Galesburg’s public schools will lose nearly $600,000 in expected revenue after former Cottage Hospital owners won a property tax appeal on the now-closed hospital. The ruling requires the county treasurer to refund those tax dollars to the hospital’s previous owners — money that had already been distributed to District 205 classrooms.
The repayment — spread across tax years 2024 and 2025 — comes as District 205 begins planning next year’s levy and evaluating its overall revenue outlook.
The Galesburg Community Unit School District 205 Board of Education reviewed early estimates for the 2025 property tax levy at its regular meeting Nov. 10, noting both challenges and positive trends affecting the district’s finances.
Jennifer Hamm, assistant superintendent for finance and operations, outlined the district’s annual finance cycle and the property tax process. The district must approve its tax levy by the third Tuesday in December each year to be eligible for tax receipts the following fiscal year.
Hamm said the district continues to face financial impacts from a Property Tax Appeals Board ruling in favor of Cottage Hospital. The decision lowered the hospital’s property valuation for tax years 2021 and 2022, requiring the district to repay nearly $300,000 from the 2024 tax year and an estimated $294,000 from the 2025 levy.
“That ruling substantially impacted our district,” Hamm said. “We’re about 50 percent of the taxing body here in Galesburg, so it’s a significant reduction for us.”
The ruling stems from the 2022 closure and bankruptcy of Cottage Hospital, whose owners successfully appealed their property tax assessments after the facility shut down. The state’s Property Tax Appeal Board agreed the hospital property had been overvalued, meaning local taxing bodies — including District 205 — had to return portions of prior-year tax distributions.
Though OSF HealthCare later purchased and reopened parts of the former hospital campus, its nonprofit status may exempt some of those parcels from future property taxes, limiting how much value can be recovered.
School district superintendent Dr. John Asplund said the district does not issue a direct payment as part of the refund. Instead, the county treasurer returns refunded tax dollars to the former owners of Cottage Hospital by reducing future distributions to the district. Asplund said the effect on District 205 is essentially a loss of revenue rather than a check being written.
The district is also awaiting decisions from the Knox County Board of Review, which met Nov. 7 to consider a list of commercial property assessment appeals. If approved, those appeals could further reduce district revenues by about $260,000, Hamm said. Combined, the PTAB and Board of Review actions could result in more than $500,000 in reduced receipts for tax year 2025.
Despite those setbacks, Hamm pointed to several positive developments. Knox County is expected to see new solar energy projects come online in the next two years, adding to the district’s equalized assessed valuation. Each new megawatt of solar power adds roughly $186,000 in new valuation.
The 4-megawatt Blue Grama Solar array, developed by Nexamp and Trajectory Energy Partners, has begun operations. A larger 50-megawatt Blackberry Solar project does not have a confirmed completion date.
“These renewable energy developments, along with new wind turbines in the county, are helping to increase overall valuation,” Hamm said.
The district is estimating a 5.5 percent increase in Knox County’s assessed valuation and an 8 percent increase in Warren County, for a combined projected increase of 5.61 percent for tax year 2025.
Last December, the board approved a levy with an estimated tax rate of $4.71 per $100 of assessed valuation, but the final rate came in at $4.60 after updated valuations. The district plans to request a rate closer to $4.71 again for the upcoming levy.
“The board has said in the past we want to try to keep the tax rate as close to $4.70, $4.72, somewhere in there as close as possible,” Asplund said. “Last year it dipped down below that because we had some bad information, so we’re trying to rectify that and get back to where we’re maintaining a five-year average around $4.71.”
If the board approves it, the levy request will go to the county clerk’s office no later than the last Tuesday in December and will be decided by March or April, according to Asplund.
District 205 includes Knox County and a portion of Warren County.
