[Southsider2k12]

http://thenewsdispatch.com/articles/2012/0...10492583649.txt

MCAS BOARD AGREES TO SELL EDGEWOOD SCHOOL

By Lois Tomaszewski
Staff Writer
Published: Wednesday, April 25, 2012 5:07 PM CDT
MICHIGAN CITY — To meet a budget shortfall of about $8 million, Michigan City Area Schools will sell Edgewood Elementary School to fund a public bond sale.

The school will continue to operate as part of the MCAS district, but ownership will transfer to a separate entity, said interim chief financial officer Dick Cook. The resolution authorizing the transfer passed by a vote of 6-1, with board member Beryle Burgwald voting nay.

The transfer allows MCAS to sell the school to a “building corporation,” which will then offer a lease purchase agreement to the school. The school board still controls decisions affecting the school.

The “building corporation” is a three-member board that acts as a separate entity. It was established in the past to oversee other bond initiatives to fund renovations and new construction throughout the district.

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This arrangement helps the school district circumnavigate a restriction in the Indiana State Constitution that limits the amount of debt a district can incur to two percent of the value of holdings. The money is needed to plug a deficit in the 2012 budget linked to tax anticipation warrants owed to the school district by the county, Cook said.

Burgwald said MCAS is not building anything. He questioned whether using the building corporation in this way is legal. The purpose of the restriction in the state Constitution is to “prevent the tax payer from being overburdened,” he said.

He also questioned whether the two entities are legally considered separate by federal tax standards, which applies to any non-taxable bonds sold to fund the deficit.

Shanahan & Shanahan, a law firm consulted for the matter, provided a letter to board members that reviewed these legal issues and formed the opinion that was a legal proceeding as presented.

The impact of the bond sale on tax payers is 45/100th of a cent, Cook said. As an example, a property assessed at $75,000 would have a 74 cent increase. A property valued at $250,000 would have an increase in their tax bill of $5.86. Based on the 2012 assessed values for Porter and La Porte counties, this funding would come from a $2.5 billion tax base.

The bonds would have a 14 year term. Non-taxable bonds totaling about $2.6 million would have an interest rate of about three percent. The rest of the bonds would be taxable at a rate of 4.25-4.5 percent interest, said Todd Samuelson, representing Umbaugh, a financial planning firm. Interest payments would begin in 2013, with payments made in June.

Before the sale can go through, the La Porte County Court has to receive appraisals from three different firms or individuals. The information will also be presented to the public via a workshop, a date for which has not been established. Cook told the board the process will hopefully be completed by June 30 “at the latest.”

Because the bond would total only $8 million, it is not required to go before the public in a referendum. Anything under $20 million is exempt from requiring a public vote.

Responding to Burgwald’s question concerning other methods to alleviate the shortfall, such as through a voter referendum for a tax increase, Cook said MCAS administrators did consider this solution. A tax increase referendum is a lengthy process and the district “needed quick action,” he said.

Also contributing to the school district’s budget woes, the state’s allocation to the school district has consistently fell by about $4 million for the last two years, board member Vidya Kora said. He also suggested that the school look at putting measures in place to reduce overall debt.

In other action:

• An energy audit of Elston Middle School, which has the highest energy usage in the district, provided several stages of suggestions to cut utility expenses. Dave Williamson, director of plant planning told the board that a number of steps are being taken district wide to cut energy costs. These include modifying the room temperature of unoccupied building to a high of 85 in the summer and a low of 55 in the winter. Solutions like this one in the short term scenario cost about $2,500 to implement at Elston and can result in a savings of $32,000 per year.

Williamson said the middle and long-term scenarios have a higher cost to put in place. Middle range improvements include installing low flow shower heads and improving lighting with higher efficiency bulbs and fixtures. Long-term projects would include insulation improvements and double pane windows.

The energy audit was free through the “Energizing Indiana” program. MCAS is under no obligation to make any changes recommended in the audit, Williamson said.

