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1/10/2018 6:13:00 PM
Goshen schools officials to seek referendums totaling about $65 million in May 2018

John Kline, Goshen News

GOSHEN — The Goshen School Board Tuesday green-lighted plans to seek public support via referendum for the construction of a new intermediate school for the district. Now it’s up to the public to decide the fate of that proposed new school.

In a special meeting early Tuesday morning, Goshen School Board members voted in favor of placing a referendum question on the ballot of the upcoming May 8 primary election asking voters located within the school district to vote on whether the school corporation should pursue construction of a new intermediate school for grades 5 and 6. The plan also calls for converting the existing middle school to serve grades 7 and 8, and adding classroom and transitional space to Goshen High School, all with the goal of alleviating overcrowding issues across the district.

According to the resolution approved Tuesday, the estimated hard costs of the project would be $55 million, estimated soft construction costs would be $4.9 million, and estimated costs of issuance would come to $5.06 million, bringing the total estimated cost for the project to right around $65 million.

Should the May referendum prove successful, the plan would be for the corporation to bond for $65 million over the course of 20 years at an estimated interest rate ranging from 1.20 to 4.75 percent, according to the resolution.

As of now, the school corporation’s debt service levy sets at $10.58 million and the current debt service rate is 86 cents per $100 assessed valuation.

According to Karl Cender, the district’s financial adviser, should the school corporation enter into the proposed lease agreement and the bonds for the new school be issued, the debt service levy would increase by a maximum of $5.09 million, and the debt service rate would increase by a maximum of 38 cents. However, due to the projected maturity of other obligations of the school corporation, the net effect on the debt service fund tax rate should be negligible, Cender explained.

“So we’re trying to keep it pretty stable, and even as we move and look toward this new $65 million capital project, the debt rate is projected to be 88 cents in 2020, but it will drop to 86 cents in 2021, which is right on target with where we’re at today,” Cender said. “And that’s because our current bonds are being paid off. So that’s one of the goals that we have, to kind of keep our debt service steady without really increasing it over what you’re currently paying.”

OPERATING REFERENDUM

In addition to the new school proposal, the board Tuesday also voted to place a second referendum question on the ballot asking voters to support a referendum tax levy increase that would add 26 cents per $100 of assessed value to property tax assessments that can then be used for operational expenses, including teachers’ raises, that are paid for out of the general fund.

Indiana code currently permits a public school corporation to adopt a resolution to place a referendum on the ballot if the governing body of the corporation determines that the corporation cannot, in a calendar year, carry out its public educational duty unless it imposes a referendum tax levy.

According to the approved resolution, GCS has determined that based on current revenue calculations for the years 2019 through 2026, the school corporation will not be able to carry out its required operational duties without additional funding assistance.

The reasons behind that budget shortfall, Cender said, are primarily two-fold.

“The school’s basic grant, monies that they collect from the state of Indiana each year, have been decreasing,” Cender said, noting that the school corporation currently receives $5,920 per student in tuition support from the state, while the statewide average is $6,060 per student. “We were at $44.2 million (in the general fund) in years 2015-16, it went down to $43.6 million in 2016-17, and then its down another $1.1 million to $42.5 million for 2017-18. So the projected operating shortfall is a total of $2.1 million, and if you look at the needs of managing class sizes, retaining teachers and operating costs of the new facility, that would be a total of $1.3 million. So a total need of $3.4 million is what we’re looking at.”

TAX CAPS

In addition to the reductions in state funding, Cender also pointed to the state’s property tax caps as another big factor in the school corporation’s shrinking budget in recent years.

Tax caps limit the amount of property taxes all units of local government can collect on any one property to 1 percent for residential properties, 2 percent for farmland and rental properties and 3 percent for commercial properties. In 2008, lawmakers passed the caps into law and added them to the state constitution in 2010.

“So what has happened to all governmental units, including schools, is they’re losing revenues as a result of the tax caps, and Goshen Schools is no exception to that rule,” Cender said, noting that GCS is currently losing about $4.8 million a year on average due to the tax caps. “Schools have really had to tighten up their belts and cut costs where they can. So as a result of the need to retain teachers, manage classroom sizes and provide for new operational costs of this new intermediate facility, the school is asking the school board to consider a $3.5 million operating referendum, and that would be for a period of eight years. The property tax rate would be 26 cents per $100 of assessed value, and that 26 cents is the maximum rate that the school could collect during that eight years. So regardless of what the assessed value does, whether it goes up or down, that’s the maximum rate.”

