Goshen News, Goshen, IN

March 7, 2013

Large school corporations look at transportation cuts to help cope with property tax caps


GOSHEN — Would you be OK with letting your child walk two or more miles to school?

That may soon be a reality for many families in Elkhart County following news that several of the county’s largest school corporations will take major hits to transportation, capital projects and bus replacement funds for the 2013-14 school year due to state-mandated property tax caps.

Indiana’s Circuit Breaker law was enacted in 2008 as a way to curb the amount of taxes property owners pay annually by limiting property tax bills to 1 percent of homes’ assessed values, 2 percent for farmland and rental property and 3 percent for business property. However, while the tax caps did result in some relief for taxpayers, they also resulted in a significant loss of revenue for local governments and school corporations.

According to projections recently released by the financial advisory firm Umbaugh and Associates, Goshen Community Schools and Concord Community Schools will receive less than half of what they originally anticipated from local property taxes for the coming school year, while Elkhart Community Schools will receive about two-thirds of what it had anticipated.

“When this first started, the state actually tried to help those districts like Elkhart, Goshen, and Concord that were among the top 20 hardest hit in the state percentage-wise,” said Concord Superintendent Wayne Stubbs. “They gave some relief the first couple of years with grants and things like that, so the impact was not so immediate. That has since gone away.”

Stubbs said much of the county’s assessed valuation, or the dollar value assigned to a property for purposes of measuring applicable taxes, has dropped in recent years, resulting in many more property owners hitting their tax caps.

“For almost all of us, our AV has dropped,” Stubbs said. “So that now has made an even larger impact on the funding we receive.”

‘This can’t be right’

As if the funding loss weren’t bad enough, GCS Superintendent Diane Woodworth said the state now requires school corporations to spread that funding loss equally between three main funds — capital projects, which covers things like building maintenance and repairs; transportation, which covers fuel costs and bus driver salaries; and bus replacement, which is used to purchase new buses.

“In the past Goshen has always taken the hit in capital projects, and you just think eventually we’ll have to do a bond in order to pay for roof repairs and things like that,” Woodworth said. “But we’ve always protected the transportation fund. So this is the first year where they’ve told us we have to take a loss there too. So that was a real shock. And on top of that, now we’re hearing that we’ll have a $3.7 million loss in funding for the coming school year. Our transportation fund will drop down to $850,000 for a $2.1 million budget. ... It’s ridiculous. I mean, we keep thinking that someone will come to their senses, because this can’t be right.”

Another source of frustration for both Woodworth and Stubbs is that the impending funding cuts are not affecting all seven of Elkhart County’s school districts equally.

“That’s what’s really frustrating about all this,” Woodworth said. “Elkhart County has seven districts, and the worst hit percentage-wise and dollar-wise are Elkhart, Concord and Goshen. We’re all kind of in a similar world of hurt. The other surrounding schools don’t have near the loss. For example, there are a couple that are reporting a $400,000 loss, when we’re facing a $3.7 million loss. It just doesn’t seem fair.”

According to CCS Business Manager Janet Gruwell, much of that discrepancy is because Elkhart, Concord and Goshen are urban schools with a much higher percentage of homes.

“A lot of it depends on what makes up your tax base,” Gruwell said. “Concord is made up mostly of homes. We don’t have a lot of industry, and with homes hitting the tax cap at 1 percent, almost all of our taxpayers are hitting the cap, resulting in less money coming to us.”

Woodworth also noted that large school districts that have needed to build and expand in recent years due to continuing growth are also being penalized due to the debt they’ve incurred.

“So again, it feels like a greater difficulty for urban schools,” Woodworth said. “Like Concord, which recently built a new Junior High, we’ve grown too. We built Prairie View, we remodeled four elementaries, so we also have some debt. But it’s because we grew. So it feels like we’re being penalized for growing.”

Looking at options

Woodworth said both Goshen and Concord have convened special study committees tasked with looking at exactly what options the corporations have for making cuts with the least amount of negative fallout.

For Goshen, which currently already has a walk zone of one mile, Woodworth said the corporation may need to look at expanding that out farther, though she does not feel that would be in the best interest of the students.

Stubbs, on the other hand, noted that Concord is a district made up of very few sidewalks, rendering the idea of walk zones moot.

“We’re not a walk zone school district,” Stubbs said. “We don’t have sidewalks from one neighborhood to the school, so basically everything is picked up by buses. That’s why making cuts to transportation is such a challenge, because there’s not a whole lot of play in it. We can have fewer buses, but it’s going to take longer to do all the routes, we’ve got to change our schedules for our days. ... It can create a huge mess.”

Woodworth said other options include requiring buses to only make one stop per subdivision, rather than stopping at every couple of houses. School field trips and busing to extracurricular activities could also be on the chopping block if alternate forms of funding are not found, she said.

“Well try to be creative and look at everything possible,” Woodworth said, “but even with all of those things, we’re still only at about $400,000 in savings. That’s not even close to the $1.5 million we need to save.”

As for Capital Projects, GCS Business Manager Jerry Hawkins said the corporation has already been forced to hold off on some repairs and building maintenance projects in order to keep the transportation fund flush, though with the corporations now being forced to pro-rate their funds, that’s no longer an option. The result, he said, is a capital projects fund that is already short on funds and getting shorter.

To get by for now, Hawkins said the corporation has the option of poaching from the general fund, which pays for things like teacher salaries, and the rainy day fund to pick up some of the slack in the transportation and capital projects funds, but added that such poaching can only go on for so long before those funds are bled dry as well.

“When you look at CPF, we’ve delayed and delayed and delayed, and there comes a time when your buildings are going to have issues,” Hawkins said. “You’ve got a roof that leaks and you’re out of money and you can’t do the things you need to do. It’s a real issue.”

Looking ahead

Woodworth said she is hopeful that upon hearing of the dire situation currently facing schools such as Goshen and Concord, the state Legislature will designate some additional funds in the biennium budget to help mitigate some of the lost revenue.

“If they would do that, that would just be so helpful,” Woodworth said, “because if assessed value can start to come back, this problem will lessen over time. And this is not a new idea to the legislature, because when the tax caps were first put in, before they were put into the Constitution, there were funds to help mitigate the loss for schools above a certain amount of loss. So they have to do something.

In the meantime, Woodworth said she, Stubbs, and other superintendents in the county have been working with organizations such as the Indiana Association of School Business Officials and other civic and business groups to try and get the word out on the plight of area schools.

“We’re going to keep fighting until they’re done in this session, and then whatever didn’t get fixed, or if nothing got fixed, in my mind, we’ll start again next year,” Stubbs said. “Because it’s not going to go away, and we can either just lay down and take it, or try to do something about it.”