Friday, November 12, 2010

The Back Door Referendum

Typically when school districts such as Minooka CCSD 201 want to raise additional property tax revenues or sell additional bonds, they must put a rate increase referendum or a bond referendum on the ballot and ask the voters to approve the referendum by a majority vote. Illinois law, however, provides the school board with another option, which has come to be known as the "back door referendum." Essentially, the way it works is that the school board is allowed to vote to issue "working capital" bonds. Once the school board approves the working capital bonds, any resident of the district who wishes to protest the issuance of the bonds has 30 days to gather the signatures of 10 percent of the registered voters in the district. If they are able to do this within the 30 day time limit, then the school board must put the issuance of the bonds to the decision of the voters in a referendum at the next election. If no person protests the issuance of the bonds and gathers the appropriate number of signatures, then the school district is allowed to issue the bonds. This turns the usual bond issuance process on its head. Under the normal process, bonds are only allowed to be issued upon a majority vote in a referendum. Here, bonds are allowed to be issued unless the protest of 10 percent of the registered voters forces a referendum. Hence, the term "back door referendum." The bond issuance sneaks in through the back door unless 10 percent of the registered voters close the back door.

Because voters typically do not keep a watchful eye on their elected representatives and because the time frame to gather the required signatures is fairly short, "back door referendums" are usually successful. Since this process has been available to school boards, there are very few instances in which voters have forced a referendum. The difficult economy and the internet may change that, however. In the past year, some concerned citizens in Palatine School District 15 were able to force a referendum on the issuance of $27 million in "working capital" bonds. In the recent election on November 2, the voters in that district voted "NO" on the referendum by a vote of 67 percent to 33 percent. You can read about it here, here, here and here.


  1. what Illinois Law? Do you have a Public Act or State Statue number?

  2. You can find the typical procedure for school board issuance of bonds at 105 ILCS 5/19-3 and the procedure for working capital bonds at 105 ILCS 5/20-7. ILCS stands for "Illinois Compiled Statutes."

  3. Does Min 201 have any capital appreciation bonds? I hope not - not reading good things about their use by sch districts out in CA.....