Resident Affordability Index (RAI)

Editor’s note: I’m starting a new discussion string from a comment on the District 428 School Board Forum. Stats are showing that readers are spending an average of more than 10 minutes reading the comments so its really a house-cleaning sort of thing.

Kerry Mellot is making an important point about what I’ll call the Resident Affordability Index (RAI). It is imperative that local elected representatives know and fully understand what the RAI is of the people who voted them into office.

Since the school district receives its revenue from residents through property tax, and that is a cost relative to the residents’ homes, then I suggest that those taxes be included in the 30% of gross income factor used as a guideline for mortgage lending.

The mortgage industry and its consumers either ignored the 30% affordability index, or they artificially inflated reported income earnings, or they “banked” on unrealistic future projections. Local governments nationwide, dependent upon property tax, also ignored the 30% rule. The current pre-Depression is the result.

School board members, who I believe are the most taken advantage of volunteers on the planet, must now-more-than-ever adhere to the RAI. The system used to elect school board members demands they represent the residents (all inclusive) of their community — or — demands they become snake oil salesmen every election season.

The populists line of thinking is that school board members represent Education in their elected duties. The naked truth is that they are elected as checks and balance to the spending required for our children’s education. They’re the only checks and balance we have. This places the school board member at odds (at times) with the very people they spend the most time with, after their election, the administrators.

If we grant that all motivations are pure we must also acknowledge that the administrators of District 428 are duly rewarded for executing their responsibilities. Regardless of their residence their compensation, on average, far exceed that of the median household income of DeKalb. If administrators are to remain duly rewarded then it should be expected of them to factor RAI into costs versus revenues.

An unintended consequence of practicing populism over naked truth is community gentrification aka suburban sprawl. Multi-generational resident families are forced to move from their hometowns because the RAI is increased beyond their capacity. Hardest hit are the lower middle income earners who must financially fend for themselves in their struggle to make ends meet.

Bringing it all home.

The school board, administrators and consumers of District 428 ignored the RAI in the $110 million referendum. No further proof of this needs to be presented than Paul Beilfuss’ answer to Kerry Mellot’s question pertaining to Dist 428’s median income, “I don’t know.” Further proof is Mike Verbic’s current position that the Board and Administration is trying to employ the $2 million TIF arrangement with the City to reduce the bond to $108 million. All things, like TIF is derived from property taxes, must be considered if RAI is adhered to and not ignored.

There now is, as described by Mike Verbic, a “mandate” to “fulfill” the referendum. It appears to be taking the form of a mandate to spend $110 million. The objective now appears to be to figure out how to borrow less than the approved maximum. Any notion of spending less than $110 million is defied by the very presence of add on options. There is absolutely no consideration of “subtract from” options.

Voters did approve the referendum, overwhelmingly. Is that not a statement of this community’s commitment to our children and our future? Is it not also a statement in trust that the Board and Administration not spend or borrow beyond those voters’ financial capacity?

The long and short of this long-winded comment is this: I know that Dist 428 board members, candidates and administrators are reading this discussion. I hope they share it with those among them who are not. I ask them to determine what this community’s RAI is and to factor that strongly into their decisions.