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MCAS fears lack of revenue spells trouble

By Alicia Ebaugh
Staff Writer
Published: Thursday, September 16, 2010 5:20 PM CDT
MICHIGAN CITY — Michigan City Area Schools is running out of money without the additional revenue from La Porte County’s reconciled property tax bills, administrators said, and the district has a $14 million debt service payment due Dec. 1.

It is hurting more than most other county taxing entities because it has had to borrow more than $20 million to make ends meet, and pay hundreds of thousands in interest, whereas others like the city of Michigan City have riverboat funds to fall back on, said Theo Boone Jr., MCAS business manager and CFO. The county borrowed its reserve funds to continue operations.

“The key is to get the property tax money owed to us as soon as possible to make that payment, because we don’t have enough to cover it. By state law, we have to make our bond payments before any other obligations,” Boone told administrators and school board members during a workshop Tuesday held to discuss the status of the settlement made in MCAS’ lawsuit against County Auditor Hinchman and County Assessor Carol McDaniel. Because this budget squeeze could end up affecting school programs and teachers, Boone has been checking in frequently with the auditor’s office on its progress with the bills since the settlement was ordered nearly four months ago.

The MCAS lawsuit was one of two in the Indiana Tax Court pertaining to La Porte County’s property tax situation. In the settlement now upheld by the Supreme Court, all parties except Long Beach residents Bill and Dalia Wendt agreed to use corrected 2006 retrended assessed property values for the 2006-pay-2007 tax year, subject to further examination of changes made to 5,640 property assessments. These properties were identified by Crowe Horwath, an independent accounting firm that reviewed the retrended property values. Any changes to those properties are due Oct. 15, according to the settlement.

“What is preventing the county from sending the reconciliation bills out, at least for the parcels that aren’t being reviewed?,” asked MCAS school board member Dr. Vidya Kora.

“I believe they could have, but they have not,” school board attorney William Kaminski replied. “Even after those parcels are checked, the property owners will still have a right to appeal. It makes no sense to keep delaying.”

Officials with the Department of Local Government Finance even have said the county could possibly move faster than it is to issue the reconciled bills and bring in income. But no one from the county showed up at the workshop to explain the situation, even though Superintendent Barbara Eason-Watkins said many officials, including Hinchman, were invited.

“I didn’t want to go if I couldn’t tell them anything they needed to hear,” Hinchman said Wednesday.

So what’s the holdup?

Hinchman blames the delay on recurring problems with software the county uses to track property tax exemptions and deductions. Also, the software provider, Manatron, put in only three categories for deductions when they set up the software in 2006. The county has 18 categories to track now.

“We have to go in and manually change each parcel,” he said. “There are thousands of them. You can imagine that takes awhile.”

These problems need to be solved before the net assessed values for 2006-pay-2007 can be sent to the DLGF for certification and calculation of tax rates, he said. Having additional staff members help them would have actually taken longer, he said, because of the time it would have taken to train them.

“This is not just secretarial work,” he said. “You have to know accounting principles and know townships.”

Hinchman thinks the process will take at least three more weeks, and the auditor’s office is still busy preparing the county’s budget for next year. It also is readying for the second installment of the 2009-pay-2010 provisional property tax bills to come in.

However, DLGF spokeswoman Amanda Stanley said the net assessed values for 2006-pay-2007 the county needs to send to the DLGF aren’t dependent on the entry of those deductions, if the county already had a close estimate of property value. It would also not have to wait for any changes due to the settlement-ordered property reviews.

“The net assessed property value is always an estimate, no matter what,” Stanley said. “Counties are always asked to withhold 2 percent of the value to account for appeals and other issues. So they could in theory send that to us at any time.”

Hinchman said Wednesday afternoon he was told he had to have everything ready at the same time, although he could not be reached for a followup comment on the issue Wednesday night.

In any case, reconciliation bills now likely won’t be sent out until mid-December, Hinchman said, so MCAS is probably not going to see the $8.2 million in property tax funds it fought to keep for the 2006-pay-2007 tax year before they need it — and the money won’t come in all at once, anyway.

“They may have already collected much of the money they are owed through tax bills already, since they billed the maximum amount when the tax bills were sent out in 2007. The collection rate on these bills is likely going to be lower, too, because the economy has been so bad,” Hinchman said Wednesday. “We understand the school district needs money, but they are just going to have to wait until it comes in. There will be a little money from the provisional bills in December, though.”

In the meantime, Eason-Watkins said she and other administrators are already “exploring options” if the school district has to make cuts.

