GOSHEN — Acknowledging that the city’s use of tax increment financing has cut into the amount of property tax revenue ultimately making its way to the local school district, Goshen Mayor Jeremy Stutsman went before the Goshen Redevelopment Commission Tuesday with a potential fix for that lost revenue.
Tax increment financing, or TIF, is an increasingly popular economic development tool used by local governments to stimulate private investment and development in targeted areas, or districts. Through a TIF, communities capture the increase in tax revenue generated by private development. Those communities then use that captured tax revenue to pay back the private investors who paid for the public improvements required to complete that new private development.
However, while captured TIF revenues can be great for promoting economic development, a side effect of the TIF process is that the portion of tax revenue that would otherwise have gone to schools within the district is reduced, which happens to be the case with Goshen Community Schools.
In an effort to remedy the situation, Stutsman informed the commission Tuesday that he has been speaking with GCS Superintendent Diane Woodworth about the possibility of using commission funds to help offset some of the school corporation’s lost revenue due to the TIFs.
“This is something that Dr. Woodworth and I have actually been talking about for some time now,” Stutsman told the commission. “It came to my attention earlier this year or late last year that redevelopment commissions can be donating for education purposes to school systems within the same district. So we started talking a little bit about what that might look like and what that could be.”
Stutsman said he began working with Goshen Community Development Director Mark Brinson to determine how much commission funding the city could spare without negatively impacting the commission’s five-year comprehensive plan.
“Mark and I looked at the numbers, and we were thinking just as a way to participate with the schools, acknowledging that yes, we are keeping some money from going to them because of our TIF districts, that we can take $50,000 out of (our two largest) TIFs, so $100,000 a year, to be donated to Goshen schools with a five-year commitment,” Stutsman said, noting that the funding would have to go toward education programs within the corporation.
“With needing more trained workers in our area, I found out Goshen schools has been talking about doing a program that would help with training of advanced manufacturing of students. I also believe it’ll be potentially open to industries in the after hours to utilize for the training of their employees," he said. "And also, they’ve got a lot of other programs that are more general work based, kind of apprenticeship programs where this could be a small piece of how the city helps not only the schools, but also helps to build a future workforce."
Acknowledging that he and Woodworth do not yet have anything concrete outlined as far as what the money would go toward, Stutsman said he wanted to first gauge the commission’s interest in the suggested gift before really digging into the particulars of the agreement.
“We wanted to come to the commission first and see if there’s an interest in looking into it more, and if there is, we would then start sitting down and actually putting pen to paper, and come back with exactly what would be done,” Stutsman said. “But I would like to see a five-year pilot program that the commission commits to, and then after that see if it’s something the city will continue to do, or if it’s a one-shot deal.”
While nothing concrete has yet been decided related to the funding’s potential use, Woodworth did speak briefly Tuesday about the school corporation’s current thoughts for where the money might be spent.
“We’ve been working with Benteler and NIBCO specifically on the advanced manufacturing piece, so we would need to set up some labs in the school with training equipment and there is some assessment equipment that we have to purchase to help get our kids ready for their certifications,” Woodworth said. “We’ve also met with Keystone, and had a little beginning conversation about developing RV repair tech. So again, we’re looking at partnering with (these companies) as much as possible, but for some of the beginning classes, we would need to add some pieces to the high school labs to get ready for that. And then our idea was, like Mayor Stutsman said, offering those facilities — if it would be helpful — like after hours. We would use it during the day with our kids, but then in the evenings, maybe some retraining of adults could happen in our building. So those are the kinds of ideas we have out there.”
Commissioner Tom Stump noted that he felt the school corporation’s suggested plan was similar to work already being undertaken by the Horizon Education Alliance, a local nonprofit which works to support networks of business, school and community stakeholders to develop pilot projects to design, test and adopt solutions to improve local education outcomes.
“Is this another source of funding you could look into?” Stump said of the HEA.
