NORMAL - Unit 5 officials were worried Wednesday that late property tax payments ultimately may hurt the district's credit rating, but their auditor said a letter of explanation to the bond rating firms may help.

At stake is how much interest the Normal-based district may have to pay in the future for bonds. The district recently started a $96.7 million construction project that voters approved in February.

"We're not in as bad of shape as it looks because of timing (of the tax payments)," board President Jay Reece told the school board Wednesday.

The district's auditor, Tom Peffer of Gorenz and Associates Ltd., agreed. Peffer said that overall, he was "extremely happy as an auditor" with the direction the district is taking. It has addressed many of the issues the auditor earlier identified as needing work.

In other business, the board also adopted a tentative levy on Wednesday.

On the topic of the district's credit, the board discussed the fact that the Illinois State Board of Education downgraded the district's rating to "financial warning" status.

That happened largely because the district had only $4.8 million in its operating funds on June 30 when it closed the books on the 2007-08 fiscal year, Peffer said. The district had just paid back $10 million in short-term debt and was waiting for property tax money from McLean County.

"It was an anomaly," said Jim Gillmeister, the district's chief financial officer, of the low balance.

Two weeks later, the county money came and the fund balance jumped by $22 million.

If the money had been in the account on June 30, the rating would have been very close to what it was last year, Peffer said.

"Timing is a critical issue on fund balance. The district had no control on these payments," Peffer said.

The district had been rated at "financial review" status. The ratings from top to bottom are: financial recognition, review, warning and watch.

Reece asked Peffer if that change would affect the district's bond ratings from Standard and Poor's and Moody's.

Peffer said the district should send them a letter from McLean County Clerk Peggy Ann Milton explaining the situation and a note from the auditor. Those likely would help the district get a decent bond rating, he said.

In other business, the board tentatively set its 2008 property tax levy for taxes payable in 2009 at $74.1 million, which is up 4.82 percent from the 70.7 million levy set in 2007.

The owner of a home valued at $100,000 could expect to pay about $5 more in property taxes next year.

The levy would have been higher, but the district is reversing about $1.8 million in property taxes property owners were overcharged this year.

Although the levy increase is not enough to trigger the legal mandate for a truth-in-taxation hearing, the district has decided to have one anyway. It will be at 7 p.m. on Dec. 10 before the next school board meeting at Sugar Creek Elementary School, 200 N. Towanda Ave.