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2/17/2012 10:37:00 AM
Charles A. Beard schools in Knightstown need $1 million loan

Bethany Mauger, Courier-Times Staff Writer

KNIGHTSTOWN - Charles A. Beard schools are facing their tightest financial year since the recession began.

The district has spent more money than it has taken in because of cash flow problems, and its savings in the bank have been cut in half as a result.

Now, the school board must borrow about $1 million to continue fixing faulty heating and air conditioning, make lease payments and buy costly fuel. The loan is meant to carry the district until its share of county property taxes come in.

Principals have been asked to keep their expenses to a minimum and use as few supplies as possible as the district tries to weather the storm. When equipment breaks, school employees try to fix it themselves before they call in a contractor.

School board President Wade Beatty called this year the district's tightest year yet and said he's concerned about the situation. He's hoping that buckling down on expenses is enough to avoid making any further cuts.

"It's tight all over the state," he said. "It's not getting any less expensive to have quality teachers and quality administrators in the system, but it seems to be getting very tight on the funds coming in to foot those bills."

The financial troubles haven't come as a surprise. Former Supt. Gary Storie had expected to lose as much as $350,000 over the course of two years because of changes to the state funding formula.

He offered a retirement incentive in an attempt to reduce the number of teachers at the top of the pay scale and replace them with lower-paid teachers. The 14 teachers who took the incentive received the promise of $9,000 payments a year for three years.

Beatty still expects to see savings as a result of the incentive. Each newly hired teacher makes an average of $15,000 less than the more experienced teachers did. If that hadn't happened, he thinks Charles A. Beard would have to consider layoffs.

The problem is the district is still making the $9,000 incentive payments, district Treasurer Stephanie Madison said. That's the reason that the $680,000 Charles A. Beard had in the bank at the end of last year has dropped down to about $330,000.

The district won't see any savings from the incentive until at least next year, she said.

The other problem is the timing of Charles A. Beard's property tax draws. Each June and December, school districts get certain amounts of the county's property tax dollars to pay for building repairs, lease payments, new buses and gasoline.

But Madison typically needs the cash months before the payments come in. Since money has been so tight, the district doesn't have enough extra dollars in savings to cover those costs.

In the past, school districts have been allowed to collect some property taxes early to pay their bills. This year, Madison was told that is no longer the case.

The district has the money to pay its bills, Madison said. Sometimes, though, the money doesn't come in by the time it's needed.

The school board is borrowing $1 million in what's called tax anticipation warrants, which will be repaid at a 1.85 percent interest rate. When property tax payments come in, the board will repay the warrant.

Beatty hopes to eventually save up enough cash to be able to cover expenses without borrowing money to tide the district over.

But Madison doesn't expect that to happen until the economy improves.

"I don't know that we will within the next several years, until we have some relief from the state," she said.

Copyright 2015, The Courier-Times, New Castle, IN.

Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

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