An amended complaint seeking millions of dollars from Lyons Township High School District 204 offers more details about the payment process the scandal-tainted township school treasurer’s office says the district failed to follow.
The township office filed the lawsuit against District 204 in 2013, saying the school had failed to make $4.4 million in required payments to the treasurer’s office. In September, Cook County Circuit Court Judge Sophia Hall dismissed the suit, which was originally filed in 2013, but allowed the township treasurer’s office to file an amended complaint, according to court documents.
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Throughout the course of litigation, District 204 has sought to sever ties with the office, whose former treasurer, Robert Healy, was arrested last year on charges that he stole $1.5 million from schools during his tenure. District officials say the ongoing prosecution of Healy has raised doubts about the office’s ability to manage the school district’s finances.
The 13-page amended complaint filed Oct. 24 is eight pages longer than the original and includes more details about how the Lyons Township school treasurer’s office calculates the amount each school district must pay the office for its operational expenses. District 204 is one of 11 school districts served by the office, which also manages funds for two educational organizations and two health insurance cooperatives.
The amount that each body contributes is calculated by dividing the total amount of funds handled by the office by the amount of funds that belongs to each district.
“District 204’s failure to pay its pro rata share in full has created a deficit,” the complaint reads. “As custodian for the districts, the Treasurer has not incurred a loss — the other fourteen districts it serves have incurred a loss to the detriment of the thirty-eight schools and nearly twenty thousand school children that they are charged with educating.”
Since the original filing of the complaint in 2013, the amount the school district owes has increased from around $4.4 million to more than $4.7 million, according to court documents.
According to the documents, District 204 has failed to pay the office about $2.6 million of its share of treasurer’s office expenses and more than $500,000 in audit expenses incurred by the treasurer’s office on the school district’s behalf. The office is also seeking to reclaim nearly $1.6 million in “erroneously allocated” interest on investments to District 204 between fiscal years 1995 and 2012.
District officials have said the school made an agreement with the treasurer’s office in 1999 that the office would stop billing the school for services the school handled on its own. The treasurer’s office has said no record of the agreement exists.
During a status hearing Tuesday morning, Hall granted a motion to allow District 204 more time to file a response to the amended complaint. Charles LeMoine, an attorney for the school district, indicated in court that a motion to dismiss the complaint was likely.
A status hearing on the case is scheduled for 9:30 a.m. Dec. 16.
The township school treasurer’s office was created in 1819, shortly after Illinois became a state. In 1962 the General Assembly dissolved the system throughout most of the state after a state panel deemed it an outmoded, inefficient “absurdity.”
But the system was left intact in Cook County at the behest of Republican lawmakers who believed it would serve as a check against financial shenanigans by machine Democrats.
While voters have eliminated a number of township school treasurer’s offices in the county, multiple La Grange-area school districts are seeking legislation to dissociate themselves from the office rather than dissolve it.
In April, the state House of Representatives passed a bill that would allow Lyons Township High School District 204 to appoint its own treasurer and stop paying the township office for financial services it performs. The district has been managing its own payroll, accounts payable and accounts receivable functions for decades.
The bill, HB5572, has not yet been called up to the Senate and it’s unlikely that will happen during the assembly’s veto session this month, said Caryn Valadez, executive director of Ed-Red, a lobby consortium that Districts 204, 102 and 105 are a part of.
“This process is hindering and costing millions of dollars to District 204 and the other districts that are being impacted by the campaign around insuring that the (school treasurer’s office) wins this lawsuit,” said Valadez, who is working to either add Districts 102 and 105 to the pending legislation or introduce new bills for the districts. “In terms of legal fees, there have been millions of dollars form 204’s perspective that have been tied up in this process.”
She added that funds spent by the school treasurer’s office on public relation campaigns to make District 204 look like “the bad guy” have burdened other districts. At this point, Valadez said that passing the District 204 legislation would likely “expedite the lawsuit.”