I wrote the following meeting summary to help keep the community informed about what is happening with our schools. I also wanted to share that the JSHS principal, Ron Shriner, announced to his staff on Friday (Sep 22) that he will retire at the end of this school year. The school board was told after he made this announcement to his staff. My summary of the budget work session is below:
KEY TAKEAWAYS: Referendum funding will be 22 percent of the school district’s budgeted revenue in 2024. Without the referendum funding, the schools would need to make deep cuts. There is a proposal to transfer about $800,000 in tax revenue each year from the operations fund to the debt service fund which would enable the schools to take on more debt. The school board discussed the increase in transfer students, how that impacts buying a home in our school district, how the marginal cost of a transfer student compares to the revenue received, and the increase in class sizes.
Agenda with links to board documents
TOPIC TIMESTAMPS: https://www.youtube.com/watch?v=l_ACgdQrwqg
- 0:01 – Overview of the 2024 budget
- 16:14 – How property circuit breaker losses affect the school district’s tax revenue
- 18:30 – Three-year fiscal plan presentation from our financial consultant
- 56:27 – No future plan yet for summer school
- 1:01:30 (also 18:30) – Proposal to transfer money from operations to allow new short-term borrowing
- 1:04:13 – How income taxes and the homestead tax deduction affect the school budget
- 1:10:04 – Recent increase in the number of TSC transfer students
- 1:17:30 – Recent increase in class sizes; how many students is too many?
- 1:25:52 – The marginal cost of an additional transfer student
- 1:37:40 – Money the foundation raised for the recent construction has not been used
- 1:44:15 – Swim program reimbursement
- 1:57:01 – Capital projects proposed for the next 3 years
- 2:03:54 – Computer and phone expenses
- 2:05:09 – Questions about the notice to taxpayers
The following is my summary of the public school board work session, not official meeting minutes. My personal thoughts and opinions are given in italics and represent my own views which do not necessarily reflect those of any other member of the school board. I identify myself as Mumford in the summary but use first person when describing my personal thoughts and opinions.
0:01 – Cronk presented an Overview of the 2024 Budget. The school board will be asked to adopt the 2024 budget at the October 10 meeting. There are 5 main funds:
Education Fund – Revenue is expected to be $18.49 million in 2024. This funding primarily comes from the state. The school district will receive $6,905 for each average daily membership (ADM) student. Money from this fund is primarily used to pay teachers, school building administrators, paraprofessionals, coaches, nurses, and community services.
Debt Service Fund – Revenue is expected to be $5.75 million in 2024. This funding comes primarily from local property taxes but this tax is not applied to TIF district property. Money in this fund is restricted and can only be used to make debt payments. The debt payment on the recent construction for 2024 is $6.10 million. The school corporation still has a bond account with $2.76 million remaining of the $95 million it borrowed for the recent construction. The plan is to use $350,000 from this bond account to make up the 2024 difference between the expected revenue and the debt payment.
Operations Fund – Revenue is expected to be $3.92 million in 2024. This funding comes primarily from local property taxes and this tax is not applied to TIF district property. Money from this fund is primarily used to pay for the maintenance of buildings, grounds, athletic facilities, school bus transportation, central office administrators and staff, technology, and food services.
Referendum Fund – Revenue is expected to be $7.98 million in 2024. The funding comes primarily from local property taxes and this tax is applied to all property in the school district, including property in TIF districts. The past few years, no money was spent directly from the referendum fund, instead it was transferred into other funds and spent from there. Now the state legislature is requiring school corporations to spend directly out of the referendum fund to make it clear how referendum money is being used. The plan for 2024 is that 62 percent of the revenue will go to education fund spending and 38 percent will go to operations fund spending. In 2024, the referendum will provide 22 percent of the school district’s total expected revenue. Voters will be asked to renew the referendum funding this November. Without the referendum funding, our school district would have to reduce spending by 22 percent and this would mean cutting positions and student programs.
Rainy Day Fund – There is no source of revenue into this fund. Occasionally, the school corporation has extra money in one of the other funds and transfers it into the rainy day fund. The current balance is $1.20 million. The school corporation has cash balances in the other funds as well to insure against delays in receipt of state and local funding.
