DUNLAP — Most school corporations pursue special referendums in order to thrive. Concord Community Schools is doing it to survive.
Such was the idea behind a Jan. 13 vote by the Concord Board of School Trustees to approve putting what they called a general fund operating referendum on the ballot for the upcoming primary election in May.
According to Wayne Stubbs, superintendent of Concord Community Schools, the corporation over the past five years has faced a combined loss of $10 million to funds supported by local property taxes, with another $4.2 million in additional losses expected this year alone.
The reason: fallout from the 2008 constitutionally-instituted Indiana property tax caps which capped property taxes at 1 percent for residential properties, 2 percent for rental and agricultural properties and 3 percent for commercial properties.
“This is much different than what happened with the Goshen Community Schools referendum, where they were actually doing a building project,” Stubbs said from his office Monday afternoon. “We’re not looking to build or add on to any of our facilities. This is simply to try and get back or recover some of the massive losses that we incurred due to the tax caps.”
As reported by the Legislative Services Agency, Concord currently ranks 8th out of 292 school districts in Indiana for experiencing the highest property tax losses — losses due primarily to Concord’s unique location, which overlaps other taxing units such as the cities of Goshen and Elkhart.
According to Stubbs, the tax caps are applied to the overall tax rate, which includes cities, counties, townships, libraries and schools.
“Concord Community Schools includes all of those taxing units, with the added distinction of having both portions of the city of Elkhart and the city of Goshen as part of our tax base,” Stubbs said. “Concord’s assessed valuation also has a large percentage of homes which hit the property tax cap at 1 percent, which reduces the amount of funding we receive. Concord also has very little farm land or industrial property, so we lose out there too.”
In addition, the school corporation is also facing a significant financial shortfall resulting from the tax caps being implemented shortly after the corporation chose to pursue some hefty building construction and renovation projects, such as the construction of a new junior high building and the conversion of the old junior high into a new intermediate school.
“We lost $3.9 million in 2013, and we project a $4.2 million loss in 2014,” Stubbs said of the resulting financial fallout. “That’s in local property tax funds — bus replacement, transportation, and capital projects — and that’s where we’re just getting brutally hammered. The way the current law works, starting in 2014, the losses will only be felt in those three funds. So for Concord, that means we lose 68.2 percent of those funds, which makes us one of the hardest hit school corporations in the state.”
In an effort to try and shore up some of those hefty funding losses, school corporation officials this May will be asking voters in the Concord area to approve an additional tax levy of up to $0.405 for every $100 of assessed property value.
“So for a person who has a $100,000 home, after their deductions, mortgage exemptions, etc., that comes out to about an $11 a month increase they’d be seeing, or about the cost of a pizza each month,” Stubbs said. “And again, this is not to build anymore buildings, add on to any buildings... this is basically operational costs needed to be able to maintain our existing buildings moving forward.”
Should the referendum prove successful, Stubbs said the additional tax levy will bring in just under $4 million in additional funding for the school corporation each year, or about $28 million over the course of the levy’s seven year lifespan.
“Getting the referendum approved would allow us to be able to get back to square one with our funds that we currently have,” Stubbs said, “because what we’re having to do now is take dollars from our state tuition-supported fund, which is supposed to go toward classroom instruction, and use those funds to cover the losses we’re seeing in our other funds.”
So what happens to the corporation if the referendum proves not to be successful? From what Stubbs is predicting, it definitely won’t be pretty.
“Unless there is a tremendous economic recovery, our AV will not grow by enough to make up the losses,” Stubbs said. “We must learn to live with 68 percent less of the revenue in our non-protected funds.”
A breakdown of how the corporation’s property tax supported funds would be affected should the referendum fail is as follows:
• Simply maintaining buildings will be the priority
• All new purchases/replacements will be placed on permanent hold
• Computers and other technology will not be updated
• Severe cuts will have to be implemented to extra-curricular activities and field trips
• Increased use of the Rainy Day or General Fund will be necessary, negatively impacting staffing, salaries and benefits
• Increased walk zones will need to be implemented, with a worse-case scenario of complete elimination of all transportation services a possibility
• All purchases of new buses will be halted, placing increased strain on the corporation’s existing fleet, many of which are 12 years old or older.
Along those lines, Stubbs noted that since November of last year, more than 30 community meetings have been held during which he spoke with more than 600 members of the community about the impacts of the property tax caps on the corporation and the importance of getting the additional tax levy approved.
“We understand that nobody wants their taxes to be increased,” Stubbs said. “But at the same time, Concord has been really hard hit, even more so than Goshen or Elkhart, and we need to try to get back to a place where we can start moving forward again. So we’ll continue to try to educate our community on what the issue is, and we’ll continue to try to make sure that people understand why this is so necessary.”