Superintendent to School Board: new state budget puts pressure on schools for funds

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Superintendent Tracy Caddell pulled no punches Monday night when he spoke to the school board and the community with regard to the new state budget. Governor Mitch Daniels and the Republican-controlled legislature hailed the budget as “balanced without raising taxes” — but the school superintendent has a much different view.

“That’s simply not true,” Tracy Caddell said during Monday night’s school board meeting. “The General Assembly deliberately placed local school boards in a position where they will have to make decisions that are certain to shoot up property taxes.”

Tracy Caddell said that the new budget will hit rural school corporations particularly hard. He said that the new budget will raise property taxes in the state by an average of 4.1 percent — and in Switzerland County that means about six to eight more cents on the local tax rate.

How can the state say one thing and the local school corporation say another?

According to the superintendent, the state will no longer have a minimum guarantee under the school funding formula. In the past, local school corporations were guaranteed by the state that each would not receive less money during a funding year than it had the year before.

“That was to protect schools with declining enrollments,” the superintendent said during an interview on the matter. “The school funding formula was based on the number of students in the school, among other variables.”

But what the superintendent now suspects is that the long term goal is to get the money to follow the student.

“That will help out schools such as Hamilton Southeastern near Indianapolis, that are really exploding in terms of population,” Tracy Caddell said. “But without that minimum guarantee, it really hurts small, rural schools.”

As an example, Tracy Caddell said that the state has decreased the amount of money that a school corporation gets for students graduating with Academic Honors Diplomas. Before, the school corporation got $963 for every student graduating with the tougher diploma standards. Now, that figure has shrunk to $900 per student.

Remediation money that was once specifically set aside to help students reach their academic potential has now been folded into the funding formula.

This year the Switzerland County School Corporation got $33,142 to help with remediation of students. In 2006 and 2007, that figure will be zero.

Committed to the positive impact of remediation on Switzerland County students, Tracy Caddell said that the new state budget will mean that the school corporation will have to study new ways to keep the programs going.

Based on projections provided by the state legislature, the Switzerland County School Corporation will see its money from the state be reduced by three-tenths of a percent next year, down $16,321. In 2007, those funds will drop by 1.1 percent, meaning a reduction in 2007 from 2006 of $60,167.

If those projections are true, then over the next two years, the state money coming to Switzerland County for the schools will be reduced by $76,488.

So how does the state tell local school corporations to make up those funds?

By allowing schools to raise their gross maximum levy on property taxes.

Under the same projections, the state will allow the Switzerland County School Corporation to raise its maximum levy — the maximum amount of tax money that the schools can gain from property taxes — by 9.1 percent ($217,943) next year; and by 8.9 percent ($231,925) in 2007.

Again, these are projections, but if they are even close that means that the only recourse that the schools have to continue programming is to raise the property taxes of the landowners in the county.

Obviously, that wouldn’t be a popular decision.

“What the state has done is to balance the budget on the backs of school children,” the superintendent said. “The states looks and says, ‘they don’t have to raise their maximum levy, that’s the school corporation’s choice,’ but the fact is that the next year’s budget is based on the year before, and once you let those funds go, they are gone forever. The reality is that every school corporation in the state will be forced by this budget to raise its maximum levy.”

Remember when the state took away all of the transportation funding for school corporation two years ago? Well, under the new two-year budget the state is allowing local school corporations to get those funds back for transportation — half in 2006 and half in 2007. How?

By raising property taxes locally.

“When you’re dealing with a rural school corporation like Switzerland County it puts us in a real ‘Catch 22’,” Tracy Caddell said. “For school corporations operating in urban areas, losing the transportation dollars isn’t that big a hit because there are so many alternatives. When you live in a rural area like this, transportation to and from school is very important, and with the miles that we drive, it’s also very expensive. What are we going to do, walk away from those dollars? We can’t. We have buses to run.”

The state is also allowing school corporations to raise its debt service — again by raising taxes. For example, a student who qualifies under the free and reduced textbook program gets school books for free, and the state gives the school corporation 69-percent of that textbook fee back.

How does the school get the other 31-percent? They are now allowed to get it through raising property taxes.

Luckily, Switzerland County may not face that problem because the Switzerland County School Endowment Corporation paid for all of the textbook rental for children here last year. If that continues, then that tax increase will no affect Switzerland County — but it will cripple other small, rural school corporations that have a high percentage of children on free and reduced textbook rental.

So the bottom line is — Tracy Caddell doesn’t want to hear that the Governor and the state legislature balanced the budget without raising taxes.

“The state says that they didn’t raise taxes, and they didn’t,” Tracy Caddell says with a grimace. “They’re making us do it because we have to pay our bills. The school corporations around the state are being painted as the bad guys in this, and we don’t have any choice. The state has forced us into a corner.

So what does this mean here?

Tracy Caddell said that it probably means that now is not the time to do any type of major building renovation. He noted that a new roof will have to be put on Switzerland County Elementary School, but he will probably go to the endowment for help.

He will also look to the endowment to possibly pay off some of the school’s debt early, taking those funds off of the property taxes earlier than expected. That won’t have much of an impact, however, since the endowment corporation has been paying the debt service portion of the school’s property taxes for the past three years, anyway.

Tracy Caddell said that it will be important that the endowment corporation continue to pay those debt service dollars, noting that it takes away about 33-cents to the existing tax bill.

“In a rural community, where taxes are going to go up, it just isn’t a good climate for that,” the superintendent said. “It’s unfortunate because our kids deserve better than that. The state sure didn’t help rural schools.”