16:14 – Cronk concluded by explaining how circuit breaker losses work. Each local government entity that imposes property taxes (school district, city, library, county, township, and special districts) submits a budget to the Department of Local Government Finance (DLGF). These government agencies do not coordinate and instead all ask for more than they expect to get. The Indiana constitution limits the property taxes you pay to no more than 1 percent of the gross assessed value of your home. The DLGF decides how much of a reduction applies to each government agency. This shows up on your property tax bill as a circuit breaker credit. For the school corporation, circuit breaker losses are only applied to the debt service and the operations fund because the referendum property taxes are exempt from the 1/2/3 percent limit. Because the city of West Lafayette, the West Lafayette Library, and Tippecanoe County all impose relatively high property taxes, circuit breaker losses to our school district ($1.30 million in 2024) are more important than they are in many other districts. Marley asked if the circuit breaker losses are scheduled to expire. Reuter explained that the property tax caps are in the state constitution, and the circuit breaker losses are not going away.
17:24 – There were no public comments on the budget
18:30 – Mike Reuter, financial consultant, presented information from the Fiscal Plan. He worked together with Greiner and Cronk to develop this plan which reports several years of past revenue and spending as well as the budget for 2024 and projections for 2025 and 2026. The projections assume steady student enrollments and no important legislative changes.
Assessed Valuation – Recently our school district has experienced larger than normal increases in the assessed valuation of property in the district which increased the amount of money that property taxes raised in 2023. However, the state legislature put a 4 percent limit on how quickly property tax revenue is allowed to increase which reduces expected revenue in the debt service and operations funds.
Complexity Score – The $6,905 our school district will receive in 2024 from the state for each average daily membership (ADM) student is the third lowest in Indiana. This is because the state determines funding based on complexity score factors like the percentage of students receiving free or reduced price school lunch. Our school district has a very low complexity score and therefore receives a smaller amount per student from the state.
Transfers out of the Education Fund – The state allows school corporations to transfer up to 15 percent of the education fund revenue to the operations fund. Reuter said that the current fiscal plan does not show any transfers out of the education fund, but said that he anticipates that we may need to consider making a transfer from education to operations in 2025 or 2026 in order to borrow more money.
Borrowing More Money – The expected revenue to the debt service fund is less than the scheduled debt payments (which grow until 2039), so borrowing more to pay for new projects would seem to be off the table. However, currently the circuit breaker losses are distributed proportionally across the debt service and operations fund. The school district could decide to allocate all of the circuit breaker losses to the operations fund which would effectively transfer about $800,000 in revenue from the operations fund to the debt service fund each year. Transferring money to the debt service fund would allow the school district to borrow more. Reuter said that the school corporation could consider issuing new bonds in 2024. Reuter explained that because of the large increase in the assessed valuation in the school district, the DLGF has been reducing the school district’s operations tax rate from 0.3712 in 2021 to 0.3348 in 2024. This is because of the state’s 4 percent limit on the growth of the operations fund tax levy. The DLGF also reduced the debt service tax rate from 0.5375 to 0.4900 in 2024. Reuter said the best way to get the DLGF to increase the debt service tax rate back to 0.5375 is to take on more debt. If the DLGF were to increase the debt service tax rate back to 0.5375, it could bring in an additional $200,000 each year in revenue. In total that would be an additional $1 million in funds available to make principal and interest payments. This plan to effectively transfer money from the education fund to the operations fund and from the operations fund to the debt service fund means less money available to pay teachers and more money for construction. New borrowing would increase our interest expenses, so it’s really the revenue minus interest expenses that we need to consider (more about this at time stamp 1:01:30).
56:27 – Mumford noted that the fiscal plan shows $150,000 budgeted for summer school in 2023 but no money budgeted for summer school in 2024 and subsequent years. She asked if this implies that there will be no summer school offerings in the future. Greiner said the jumpstart program for the past 2 years used ESSER money and they are not sure if it will continue. Cronk said that the summer school social studies program at the JSHS was a pilot program and no decisions have been made about the future. However, money can be moved within the budget if summer school money is needed. Reuter said that the state provides some reimbursement for JSHS summer school expenses.
1:01:30 – Marley asked how much new debt the school corporation could take on if the circuit breaker losses were all applied to the operations fund and not to the debt service fund. Reuter said that given the high interest rates he would estimate that the school could take on $2.2 million in short-term debt. He noted that the school corporation’s scheduled debt payments increase over time and so we need long-term assessed value growth in order to make those payments. Wang asked if short term borrowing means a less than 5-year repayment period. Reuter said yes, less than 5 years and he suggests borrowing the amount that will increase the debt service tax rate back to 0.5375. New borrowing of $2.2 million would mean an increase in interest expenses of around $150,000 annually.