In response, Woodworth explained that the nonprofit is a potential source of funding, though the HEA’s work related to advanced manufacturing is currently focused more on adult training and retraining.
“They got a large skill-up grant that’s mostly for retraining adult workers,” Woodworth said. “There’s a little bit of the funding that they got from Workforce Development for that grant that we could access, and if we promise to use it for adult workers at night, then we would have more access. But it would not be enough to fund what we need to get our labs ready.”
Stump also questioned Woodworth about the school corporation’s current budget, and why it isn’t able to support such a need on its own.
Woodworth responded by noting that reductions in the amount of state funding provided to public school systems in recent years coupled with things like the significant losses in property tax revenue resulting from the state’s property tax caps have significantly cut into the corporation’s spending power.
“We’re at about $23 million cumulative loss in those funds from property tax collections,” Woodworth told the commission. “For example, our Capital Projects fund is one of those that is a rate-driven fund, so the money that we don’t collect is just gone. And Capital Projects is what we would have used to do this work we’re talking about right now to fix up our labs.”
Along the same lines, Stutsman noted that while it’s true the school corporation this past May was successful in getting two voter referendums approved — one to help bolster the corporation’s flagging General fund and one to assist with the construction of a new intermediate school — that additional funding will do nothing to help the corporation with its plans for advanced manufacturing instruction.
“I’ve heard some comments with the big referendums that the school just got, that they’ve got cash everywhere. Well, don’t forget, it’s no different than the Redevelopment Commission or Civil City. We all have these silos of money that can be used here, but can’t be used in other areas,” Stutsman said. “So what we would be donating to is not something that these referendums would be helping with.”
Stutsman also made a point of informing the commission that it was he who brought the idea for the funding gift to Woodworth, and not the other way around.
“I just want to be clear for everybody here, I went to Diane with this idea. The schools did not come to me requesting this,” Stutsman said. “I just saw this as an opportunity. There’s a lot going on to reeducate and retrain current workers, and that’s a huge piece of what we need to be doing now. But a longterm effort has to be finding better ways to train our youth so they’re ready for this, otherwise we’re going to always be having to do short-term efforts to try to keep our workforce up.”
For his part, Commissioner Vince Turner said his initial reaction to the proposal was positive, though he would like to see something more concrete when it comes to a potential plan for the funding’s use.
“I think I would rather see narrower than wider,” Turner said. “I would like to see a specific program that you’re asking us to come along side of, what the training would be, who the partnerships would be with, what we’re funding, etc. The other thing I’d suggest is I don’t mind the 5-year aspect of it, but I’d like to see it (reviewable) in a similar way to tax abatements, where we have an opportunity as a commission to say,’Yes, this is the direction we want it to go in.’ Folks are begging for workers now, and if we can come alongside in a public-private partnership where we have very specific things that we’re saying we’re funding, I see some optimism in there.”
Commissioner Brett Weddell also expressed initial support for the proposal, noting that it would behoove the commission to acknowledge the negative impact the city’s use of TIFs has had on the school district.
“The city council had Umbaugh and Associates come and do an analysis that took into consideration the two largest TIF districts we have, projects that are coming on board, revenues and whatnot,” Weddell said. “Between those two major TIF districts, the redevelopment commission will bring in approximately $7.8 million per year. Their analysis then took it a step further and said if we eliminated those two TIF districts, got rid of them, and they went away, the Civil City would collect an additional $2.1 million (per year), and the school system would collect $1.8 million. So obviously having the TIF districts is still a net positive for the city, but we always knew that the school was losing money. I don’t think anyone really knew what that meant (until now).”
Given the commission’s general acknowledgment of interest in exploring the proposal further, Stutsman said his plan would be to bring something more concrete back for the commissioners to review likely at either their July 10 or Aug. 14 meeting, to which they agreed.
John Kline can be reached at firstname.lastname@example.org or 574-533-2151, ext. 315. Follow John on Twitter @jkline_TGN