IPS caught in tax crisis


"A long, hot summer for IPS students

While the state sorts through its property tax crisis, Indianapolis schoolchildren and teachers broiled in un-air-conditioned schools through a late summer heat wave. Relief, in the form of air conditioning rather than early dismissals, may be a long time coming. The Indianapolis Public Schools Facilities Improvement Plan has seen its completion date pushed back from an original estimate of 2010 to at least 2014. A $475 million bond issue approved by the school board last year to fund the third and final stage of construction and renovation awaits approval by the state.

Forty-seven elementary schools, seven middle schools and parts of Arsenal Tech High School are scheduled for renovation during the delayed third stage, with 28 of the schools getting air conditioning for the first time. Schools would also get new playgrounds, lighting and ceilings, and work required to meet Americans with Disabilities Act requirements would be completed.

On June 21, the Indiana Department of Local Government Finance, the last stop for the bond issue, requested that they have until Nov. 17 to make their final decision, the final day of a 180-day period allowed to the state to process funding requests. The LGF is initially allowed 90 days to make a decision, but requested the maximum of 180 days for further deliberation.

IPS Superintendent Eugene G. White announced on July 13 that the district would delay moving forward on the bond issue, although the practical impact of that statement is not yet clear. The administration would like to further delay any decision made by the LGF to avert a “no” vote, but any step at this point to halt the bond approval process would be extraordinary and outside of the typical decision-making powers of the administration or school board. IPS is still negotiating with state and local officials to see if a delay can be arranged, but the Nov. 17 date remains the final deadline.

”We met last week with two people from the Governor’s Office, and right now we’re in the process of creating a proposal to them that would allow us to seek permission to wait until we get the Marion County reassessment results before we go before them to talk about the situation again,” White says. “So, they’re going to wait until they get our proposal and then they’re going to give us some type of feedback on that.”

IPS plans to submit their proposal for a further delay by late October or early November, before the commissioner has to make a final decision. Before submitting the proposal, White plans to have four community meetings to discuss the bond issue, particularly in the Butler-Tarkington and Meridian-Kessler neighborhoods where homeowners have been hit hard by the recent property tax assessment.

White acknowledges that the proposal would be unusual, but thinks that it is an appropriate measure given the economic climate. “It’s out of the ordinary, it’s unprecedented, but it’s not illegal,” White says. “It’s something that we think the statute allows us to seek — that’s what we need to do and we need a little time to do it. The statute does not address an extension, therefore we believe that it can be extended because of the circumstances.”

Before the June 21 delay, the bond issue had moved through the approval process without a hitch, including a 7-2 vote in favor of the bond issue by the School Property Tax Control board, an advisory group to the commissioner. The IPS delay is not unique: The commissioner has not passed judgment on any proposals since June.

If the plan were to be voted down in November, IPS would have to start the bond issue process over, risking rejection via taxpayer remonstrance by citizens newly attuned to the impact of public projects on their tax bills. No remonstrances (citizen petitions against, in this case, a bond issue approved by the school board) were filed following board approval of the bond issue last Nov. 29, in large part because of the backing of the Indianapolis Chamber of Commerce.

The decision is now exclusively in the hands of the commissioner of LGF, who takes recommendations from a seven-member School Property Tax Control board, as well as from the governor. The commissioner was appointed by Gov. Daniels this July. The decision of the School Property Tax Control board is not binding on the commissioner, and as a recent appointee picked by the governor in the midst of a tax crisis, the commissioner’s thinking will likely hew closely to the governor’s attitude towards new public expenditure.

Just as the delayed third stage of construction wouldn’t begin until at least 2008 or later, the bond issue wouldn’t find its way to taxpayers’ bills until 2010. At current estimates, a $475 bond issue would increase tax rates by 36 cents on $100 on assessed property value.

A delay of any significant length could reduce the scope of the project, explains Debra Kunce, an associate at Schmidt Construction and project manager for the IPS Facilities Improvement Plan. “If they ask for $475 million a year from now, that means there will probably be $16-$20 million a year in inflation, and it’s quite likely that they won’t get an additional $16-$20 million, they’ll just be able to do less,” Kunce says.

Meanwhile, IPS students and teachers are attempting to prepare for the ISTEP in unimproved facilities, losing time to early dismissals and frequent water breaks.

“I talked to many principals about the struggles that teachers had who were making the valiant effort to try to do review to get our kids ready for ISTEP, which starts Sept. 17,” says Kim L. Hooper, spokeswoman for IPS. “It was a losing battle because the children could not focus. They were miserable.” Hooper also points out that IPS is losing teachers to other school districts that have work environments with basic amenities like A/C.

Aside from bond issues, IPS and other Marion County school districts must compensate for shortfalls on yearly operating costs due to lower than expected property tax revenues. Rodney M. Black, business manager for IPS, explains that while the district typically borrows in February to sustain them until a June property tax payout, because IPS didn’t collect anything in June, the district has had to take out unplanned-for loans in June and August.

“June is additional and the one we’re doing in August is additional,” Black says. “So far we’ve borrowed three times, but if we get worse collections than what we thought, then we may have to go back a fourth time. We normally don’t have this type of problem, so the struggle becomes one of re-forecasting continuously, trying to determine where the collection rates are.” And all of these loans mean interest charged back to taxpayers: approximately $370,000 for just the June loan.



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