1:04:13 – Wang asked how the state legislature’s decision to reduce income tax rates affects schools. Reuter said that the state is reducing the income tax rate by 0.25 percent gradually over several years and that this matters to schools because K-12 education is half of the state’s budget. If the state were to have less tax revenue available in the future, allocations to schools may be cut. Wang asked about the change to the supplemental homestead tax deduction which he said will temporarily rise from 35 to 40 percent for properties worth $600,000 or less. Reuter said that the state legislature had considered temporarily decreasing the property tax cap below 1 percent, but ultimately decided to instead increase the supplemental homestead tax dedication which reduces the net assessed value of the property. However the 1 percent cap applies to the gross assessed property value and so this will not provide any tax relief to property owners with tax liability far above the 1 percent cap.
1:10:04 – Witt asked Reuter to explain how transfer tuition affects our budget. Greiner clarified that the children of teachers and staff are counted in our ADM. We only receive transfer tuition from TSC transfer students. Reuter said that the transfer tuition is calculated by a formula set by the state to reflect the cost of education in our district. Mumford said that if you take our annual revenue and divide it by the total number of students we have today, that is about $16,000 that we spend per student. But when we charge TSC, they are only paying us $9,000 to $10,000. Reuter said that the state is never going to allow you to charge for debt because they consider it as purchasing assets for the community, but where transfer students help is in optimizing class sizes. Debt service is about 16 percent of the school district’s revenue, or about $2,500 per student. Mumford said that she agrees with Reuter that accepting transfer students is a good way to optimize class size, but noted that this is not our current policy. Currently, we are accepting every TSC student who requests to transfer. Mumford said that this is causing a decrease in our ADM enrollment because families who were going to move into our school district were told that our policy is to accept every transfer request from TSC. Some families decided to buy a home outside of our district specifically because of this new transfer student policy. Mumford noted that buying a home outside of our district avoids the higher property taxes that we pay. Austin disagreed and said that she knows a family that lives outside of the district who wanted to transfer their two children into our district but were told that there may not be room for them. They were eventually allowed to transfer in, but it was just before the school year began. Austin told Mumford that the idea that we accept all transfer students is incorrect and misleading and that she believes that transfer decisions are made very carefully and deliberately. Mumford asked Austin if her example is from this year? Austin said that her example was from several years ago. Mumford asked Greiner if we accepted every TSC transfer request this year. Greiner said that we only turned away 4 students this year. Mumford asked if those 4 students were turned away because of class size considerations. Greiner answered that they were turned away for behavioral or attendance issues and not for class size considerations. There are multiple houses in our school district that have been listed for sale for some time and haven’t sold. That’s not a good sign. Families choosing to buy in TSC because the administration promised them that their children can transfer into our district is not good for our community.
1:17:30 – Mumford said that our 5th grade has the largest class sizes we have ever had at the intermediate school, but there is still no limit on the number of 5th grade students allowed to transfer in. We now have 5th grade teachers with 25 students in their class. Austin said that we already have principals, nurses, and classrooms; the electricity and other bills are all the same regardless of the number of students in our schools. She said that we can accept more students without increasing any of those costs. Greiner said that if the board decides that 24 or 25 or 26 students in a 5th or 6th grade class is too many, then he will follow that direction, but that in the time he has been in our district the school board has not given him any direction on class size. Greiner said that in his experience, 26 students is an appropriate number. If the school board feels differently, then he just needs to understand that because currently he is accepting transfer students to try to maximize dollars. Greiner said that larger class sizes allow us to pay higher teacher salaries. Witt said that it is questionable for the school board to tell the administrators, who are education professionals, what the right class size should be. She said that class size is not a current priority in this district. Witt explained that she does not have a strong feeling about 23, 25, 27, or 30 students per class in the 5th grade. There are other school corporations around the state that wish they had our class size numbers. Witt said that 25 students in a class is a luxury. Her view is that our school leaders have done an exceptional job at managing class sizes. Mumford recommended that the school board consider the topic of class sizes at a future meeting with a vote to make it clear where the board stands on class sizes. Mumford said that her view is that the board should seek input from teachers, because teachers are not happy about class sizes, and also from community members and then provide direction about class sizes. Witt said to Mumford, “I would like to make it clear that you do not speak on behalf of all teachers.” Mumford responded that she was sorry and did not mean to imply that she spoke for all teachers. Greiner said that he regularly discusses class size with teachers during union discussion meetings. Mumford said that she believes that our policy should be that students who have transferred into our district are guaranteed to be able to continue in our schools until they graduate, unless there are significant behavior and attendance issues. Otherwise, families have too much uncertainty and fear. Greiner then left the meeting to make another appointment. When our district agrees to accept a transfer student we are agreeing to educate that child. This is a long-term commitment to that student and the student’s family. There should be no year-to-year uncertainty about transfer students once they have been accepted into the district.