• Food service worker Darlene Melendez, speaking on behalf of several of her co-workers who attended the meeting, questioned why her department is the only one in the district which does not have retirement funding.

[Southsider2k12]

And for those who are wondering why, this tells me the financial situation of MCAS is still really, really bad. They are essentially taking out a mortgage on Edgewood because they can't pay their bills. It puts us more into debt than we already are.

[MCRogers1974]

My understanding is the issue is cash flow. They have the money but the money is in the form of uncollected taxes. The situation should correct itself if the county government ever gets this tax reassessment issue resolved.

[Southsider2k12]

My understanding is the issue is cash flow. They have the money but the money is in the form of uncollected taxes. The situation should correct itself if the county government ever gets this tax reassessment issue resolved.

That is part of the issue. The MCAS has taken out millions and millions in tax anticipation notes, but because their total debt load is over $100 million, there is no one out there who will lend to them anymore

[MCRogers1974]

Yikes! They call that "tapped out".

[Southsider2k12]

http://thenewsdispatch.com/articles/2012/0...0d118930381.txt

Time for board members to resign

Published: Monday, April 30, 2012 5:06 PM CDT
After attending the April 24th meeting, I am requesting six school board members (Donald Dulaney, Bill Greene, Vidya Kora, Jeff Jones, Beth Piskur, Jim Kintzele Sr.) to resign due to fiscal irresponsibility.

Borrowing $8,000,000 (plus $8 million more if needed) plus interest, to pay off debt created by this board and previous boards over constructing buildings and burdening the homeowners with more debt! These members again, approved as always without public input, more debt!

With out of control unemployment, under employment, foreclosures and abandon buildings in our school district, we taxpayers have been forced deeper into debt once again! Please stand up and be heard and quit being the silent majority, you will not be able to afford your home any longer if you continue allowing these out of control tax increases to go uncontested.

This board has continually refused public comment before the vote, which I have requested several times for your input therefore, disallowing the taxpayers input before they vote to increase taxes and agenda subjects. This board has known for six years we have a tax problem in this county and refused to cut their budget but, only increase taxes and add enormous debt to us taxpayers. Remember “a government big enough to give you everything, is also big enough to take everything away.” Will the next thing be your children?

Dennis Metheny

Michigan City, IN

[eric.hanke]

That is part of the issue. The MCAS has taken out millions and millions in tax anticipation notes, but because their total debt load is over $100 million, there is no one out there who will lend to them anymore

The MCAS has also based their budgets on estimated tax revenues and padded accordingly. Since property tax revenue has declined based on the economy the MCAS is also budgeting for more than what the funds allow. I've been preaching this for almost a decade to the board.

[Southsider2k12]

The MCAS has also based their budgets on estimated tax revenues and padded accordingly. Since property tax revenue has declined based on the economy the MCAS is also budgeting for more than what the funds allow. I've been preaching this for almost a decade to the board.

You aren't alone. We have got to get candidates who actually understand basic finance instead of ones who understand pretty signs and fundraising.

[Southsider2k12]

So the school system doesn't even know what schools it has mortgaged? Awful.

http://thenewsdispatch.com/articles/2012/0...57558895029.txt

MCAS turns to Joy Elementary as collateral for bonds

By Lois Tomaszewski
Staff Writer
Published: Thursday, May 10, 2012 5:07 PM CDT
MICHIGAN CITY — Michigan City Area Schools board of trustees on Wednesday took steps needed to initiate the sale of bonds to fund about $8 million to patch a portion of the district's $16 million budget deficit.

In one change, ownership of Joy Elementary School will transfer to the Michigan City School Building Corporation, which will use the school as collateral for the sale of bonds. The money from the bonds funds the sale of the school, which is then leased back to MCAS until the bonds are repaid.

An error in a previous resolution by the school corporation identified the school building put up for collateral as Edgewood. It was later determined that Edgewood had been used for a prior bond sale and could not be used for this current proposed financing plan.

