April 14, 2012 · 2 Comments
EDGAR CO –
TORT Fund or Slush Fund
For those of you that pay property tax, have you ever wondered why we pay so much compared to other parts of the country? One reason is explained in detail below.
The General Assembly established an extraordinary tax for funding liability actions against schools in 1980, including insurance and risk management programs. It is important to note that this tax (on your property tax bill) is excluded from various limitations otherwise applicable to tax levies. More details are available at: http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=074500100HArt%2E+IX&ActID=2062&ChapterID=58&SeqStart=9200000&SeqEnd=10000000 (See 9-107, Policy; tax levy).
It has come to our attention that Paris Union School District 95 has been spending these funds on a variety of expenses which are not remotely related to allowable expenditures. Our FOIA request for District 95’s year end fiscal reports shows that school administration is treating this as their slush fund, using it in FY10 to pay salaries in the amount of $104,796, only some of which are authorized. The tort fund also paid for carpet replacement for Room 154 (building not specified on Expenditure Report), sprinklers, fence, materials testing, and playground equipment at Mayo totaling $62,377.42.
Sprinklers – House Bill HB 3824 is designed to authorize the use of TORT tax revenue for the purchase, installation, and maintenance of sprinkler and other fire suppression systems. As of March 9, 2012, it had not been approved – meaning the use of TORT funds for these purchases in the past (and currently) is not an appropriate use of TORT funds.
Carpet – Has never been an authorized expenditure from TORT tax funds. TORT can’t be used for asbestos abatement, what makes anyone think carpet is an authorized expenditure?
Fence – Has never been an authorized expenditure from TORT tax funds.
Playground – Doesn’t even come close…
Materials Testing – I assume this was for the playground at Mayo – not even close.
When questioned on these expenditures, we get answers like “It was a safety issue”, or “the board approved it”, and the classic “our lawyer and accountant said it was OK.” It is not OK, and I believe the board is fully aware of that fact.
Risk Management Plan
In order to use TORT funds for salary expenses, you must first have a risk management plan, in advance of the levy, that spells out the specific risks and measures taken to minimize or eliminate those risks. Job descriptions must clearly detail the actions taken by the employee following the risk management plan. Cleaning the building, routine light switch and outlet replacement, snow and ice removal, supervise custodians, etc are considered ROUTINE tasks and should not be paid using TORT funds. There is case precedence for this from lawsuit brought against other school districts in Illinois.
Evading Tax Cap
Illinois law makes it illegal to use levied funds for any purpose other than its original purpose. General fund tax increases (over .5%) require voter approval, while TORT tax increases fall outside the cap on property tax increases and can be raised as any time. The law is specific on allowable expenditures from this fund.
District 95 is walking a tightrope on this one – Other Illinois school districts have already been taken to court by protesting taxpayers, and lost their cases resulting in a court order to refund the TORT tax money back to the taxpayers. A Google search of “Illinois Use of Tort Levy” yields a bevy of examples, including:
Not the only culprits
District 95 is not alone in this and more articles are forthcoming. We do know the Edgar County Board is essentially doing the same things out of other levied special funds and we are looking into other local school districts also.
I suggest District 95, at a minimum, place the $62,377.42 back into the TORT fund or reduce next year’s tax by an equal amount.