The Washington Times-Herald

January 24, 2013

Barr-Reeve discusses referendum

Vote is May 7 for Montgomery schools

By Andrea McCann
Associated Press

MONTGOMERY — Barr-Reeve Superintendent Travis Madison hosted an open meeting of the Barr-Reeve Community Schools Board of School Trustees Tuesday night to address questions about a proposed tax referendum.

More than 70 people were in attendance and several asked questions following Madison’s presentation, but there was no outward resistance to the idea of an operating referendum.

“I felt very positive about the meeting last night,” the superintendent said Wednesday. “I thought there were good questions brought up.

“I haven’t heard a lot of opposition; I think there are a lot of questions, and that’s good.”

It’s good, he explained, because it shows the B-R community is invested in its schools. Gary Graber and Jamie Miller are two examples.

“To me, the bottom line is: If you lose your school,you lose the town,” Graber said, adding that people want to move into the area because it’s a nice place to live.

A Barr-Reeve graduate himself, Graber said his children and grandchildren also attended B-R schools, and he believes it’s a good school system. He said the tax will not be hardship and wondered why anyone would want B-R to consolidate with another school and pay higher taxes when they can keep their own school and pay lower taxes.

“I thought the meeting was very informative,” Graber continued. “I’m looking forward to voting May 7. To me it’s a no-brainer for people who live in this area.”

Miller, also a B-R graduate whose children attend or attended B-R schools, agreed. She also called the issue a “no-brainer.”

“To me, it’s basically a no-brainer if taxes will go up anyway,” she said.”I want to keep my school. If I’m gonna pay more, I want it to go to my school.”

Miller described a close-knit, family-oriented environment at B-R, where the staff and administrators know parents by name and care about their students.

“Bigger isn’t better,” she said.”In fact, I think it’s the opposite.”

Miller said she learned a lot at the meeting because Madison explained the different funds the corporation has and how those funds are used. She said she felt better about the referendum after the meeting because she learned about the checks and balances in place that determine how the money can be used, and also that the rate probably will never reach the 35-cent ceiling.

“I thought it would be beneficial to discuss school finance,” Madison said. “It’s important to identify how it differs from business finance ... it may help answer some questions.”

How school finance works

In his presentation, Madison gave an overview of how the school corporation operates financially, telling the audience there are six primary funds: General Fund, Debt Service Fund, Pension Debt Service Fund, Capital Projects Fund, Transportation Fund and Bus Replacement Fund. He explained the sources of income for each fund and the expenditures the corporation can make from each one.

In addition, he outlined the 2013 tax rate for each fund, which totaled 60 cents. That total is 10 cents lower than last year’s, he said, and it’s expected to drop another 10 cents next year as more debt is paid off at the end of 2013.

According to Madison, 85 percent of the corporation’s expenditures are from the General Fund. He said the General Fund cannot be levied. Salaries, benefits, utilities and instructional supplies are paid from the General Fund. Income includes state support, which has continued to diminish; federal support, the use of which is closely dictated by the government; interest; and rentals.

The Debt Service Fund receives income from property, excise and commercial vehicle excise taxes.

Expenditures include tax anticipation warrant interest, building corporation leases, general obligation bonds, common school fund loans and uncollected textbook rentals.

The Pension Debt Service Fund pays only for pension bonds. Income is the same as the Debt Service Fund, with additional income from financial institution tax.

“We have to have money set aside for unfunded obligations,” Madison said, explaining that pensions fall into this category, so the corporation used a bond issue to cover unfunded pensions.

The Capital Projects Fund receives income from the same sources as the Pension Debt Service Fund, but significantly more expenditures come out of Capital Projects. They are: building improvements, land acquisition, architect fees, building and equipment rental, maintenance, emergencies, utilities and technology.

“Currently this is our biggest levied fund,” Madison pointed out.”The bulk of this is just maintaining our buildings.”

The Transportation and Bus funds also get income from the same sources as the Pension Debt Service and Capital Projects funds. The Transportation Fund is used to pay for transportation staff, equipment and supplies, fuel, maintenance, insurance and drivers’ salaries. The corporation has two routes; the rest are contracted through two vendors.

The only expenditures from the Bus Replacement Fund are for buses. Madison said the state sets the amount corporations can pay for buses. He also said this year the state denied a corporation request to buy a new bus - one example of the checks and balances the corporation must go through when spending.

“Expenses have to be approved by the state,” he said.”We would only levy what we can show a need for.”

Madison went on to tell his audience that the corporation treasurer cannot move expenditures between funds. Money can be moved within funds, but not between.