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Motions by Burgwald lack board support

By Alicia Ebaugh
Staff Writer
Published: Wednesday, September 15, 2010 5:12 PM CDT
MICHIGAN CITY — Michigan City Area Schools board member Beryle Burgwald found no support Tuesday from fellow members to cut funding for an $880,000 boiler installation contract that has never appeared before the school board for approval.

Burgwald attempted to make the cut before the board accepted the school district’s 2011 budget appropriation, but it died for lack of support from other members. The contract is included in the 2011 debt service budget, which is slated at $10.7 million, Burgwald said.

The contract with Energy Systems Group, a nationwide provider of comprehensive energy and performance contracting services based in Evansville, Indiana, purportedly is for the installation of new, energy-efficient boilers in several schools. However, Burgwald said, the board has not seen a copy of the contract — only the budget line item.

“An authorization has to come before an appropriation, but that’s clearly not what happened in this case,” he said. “Now, we’ve apparently got to pay interest on an expense we can’t afford, anyway.”

No additional comments were made by school board members or administrators before the vote to accept the budget, including on when the contract may have been signed. Energy Systems Group provided the district with a free energy efficiency audit while former superintendent Michael Harding was still at MCAS last year.

Burgwald’s other budget amendment attempt — to rehire two counselors with the $120,000 saved through the elimination of one central office secretary and Grants, Resource Management & Staff Development Coordinator Jane Larson — also died for lack of support.

“I only made that motion because (Superintendent Barbara) Eason-Watkins made it clear that it was the school district’s priority to bring guidance counselors back first,” he said.

Eason-Watkins said teachers and principals with whom she has met have said the return of guidance counselors and social workers would be their highest priority. All elementary school social workers were laid off this spring, along with 49 teachers and counselors. MCAS only has been rehiring laid-off teachers and support staff as others have retired or resigned.

Board President Jim Kintzele said he felt it would be “micromanaging” to tell the superintendent who she should hire.

“We usually let the superintendent bring before us the people they need to do the job,” he said.

Burgwald voted against four of five budget resolutions Tuesday because his amendments weren’t accepted, he said. All other members voted to support all the resolutions.

The school district’s total proposed 2011 budget is $70.7 million, down about $7 million from this year. It includes a $6.6 million cut in the general fund, which covers wages and benefits, and a $1.3 million increase in debt service. Debt service includes payments on millions of dollars in loans MCAS took out over the past decade to finance the building of two new elementary schools and renovations at other schools.

MCAS chief to give address

MICHIGAN CITY — Michigan City Area Schools Superintendent Barbara Eason-Watkins is set to give a “State of the Schools” address at 6 p.m. Wednesday, Sept. 29, at Elston Middle School.

Eason-Watkins plans to discus her vision for the school district’s future, as well as areas of focus in student achievement, for this year and in the future, said Betsy Kohn, MCAS communications director. She also will explain how those things fit in with the district’s strategic plan.

The address is being held in the school auditorium in hopes a large number of parents and community members want to attend, school board President Jim Kintzele said.

First day attendance figure: 6,489

MICHIGAN CITY — First day attendance at Michigan City Area Schools was 6,489 students, including preschoolers, which administrators said they estimated to be 96 percent of the students the district should have for the year.

Assistant Superintendent Carla Iacona said this year’s first day attendance Aug. 25 had four more students than the first day in 2009.

“This is the first indication we’ve gotten that we may not see a decline in enrollment as much as we expected,” she said. In the spring, administrators expected a loss of at least 120 students. “This could be good news for our budget situation.”

The school district receives about $7,000 from the state in funding per K-12 student enrolled.

The official enrollment count is set for Friday, Iacona said. There were 6,844 students enrolled at MCAS for the 2009-2010 school year.

Staff unite to aid autistic child

MICHIGAN CITY — Several Michigan City Area Schools employees dropped everything Friday night to help an autistic preschooler find a lost blanket, school board member Kathryn Lee said.

“This proves to me that MCAS employees are 100 percent for families and children,” Lee said. “We have some really great people.”

Lee said the child’s mother called her Friday night frantic about the blanket, which she thought the child left behind in his Pine Elementary School classroom.

“It’s very hard for autistic children to change their routines,” she said.

Lee called Assistant Superintendent Carla Iacona, who was able to reach night custodian Scott Braddy, and the three of them went to the school in search of the blanket.

“We tore that place apart looking for it, in the garbage cans and everything,” Lee said. “Unfortunately, we never found it that night, but the mother was able to get him to accept a substitute blanket before going to bed.”

There is a happy ending, though. The blanket was found Monday morning at Edgewood Elementary School, where the boy apparently dropped it as he was switching buses.