INDIANAPOLIS – State lawmakers came up with a temporary solution this session to help dozens of school districts struggling with cuts in transportation funding.
Several Allen County districts are among the corporations to benefit from the bill.
But a three-year fix doesn’t eliminate the base problem.
“This kicks the problem down the road two to three or four years,” said Northwest Allen County Schools Superintendent Chris Himsel. “We need some long-term relief. At some point we’re not going to have enough to pay for transportation.”
At issue is a protected levy law legislators passed in 2012 but is going into effect this July.
It diverts money from school districts’ transportation, bus replacement and capital funds to pay off debt.
This comes on top of schools already struggling with losses from property tax caps, which have reduced money coming into districts for transportation and capital maintenance.
Dennis Costerison, executive director of the Indiana Association of School Business Officials, said a few districts in the state were set to lose 100 percent of money in their transportation, bus replacement and capital funds because of the protected levy law.
And he said many more would be affected, including districts not typically considered to have financial problems. Instead, they have debt from constructing buildings and now the community’s assessed value is going down while homeowners in the district are hitting the 1 percent caps.
Costerison said the caps can’t be changed since they are in the Constitution. So, lawmakers tried instead to help more than 90 districts expected to lose more than 10 percent in their property tax funds, or about $112 million statewide.
Operating funds come from the state.
House Bill 1062 – signed by Gov. Mike Pence last week – gives a three-year reprieve.
Costerison said Northwest Allen County Schools would have lost nearly half of those property tax funds.
Now that loss is down to 14.2 percent, saving the district about $2 million.
Similarly, Southwest Allen County Schools would have lost more than 20 percent in those property tax funds.
Now that loss is down to 10 percent, saving the district about $850,000.
Himsel said NACS simply grew at the wrong time in relation to when the tax caps were put in.
That meant all the debt accumulated before the caps from adding buildings for the growing enrollment wasn’t grandfathered, and now the district has less money coming in to pay off the loans.
He said the legislature should grandfather previously accumulated debt or simply provide state money to cover some of the losses. That is what legislators did during the first few years of tax caps to keep schools whole. And recently lawmakers paid off charter school debt.
Southwest Allen County Schools Superintendent Steve Yager said the district is on track to get out of debt by 2019.
“We just have to make it through a few years by tightening our belt and staying conservative,” he said. “We’re OK for now.”
He said the district won’t take advantage of another option in the legislation allowing districts losing at least 20 percent in their property tax funds to refinance up to half of their existing bonds up to 10 years longer.
Himsel also said NACS would not use that option. He equated it to lowering your house payment but owing on the house for a longer term.
“Prolonging our debt doesn’t help us,” he said.
Himsel said given the current enrollment pattern the next time the district might discuss another building would be when current debt is retired – between 2018 and 2022.
That allows new debt to come on but taxes not to increase for residents and businesses.
“We have always lived within our means and will continue to do so. If we can’t afford to there will be service cuts,” Himsel said. “At that time the community might have to decide whether a referendum would help.”