Elkhart, Concord seeking state waiver to help with tax cap problems

A new waiver from the state may help Elkhart and Concord schools deal with property tax cap losses, but schools are still losing millions from several important funds.

Posted on May 1, 2014 at 5:44 p.m.

If you've heard something about Indiana schools getting a break from property tax cap problems, you're hearing right.

But that doesn't mean the schools' funding issues are over.

Here's what's happening in two local school districts — Elkhart and Concord.

Effect of property tax caps

Property taxes from the Elkhart and Concord districts fund transportation, construction and repairs to school buildings and debts that these two schools have accrued. 

Both schools lost a chunk of money when property taxes in Indiana were capped in 2009.

Elkhart is losing more than $6 million and Concord more than $4 million in 2014. 

Protected funds

To make matters worse, at least from the schools' perspective, a 2012 law "protected" schools' debt funds. 

That means schools must take the smaller amount of money they have and use it to pay debts as if they still had as much money as they did before property tax caps went into effect.

Once the two debt funds have been paid, schools are allowed to use the remaining money for the other funds: transportation, capital projects and bus replacement.

That law protecting the debt funds was supposed to go into effect this year. But in January, state legislation said that schools that are losing more than 10 percent of their transportation fund can apply for a wavier from this law for three years.

The Indianapolis Business Journal reported that nearly 60 Indiana schools would be losing at least 20 percent of their transportation fund, making them eligible for this waiver.

Elkhart schools would lose 36 percent of its transportation fund if the protected debt law goes into effect. Concord would lose 63 percent.

Both schools have applied for the state waiver but haven't heard yet if they will receive it. 

What changes?

School officials cautioned that getting this waiver doesn't change the fact that they are losing millions. It just gives them the opportunity to spread their losses out over five funds instead of three. 

Doug Hasler, director of support services for Elkhart schools, said the district has less money for transportation in 2014 than it did in 2013 — even with the waiver.

"This shifts the problem," he said of the waiver. "It spreads our total loss across a greater number of funds."

Janet Gruwell, business manger for Concord schools, said that the corporation does want to pay off its debt — but not at the expense of devastating other funds. 

She also said that another measure is already in place to make sure schools pay off debt. If schools don't make debt payments, the state doesn't pay into that school's general fund.

Gruwell noted that under the protected debt funds law, the state is actually "double-protecting" debt funds, causing a major problem for schools that are already breaking under tax caps.

"To lose 63 percent of our transportation … we would not be able to run that fund at all," she said. 

Choosing priorities

Getting the transportation fund operational may seem like the highest priority for schools since buses run every day. But schools can't ignore the capital projects fund for long, according to Concord Superintendent Wayne Stubbs. 

Stubbs said that capital projects pays for new computers for students. 

The computers that Concord students are using now are 10 years old in some cases, and this year that caused a problem for one of the highest-stakes test kids will take — the ISTEP. 

Kids took the pencil-and-paper version of the ISTEP this year, Stubbs said, because the state determined that Concord's computers were too old to work with the online test.

"All those required assessments from the state, they are all done online," he said. "It’s putting more pressure on school districts to make sure all that works."

Concord isn't looking to get the latest technology or even a computer for every student he said, just the minimum needed to take required tests online.

If the school's referendum passes, part of that money would go toward updating computers. 

Follow reporter Lydia Sheaks on Twitter at @LydiaSheaks


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