Speaking to the anticipated property tax impact to homeowners within the district should the referendum be approved, Cender said using the median value for a home in the area, which comes to about $116,000, the annual increase in taxes would equate to about $112.50 a year.

If the operating referendum ultimately proves successful, the new tax levy would be imposed from 2019 through 2026, for a total of eight years, and would raise about $3.4 million annually for the corporation, according to the proposal.

“And I think it’s important to point out that if, in these eight years, we don’t need the entire $3.4 million, if we don’t need that for operational costs and to support our teachers, then we wouldn’t necessarily file that,” board member Roger Nafziger added of the proposal. “And that can be changed each year, as we go through the eight years. It’s just part of the budget process.”

Michelle Kercher, coordinator of volunteers for GCS and a big supporter of the proposed operating referendum, offered her own words of encouragement for the board’s decision to move forward with the referendum Tuesday,

“I think it is an important thing that we do as a community, that we support our teachers and our staff. Our teachers have needed a pay raise for a long time,” Kercher said. “I am frustrated that the state has put us in a situation where we have to do stuff like this because they’re not funding schools equally. But because they aren’t, which is the state’s fault, they’re forcing us to go after referendums like this for operating costs, which I support, because I support our educators.”

The two referendums — one for the building plans and the other for the general fund increase — will now each move forward for placement on the May 8 primary election ballot. Each referendum will be voted on separately, and only by those voters residing within the school district.

“We’re excited about getting to this point, of course. It’s the culmination of lots of work, lots of meetings, lots of hours that many people have put in,” GCS Superintendent Diane Woodworth said of the proposals following Tuesday’s meeting. “Next steps are preparing for referendum, so now we will be working with the election board and all of that to get the questions on the ballot. This was the first step that allows that to happen.”

IN THE WORKS

The issue of overcrowding is not a new one for the school corporation. School officials actually first considered constructing a new intermediate school for the district back in 2008, though the proposal was eventually scrapped due to the onset of the recession.

In 2015, school officials once again began exploring the idea of a new intermediate school, this time through the creation of a strategic planning steering committee tasked with mapping out the next decade of planning for the corporation.

After approximately two years of research including everything from enrollment projections and grade configurations at the corporation’s nine schools to school age, classroom size and available amenities, the group was able to narrow its search for a solution down to two options, both of which involved constructing a new school building on school-owned property near the northwest corner of Greene Road and Plymouth Avenue, just a mile from the existing middle school. The two options were then presented to the board for review in May of last year.

Option 1 involved keeping the corporation’s seven elementary schools as-is, adding a new intermediate school for grades 5 and 6, and utilizing the existing middle school for grades 7 and 8. The plan also called for some renovations to the existing high school.

Option 2 — and the one that the team ultimately recommended to the board — involved keeping the corporation’s seven existing elementary schools as-is, and building a new middle school for grades 5 to 8 to complement the corporation’s existing middle school, which would also be converted to house grades 5 to 8. Then, like option 1, the high school would receive a variety of renovations.

A CHANGE IN DIRECTION

Following the committee’s recommendation, schools officials last year hosted three public meetings beginning in November designed to give community members a chance to provide feedback on the proposal for the two 5-8 buildings.

According to Felipe Merino, current president of the Goshen School Board, the board received a significant amount of feedback from the community both during and after the three community meetings, an overwhelming majority of which indicated a preference for Option 1, rather than the recommended Option 2.

Given that overwhelming feedback, board members during their regularly scheduled meeting Monday announced they would be scrapping their support for Option 2 and would instead be throwing their support behind Option 1, which is what ultimately ended up happening during Tuesday’s special meeting.

Referencing the input he received from those in the community advocating for Option 1, Merino said one of the primary concerns expressed revolved around student safety, and the fact that a 5-6, 7-8 configuration would allow for a greater separation of younger students from older students than the 5-8 option.

Also raised as a primary concern was cost, as going with the 5-6, 7-8 configuration would result in a reduction in construction costs due to the fact that such a school configuration would not require as robust athletic or fine arts facilities as a middle school would. In addition, Merino noted that the 5-6, 7-8 option would also save the corporation about $660,000 annually in operational costs, as such a building would be less expensive to operate in terms of the instructional expenses and needed staffing.

Related Stories:
• Alexandria school board OKs proceeding with referendum; only 1 resident speaks against
• Vigo County School Corp. preps for a possible referendum later in 2018
• Lake Central schools to consider $55 million referendum for May 2018 ballot
• Northwest Allen County schools plan to have $34 million referendum on May ballot

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


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