - a subject of the aforementioned audit) is that when Cook County is inevitably late with tax bills, the District could be in a serious cash crunch.

Late last year and up to the present, the County remains delayed, creating said cash crunch. According to the District’s memo today, they have two months of expenses on hand;

After reserving funds to repay the District’s $15 million Tax Anticipation Warrant (TAW) issued against the 2024 levy, the District has approximately two months of operating expenditures available as cash on hand.

To get through payday, the District needs to take out short term loans - these are called Tax Anticipation Warrants (TAW) and they are not free. The District has to pay interest on the loans along with the opportunity cost of lost investment revenue. District 65 estimates the losses near $1 million dollars:

• 2024 levy losses: $961,662.86

• Projected 2025 levy losses: $215,776.57

• Total estimated lost earnings exceed $1.1 million

District 65 is not the only District impacted, the mess is costing Chicago Public Schools up to a quarter million dollars per day. ETHS authorized tax warrants, but they were never utilized. An article on Bond Buyer highlights the danger to Evanston, specifically.

The school districts on that list include Dolton West School District in Riverdale, Chicago Public Schools, Prospect Heights, Evanston Community Consolidated School District 65, Homewood School District 153 and LaGrange School District 102.

The bottom four of those school districts have dipped very low in their debt service fund balances, Ciccarone said.

Back in 2024, financial consultant Dr. Grossi spoke to the Board about the relationship between tax warrants and state takeover:

The takeover is somewhat arbitrary, there is some metrics they cite in the code in terms of issuing two years of tax anticipation warrants but a lot of it is just an assessment. At some point in time they get on the state’s radar and they monitor what is going on and depending on the situation, they act accordingly.

This is a direct result of Cook County’s late and over budget $250M+ migration to Tyler Technologies. Tyler is also a vendor to District 65 and you may remember them as the firm blamed for late payroll to teachers in Evanston and Dekalb County, Georgia in 2024. Over the last ten years, District 65 has paid Tyler more than $1.4 million.

According to the Bond Buyer story, everyone is blaming everyone else.

The county treasurer's office has blamed Tyler Technologies — the Plano, Texas-based software company providing a new system to replace the county's legacy one — for botching the original timeline, which would have had the county adopt the new software in May. Tyler has accused the treasurer's office of causing the delay, according to the Chicago Tribune, which obtained internal county communications through a records request.

Until this gets resolved, it’s the children of Cook County that will feel the pain.