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home : most recent : property tax September 23, 2017

4/9/2017 6:33:00 PM
Whodunit? How did Muncie Schools get into this mess?

Seth Slabaugh, Star Press

MUNCIE — Having difficulty deciding who is responsible for Muncie Community Schools' financial crisis?

Is it the school board? The GOP-controlled Statehouse? The Muncie Teachers Association? Or could it be Muncie voters, who defeated a referendum asking for a tax increase for school bus service — and who object when it's their school's turn to close, or when school cafeterias are privatized.

The Star Press asked two experts in school financing for a verdict, which they more or less agreed on after some arguing.

The district is talking about closing at least five schools, including Northside Middle School. Last week, a state-appointed fact-finder said MCS’s reaction to the “extraordinarily difficult financial position” that it has “created for itself” appears to be “haphazard and disorganized.” Also last week, the Indiana House voted 77-19 for a bill to place the school district under the control of a state-appointed emergency manager. The school board would serve only as an advisor to the emergency manager.

Michael Hicks, the George and Frances Ball Distinguished Professor of Economics and director of the Center for Business and Economic Research at Ball State University, asserts the school board and MTA for years have gotten away with falsely blaming their budget woes on the state. He calls the school board "a wholly owned subsidiary" of MTA.

But Larry Deboer, an agricultural economist at Purdue University who has been counseling state and local government on budgets, taxing options, property tax assessment, and revenue options since the 1980s, didn't exactly agree with Hicks and vice versa, at least at first.

"It's easy to see why Muncie schools are in financial difficulty and are closing school buildings, with declining enrollment, declining state aid and lost (property tax) cap credit revenue," Deboer told The Star Press. "… state aid has declined a lot," by a "significant amount."

Muncie lost a large measure of its property tax levy to tax caps, which were voted into the Indiana Constitution in November 2010. Property tax bills on houses were capped at 1 percent of a house's value, for example no more than $1,500 per year on a $150,000 house. Tax bills on farmland are capped at 2 percent of farmland's value, and  tax bills on commercial, industrial and utility property are capped at 3 percent of their value.

That cost MCS money for capital projects and transportation, according to Deboer. The Muncie district lost 42 percent of its levy to the caps, "surely one of the biggest losses among all school corporations," he said. The state eliminated the general fund property tax levy for schools in 2008-09, but MCS still has tax levies for bus replacement, debt service, capital projects and transportation.

Meanwhile, a study published by Deboer in December identified Delaware as one of the most "fiscally disadvantaged" counties in the state, along with others in East Central Indiana, apparently due to the loss of manufacturing jobs the region had been heavily dependent on.

Related Links:
• Star Press full text

Related Stories:
• School takeover bill which focuses on Muncie and Gary draws criticism, praise
• What Indiana lawmakers said about Muncie Community Schools finances
• Indiana House votes to approve takeover of Gary, Muncie schools
• Fact finder blasts Muncie Community Schools, rules for teachers
• Annual state aid to Muncie schools drops about $10 million since 2009
• OPINION: School board elections matter
• Yorktown State Senator Eckerty seeks delay of Muncie Community Schools takeover
• How much is Muncie Community Schools really in the hole?
• Muncie school board votes to close 3 schools
• Muncie Community Schools takeover bill goes behind legislative closed doors
• Mayor says in State of the City: 'Muncie will find a way'
• Muncie Community Schools operates more schools than its peers
• Muncie Community Schools attacks state fact finder report, files appeal
• Lawmaker who wanted state to takeover Muncie schools has two districts that are in red

Copyright 2017 The Star Press

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

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