The Lyons Township Debate Over Investment Earnings

LA GRANGE, IL — Lyons Township High School has long maintained that the treasurer's office keeps under wraps information on investment income for local school districts.

The Lyons Township Treasurer's Office handles the finances for school districts in La Grange, Western Springs, Burr Ridge and other towns. In May, a state court granted the high school's longtime wish of separating from the treasurer's office.

In statements over the years, Timothy Kilrea, who retired as the high school's superintendent June 30, maintained the treasurer's office declined to divulge key data. That information included a complete breakdown on how the money was disbursed to the 13 member districts, the formula used for the distributions and the status of withheld earnings.

The treasurer's office handles hundreds of millions annually in income from the member districts. The high school typically makes up for a little more than 20 percent of that money.

In response to a public records request, the treasurer's office showed examples in which it sent the breakdown of investment earnings to the member districts. This data was contained in emails to Kilrea and other superintendents.

As for the formula, one of the emails contained an answer to Kilrea's question. In a 2019 email to Kilrea and other superintendents, Treasurer Ken Getty said the distributions were based on the average trailing four-quarter fund balance for each of the members. That, he said, determines the members' share of earnings for that particular quarter.

Perhaps the high school's biggest issue with the treasurer's office was the withholding of 10 percent of a member's prior quarter's investment income. For its part, the treasurer's office contends the 10 percent is not distributed as a best practice until final accounting and bank reconciliations are completed.

In a 2019 email to Getty, Kilrea said he wanted to know what happened to the money.

"I do not recall ever receiving notice from the LTTO about any distribution of withheld funds being made to the member districts in subsequent quarters or fiscal years," Kilrea said.

He said each member should get close to 100 percent of earnings every quarter — the 90 percent in the investment income from the most recent quarter and 10 percent of the prior quarter's withheld funds.

However, Getty said Kilrea's inquiry did not make sense because the money was never physically withheld or prevented from generating future income.

"The funds are withheld from distribution to the individual member districts' fund balances, but are kept within the LTTO's investment portfolio with the goal of generating future income," Getty said.

When Patch inquired further about the undistributed money, Getty said in an email that the money "stays within the investment portfolio fund balance and would be redistributed in the future depending on the type of investment security (the money) was used to purchase."

Patch's message with a high school spokeswoman went unreturned.

Eight years ago, litigation between the high school and the treasurer's office started when the former treasurer, Robert Healy, was mired in scandal. In 2015, he was convicted of stealing $1.5 million in school money and sentenced to nine years in prison for the theft.

In the litigation, Lyons Township High School contended the treasurer's office's board refused to conduct forensic audits in 2012 and 2013 when Healy's issues started coming to light. In Patch's one phone interview with Getty in early June, he said he did not know why the treasurer's office board declined to conduct a forensic audit. He became treasurer in 2018.

Michael Thiessen, chairman of the treasurer's office's board and a Western Springs resident, did not return a call for comment.