Faced with losing millions of dollars due to tax appeals by Allstate Insurance Co., West Northfield School District 31 is asking voters to allow an increase in its tax rate.

“Right now, they’re claiming there’s more than $10 million in tax refunds due back to them,” said District 31 Superintendent Alexandra Nicholson, referring to the insurance giant headquartered in Northbrook.

District 31 is fighting the appeal in Cook County Circuit Court, but it’s anticipating that a win for Allstate would mean a loss of $3.3 million to the school district, Nicholson said.

On top of that, the insurance company also has filed appeals for 2007 through 2009 — so the school district could be forced to refund even more tax money.

The refunds are part of the reason the district has placed a referendum on the April 5 ballot asking voters if the district’s limiting tax rate should be increased by 49 cents, or nearly 0.5 percentage points — $1.306 to $1.796. In other words, the owner of a $100,000 home could be taxed an additional $49.

The limiting rate is the total tax rate less debt service, which is not limited by tax cap laws, said Catherine Lauria, director of business services for District 31.

If voters approve the higher rate, district officials estimate they could raise $2.2 million a year, Lauria said. That would allow the district to refund ongoing appeals, maintain building infrastructure and improve programs and facilities, Nicholson said.

Residents, she said, would see the higher rate applied to their fall 2011 tax bills.

“It’s a permanent increase,” she said. “We looked back 40 years. There was never a permanent increase in the rate. I even called the county clerk to see if he could find it.”

This isn’t the first time Allstate has appealed its taxes. Five years ago, District 31 refunded $2.3 million to the company, depleting the school district’s reserves by 33 percent, Nicholson said.

“I was told the district found out about the refund just by receiving less revenue,” said Nicholson, who was not with the district when that appeal was approved. “It was a complete surprise.”

At the beginning of this school year District 31 developed a financial plan to deal with a loss of revenue due to the Allstate and diminishing state and federal funding, Nicholson said.

The district sold $6 million in bonds that it would use over the next three to five years. Meanwhile, the district challenged Allstate’s appeal in court. But after the bonds were sold, the district learned how much it could lose to the insurance company.

“Now that we’re faced with a refund … we know we can’t wait three to five years,” Nicholson said.

District officials also made $450,000 in what Nicholson called “efficiency reductions” between 2008 and 2009. And they are set to trim another $200,000 from the 2011-12 budget.

Those reductions include some non-certified staff positions that would not affect education programs, Nicholson said. But any more cuts could impact instruction, she added.

The district also has the option to borrow more money, but it risks exhausting its borrowing capacity, which is about $12 million, Nicholson said.

Once the district exceeds that capacity, the Illinois State Board of Education would designate District 31 “at risk” and assign a financial oversight panel.

Allstate has already received reductions to its property assessments for 2007 through 2009, according to documents from the Cook County Board of Review, the three-member panel that analyzes appeals to the initial valuations by the Cook County Assessor. (The board was recently reduced to two members after Joseph Berrios was elected Cook County Assessor. A replacement is expected by the end of the month.)

Nicholson also said that Allstate has appealed its taxes for those three years, although she does not know the details.

The company’s tax appeals also could impact other taxing districts, particularly Glenbrook High School District 225. Because the issue is under review, District 225 spokeswoman Karen Geddeis declined to discuss it.

An Allstate representative said that the company is committed to paying its fair share of taxes, which it has done consistently and on time.

“We’re really proud to be corporate citizens in Northbrook,” said spokeswoman Shaundra Turner.

However, when the assessed value of Allstate’s property is not consistent with the actual value, it will file an appeal, Turner said. Like other companies, she said, Allstate compares its property with other corporate real estate in the area.

“We have to do the right thing to manage our business,” Turner said, adding that the company strives for “job stability for employees and fair prices for consumers.”

Turner also said the company is committed to Northbrook schools, where some employees send their children. Through a partnership with District 31, she said, the Allstate Foundation, the company’s charitable giving arm, has awarded $50,000 in grants in the past three years for school improvements. (Nicholson disputed that amount, saying that the foundation awarded about $43,000 out of a requested $60,000 and that the district’s education foundation has only received $13,000 to date.)

But if Allstate’s tax appeals trend continues, Nicholson said, District 31 could stand to lose $1 million to $1.5 million per year.

It has put district officials in a position in which they don’t know whether they can rely on the tax revenue for which they budget.

Essentially, a property owner has two opportunities to amend the amount of taxes he or she pays. First, a property owner can question the Cook County Assessor’s valuation of the property each year, which documents show Allstate has historically done, explained Scott Guetzow, a spokesman for the Cook County Board of Review.

The Board of Review then considers the appeal and decides whether to lower the assessment. Allstate’s property assessment remained the same after review for 2005 and 2006, but it was reduced for 2007 through 2009, dropping from $18.9 million to $12.7 million most recently, documents show.

Its current assessment is $2.5 million less than for 2005, the oldest records provided by the Board of Review.

Second, a property owner can appeal his or her taxes either through the Illinois Property Tax Appeals Board or, as in this case, the circuit court system, Guetzow said. This poses a challenge for taxing districts like District 31, because they have already received payments from the property owner and are faced with the prospect of refunding some of that money after the appeal is settled.

“Any interested party can intervene in those cases,” Guetzow said.

District 31 officials did not want to be caught off-guard by another refund to Allstate. With a new law behind them allowing taxing bodies to research court records for appeals, they challenged the insurance company.

It’s not clear how Allstate would recover its money if its appeal is successful, Nicholson said. Depending on the settlement, it could be recovered in one lump sum or over a period of time, and it would likely be withheld from future tax extensions.

Either way, she said, the district can’t afford it under current conditions.