“If the referendum were to pass, we’d have a seventh fund called the Referendum Fund,” he said. “It would have to be used for specific expenses. It will run like the other funds.”

The state Department of Local Government Finance would monitor the Referendum Fund just as it does the other funds to protect local taxpayers, according to Madison.

“There wouldn’t be anything along the way that wouldn’t have checks and balances,” he said.

The referendum

The operating referendum would apply for seven years. Madison said he hopes the schools will be in better shape by the end of that time. If not, though, taxpayers would be asked to vote on a new referendum.

He said he and the board want taxpayers to see they’re good stewards of the funds so they’ll approve a tax referendum again if needed.

Board members Galen Graber and Joe Cummings were present at the meeting, which is why it was an open board meeting, and Cummings, this year’s board president, addressed the group before the meeting was adjourned.

“As far as the board is concerned, we want to keep the school as is,” he said, stressing that they don’t want to cut people or programs.”It’s my money as well as your money. The thing to look at is we’re going to have to pay more in taxes if we consolidate.”

Cummings said his kids are almost all through B-R, but now he has grandkids he wants to come up through the B-R schools. He said the board has considered several avenues to keep the corporation going, including chartering it, but he thinks the referendum is the best option.

“It’s not to add to the school or anything,” Cummings said.”It’s just to keep going. We don’t want to spend a penny of it if we don’t have to.”

Though the B-R administration has been conservative, watched expenditures and made cuts they thought would help the bottom line without harming student education, it hasn’t been enough, according to Madison. He said there are few places left to cut.

“When you look to run a business,you look at two things,” he said.”You look at revenue and expendituresÉ Barr-Reeve has a revenue problem. In business, you can raise prices; you can’t do that at school.”

He explained several negative impacts to revenue, including state cuts amounting to hundreds of thousands of dollars and the elimination of grants the schools used to receive. Climbing costs have added to the burden.

Questions

The first question Madison fielded after his presentation was: Regardless of consolidation, will the tax rate go up?

“The answer I get is Ôyes,’” Madison said. “The only thing that could differentiate that is debt. The debt would follow the kids. I can’t get an answer if Barr-Reeve would pay the other school’s debt if we’re consolidated. The assumption is you’d pay the same as them because you’re using their facilities.”

Another person asked if Madison had a feel for how much it would help if the new governor releases more money to schools.

“It would help,” he said. “We would have to ask for less. It may get us to where we’re breaking even again.”

The next question was: Are you starting out with 35 cents?

“We’re not sure yet,” Madison replied.”Our hope is no. My hope is it’s half that - that it’s neutral.”

In answer to a question wondering if the state will have a say in how the money is used if the referendum passes, the superintendent said “no.” He said the money would come to the corporation in monthly payments. He explained the State Board of Accounts audits the corporation’s finances and tells administrators what they’ve done correctly and what needs to change.

“If this doesn’t go through, how long until consolidation?” one audience member asked.

Madison said they would probably know before the 2014 budget process.

“We could look at cutting programs, but if not, we could probably get through 2015,” he said.

In answer to other questions, Madison said:

* If the referendum passes, B-R will stay in business for seven years, and then there will be a new referendum on which to vote.

* The state cannot cut B-R’s funding anywhere else if the referendum passes.

* The operating tax should be enough to keep the school running for the next seven years.

* The school voucher system hasn’t hurt the corporation to his knowledge.

Voting

According to Voter Registration Clerk Carolyn Newton, residents of Barr 1, Barr 2 and Reeve Township precincts will be eligible to vote on the referendum May 7. Madison said the corporation has no input on the wording of the ballot except to input the amount and the length of time.

He encourages everyone to get out and vote. Anyone who’s not registered to vote can pick up a registration card at the B-R Central Office, he added.

For more information

Constituents with questions should feel free to contact Madison or a school board member. The superintendent said there are very specific regulations to follow, and they are the only school representatives who can speak about the referendum.

A steering committee of community residents can also answer questions and relay concerns back to the superintendent and board. It currently includes Alex Knepp, Tony Duncheon, Jody Schultheis, Roberta Graber, Hank Wittmer, Mike Kavanaugh, Corry Corbin, Larry Wilson, Matt Hart, Tyson Wagler and Kenneth Swartzentruber.

“I want folks to continue to be comfortable asking questions,” Madison emphasized.”I hope we can provide answers.”

Anyone wishing to be kept up to date on the referendum process can leave an email address at the B-R Central Office. Madison said he’ll send updates when there’s breaking news and will compile a frequently-asked-questions list for the school website.