The sale to a three-person building corporation and the leasing of the building back to MCAS may seem like a scheme, but it is legal under Indiana law, said bond attorney Jim Shanahan in a May 3 memo to the board.

Click here to find out more!
"In Indiana, building corporations are used by school corporations, cities, towns, counties and libraries and other municipal entities to assist them in undertaking financing," Shanahan wrote. "Under state law, a building corporation is treated as a separate legal entity from the municipal corporation with whom it is working."

This same arrangement was made to fund other bond projects in the district, including renovations at Edgewood and the construction of Pine and Lake Hills elementary schools and Michigan City High School.

At Wednesday's school board meeting, trustees voted five to two to reauthorize the building corporation, which is comprised three members — Jim Elizondo, Sidney Baker and O. Roderick Wilson, all with City Securities of Indianapolis. MCAS is not allowed to have any members on the building corporation, but are required to approve the members who serve. The resolutions were presented by school district attorney William Kaminski.

The second resolution corrected the prior mistake, naming Joy Elementary School as the building that would serve as collateral for the bond sale. The resolution also extends the terms of Edgewood's lease to MCAS.

The third resolution authorizes the La Porte County Circuit Court to appoint appraisers to clear the way for the transfer of ownership of Joy Elementary. An appraisal has to be done before bond sales can start.

A public hearing on the bond sale is scheduled for May 22, the date of the next school board meeting. A time has not been set for the public hearing, as of News-Dispatch deadline on Wednesday night.

[eric.hanke]

So the school system doesn't even know what schools it has mortgaged? Awful.

http://thenewsdispatch.com/articles/2012/0...57558895029.txt

And to think, we actually voted these morons into office and pay hundreds of thousands in administrator salaries to these idiots. Lord help us.

These are the same people we trust with the education of our children. Well, some of us (not me).

*Snickers*

[eric.hanke]

You aren't alone. We have got to get candidates who actually understand basic finance instead of ones who understand pretty signs and fundraising.

The unions (MCEA) also have to back local candidates and not out of town carpetbaggers (Don Dulaney) who don't even trust the MCAS enough to send his own kids to school here. He lives in Beverly Shores and pays to send his children to Duneland schools. Yet the MCEA backed him as their candidate.

Hopefully, in a year I won't have to worry about MC any more (we'll be full time in Florida). Or anywhere but MC.

[Southsider2k12]

http://thenewsdispatch.com/articles/2012/0...1f143753806.txt

State or federal law?

Published: Saturday, May 19, 2012 5:06 PM CDT
In the front page News-Dispatch article of May 10 relative to the floating of a new $8 million bond issue thru a School-Board-created Building Corporation, a May 3 memo from bond counsel James Shanahan is quoted as saying, “Under state law a building corporation is treated as a separate legal entity from the municipal corporation with whom it is working” (read “municipal corporation” in this instance to mean the Michigan City Area Schools).

This, of course, refers to an oft-resorted-to effort to use such a building corporation to get around Article 13’s 2 percent debt limit on bonding by municipal corporations (including schools) within the Indiana Constitution – although building corporations are exempt from paying property taxes just like schools or any other municipal corporation in the state.

Now, as pointed out at the May 9 school board meeting, in his legal memo of April 16 Atty. Shanahan notes that federal tax laws view building and school corporations “as one entity”, not two. Under our form of government we have a well-established doctrine of Pre-emption, based on the Supremacy Clause (Article 6, Section 2) of the U.S. Constitution. Thus, when a federal law “occupies the field” on a particular subject it prevails over any conflicting state legislation on the same matter. So, the Indiana statute cited above should give way to the federal law declaring that a Building Corporation is not a separate entity and, as such, building corporations would come under coverage of the 2 percent debt limit.

Granted that this bond issue is part of the city schools three-pronged attack against its current $1.6 million deficit (along with budget cuts and the Rainy Day Fund), but is our motto here to be “Necessity knows no law”?

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— Beryle Burgwald

Member, Michigan City School Board

Michigan City, IN