The need for further local and state fiscal controls

The Indiana General Assembly election results are very encouraging. Economic issues, I believe, will be central for the 2011 legislative session. I do believe there needs to be a discussion from the General Assembly regarding a couple of central fiscal issues to local government.

With the approval of property tax caps to the Indiana Constitution, the GA must address the up-and-down cycles of business that naturally happens. The general economy will always have its cycles of expansion and retraction. Associated with economic cycles come the tax revenue increases and decreases. Many local government services were dependent on local property taxes. That issue is now changing. Many of these services are dependent on revenues from the state. The increase of sales tax was the offset to property tax caps. Sales tax revenue will follow the economic cycles. The GA must look to smooth out the disbursement of revenues to local governments.

This should include greater expansion and controls on the use of local “Rainy Day” funds. The use of these temporary savings accounts should have greater definition regarding the amount (percentage or dollar) that can actually be accumulated and then also how and when these funds should actually be used.

I ask local legislators to begin an in-depth discussion and evaluation of this issue.

An option for New Haven public schools

A few months ago I wrote about my defense as a school board member of East Allen County Schools. Much of this directly revolves around the economic forecasts of not only EACS, but public education throughout Indiana.

Now the debate has become focused on New Haven’s mayor advocating the possible secession of the city’s schools from EACS. I won’t discuss the educational reasons the mayor has listed for the proposal because I agree with many of them.

When I was a board member, General Fund revenues were generated by local property taxes. Now they come from the state based on student populations. The money now follows the student. This is a significant change because local school districts’ budgets are dependent on the state’s economy and financial status. Again, I am not going into the pros and cons of this change. The significant change is that student tuition follows the student throughout the state, not being generated from property taxes within the school district.

When I was in my last term on the board, the state authorized the limited existence of charter schools. I favored this because it created a competitive environment for public education. Charter student populations continue to increase in the Ft. Wayne area. This represents a significant budget loss for the local school districts. Yet, they continue to silently ignore this competition. They complain that budgets are in decline, yet fail to admit that charters are taking that money from them. There must be perceived reasons – real or not – why parents are using this option to educate their children.

I say all of this because a possible secession from the school district will hinge on the financing of the school district. As this issue is researched, would a new school district be able to afford a duplicative administrative structure? Doubtful. Would a new school district be immune from current capital debt obligations? Would they be trying to create new debt while paying for old at the same time? How does that protect local taxpayers? Starting a new school district means hiring an entirely new administrative structure, new classroom teaching structure, educational supplies, books, etc. A support staff would also be needed. Hire your own or contract for services? Perhaps contract with the old school district for support services. Can an entire K-12 program be created new for a community in a period of weeks? Doubtful.

The alternative which I suggested to the mayor a couple of months ago, but he dismissed at the time, was to pursue charter school management companies to implement a progressive program to meet the educational goals of the community. Companies could literally create competing programs designed to meet precisely the needs and desires a community would outline. Technically, the mayor has no authority to start charter schools, but if the area is fertile for a charter school, a management company could get authorization through Ball State University. Much – if not all – of the administrative work would be completed by the charter company. The state student tuition would follow the student. This option could be implemented much quicker than trying to establish an entirely new school district.

I agree with the mayor’s end goals – better educational opportunities for New Haven residents. Since my input was not sought, I offer it here to the public.