This week the Second District Appellate Court upheld summary judgment in favor of 17 DuPage County school districts on 54 tax rate objections spanning a 13 year period involving transfers from the school districts’ working cash funds to a fund other than the educational fund. In doing so, the Court rejected long-standing objections and provided a favorable precedent for other school districts facing similar tax rate objections throughout the State.
This case, G.I.S. Venture v. Novak, was before the Appellate Court for the second time. As we reported in a prior FR Alert, the Appellate Court first heard the case in 2009. At that time, the Court found transfers of funds from a working cash fund to a fund other than an educational fund were not authorized under Illinois law. The Court then remanded the case to the Circuit Court with specific instructions. The remand instructions called for the Circuit Court to analyze whether the working cash fund assets, had they been transferred directly to the districts’ educational funds, would result in an excessive accumulation of assets in the educational funds.
At the Circuit Court on remand, the 17 schools districts worked collaboratively with the County Collector in filing a joint summary judgment motion covering all 54 objections for all 13 years. Circuit Court Judge Paul Fullerton reviewed the evidence submitted by the school districts detailing the excess accumulation calculations. In reviewing these calculations, the Court found that none of the school districts would have an excess accumulation in their educational funds relying upon the Illinois Supreme Court’s decision in Central Illinois Public Service Co. v. Miller—the leading case on the issue of excess accumulation. Based on the school districts’ evidence, the trial court granted summary judgment in favor of the school districts and the County. The Objectors then appealed Judge Fullerton’s ruling to the Appellate Court.
At the Appellate Court, the school districts filed a joint response brief prepared collaboratively among the districts, their respective counsel, and the County Collector. Ares Dalianis from Franczek Radelet handled oral argument before the Appellate Court on behalf of the school districts and the County Collector. In its decision, the Appellate Court rejected the Objectors’ arguments regarding the propriety of the transfers and instead focused on whether there would be any excess accumulations in the educational funds had the assets in the school districts’ working cash fund been transferred directly to educational funds. The Court found that there would not have been any excess accumulations and accordingly, that the objections should be denied.
The Objectors have the right to petition the Appellate Court for a rehearing and/or seek review by the Illinois Supreme Court. This decision is a very positive ruling for Illinois school districts, especially those facing similar objections.