1:25:52 – Reuter asked Mumford to explain why someone would choose to move out of the district and still send their children to our schools. Mumford said that she was talking about the influx of new families each summer. Some have chosen to buy outside of our district because they were promised that their children would be able to transfer into our schools. Mumford asked Reuter if it is correct that the average amount of money we have available to spend per student goes down as we accept additional transfer students. Reuter said that the school’s debt payments have to be made regardless of the number of students and so this part is fixed. Again, debt service revenue is only about $2,500 per student. Mumford agreed with Reuter but said that accepting additional transfer students is about more than possibly needing to hire another classroom teacher. There are many additional costs that go up with each student, like specialists and paraprofessionals who have to spread their services across more students. Austin responded that this is not correct because our students all receive the services that are required by the law, regardless of the number of transfer students we accept. Mumford said that she didn’t mean to imply that we deny students services, but for example in an English learner class, more students means that each student gets less individual attention. Mumford said that her understanding is that we do not have a written MOU with TSC that describes our transfer agreement and asked if this is the case. Reuter said that he did not know if we have a written agreement and that this would need to be a question for Greiner. Witt said that Mumford met with Greiner and that he answered that question. Mumford replied that she had given Greiner questions in advance to give him time to prepare, but that even when she knows the answer, she also asks the same question at the public meeting so the community can hear the answer as well. Witt said that questions from all board members should be sent to her in her role as president in advance of the meeting and complained that she did not receive Mumford’s budget questions in advance. Witt said this is important so that the entire school board knows what will be asked. Mumford asked if Marley had sent Witt his questions in advance. Marley said that he had not. Mumford said that there has been too much email conversation between board members and said she wants discussions to happen at the public meetings. Mumford recommended holding a work session before the October school board meeting to allow the board to ask Greiner additional budget questions before voting on the budget. Witt said that this “gamesmanship” is not indicative of a board that is working together and asked Mumford to start working together. Witt concluded by saying that she would consider the request for a work session.
1:37:40 – Mumford asked if our school district has received any money from the West Lafayette Schools Education Foundation to pay for the recent construction. Cronk said that the school corporation has not received any money from the foundation. Reuter said that the foundation originally committed $1.6 million towards the construction, but that this money has not yet been received by the school district. Mumford asked why the plan has been to spend the remaining borrowed money in the bond fund to make our debt payments rather than using the money the foundation raised to help fund the construction. Reuter said that he recommended using the borrowed money first, but is now recommending that the bond funds may be useful in helping to make payments on new short-term bonds that the school corporation may issue in 2024. Wang asked how much borrowed money is left in the bond account. Cronk said that it is listed on the fund report. Reuter said that there was about $3.5 million left a year ago. Mumford said that there is about $2.7 million today.
1:44:15 – Mumford asked why our operations fund revenue from reimbursements increased by so much, going from $10,000 last year to $189,000 this year. Cronk said that the swim program at the pool is a self-sustaining program. The school corporation pays the costs, but then every 6 months the school corporation reviews the swim program revenue and then receives a reimbursement. That had not happened previously and so this larger reimbursement amount was to catch up, but the amount will not be so large in the future. Witt said that in public board meetings there were discussions about the need for initial start-up breathing space for the swim program and that she doesn’t want any implication that the reimbursement was not happening because someone was doing something wrong.
1:47:37 – Mumford asked why the budgeted amount for land acquisition and development increased from $15,000 last year to $135,000 this year. Cronk said that this is still just a budgeted number, not the amount we have spent for 2023. It is there for things like resurfacing parking lots. Mumford asked why we budgeted so much. Cronk said that the 2023 budget was created before she joined our district. Austin said her guess is that parking lots cost a lot to resurface and so if there was a plan to resurface a parking lot, that’s why the money was budgeted, but that if we don’t end up resurfacing the parking lot then the money can be used somewhere else. Mumford asked Cronk if the $362,000 budgeted this year for building acquisition, construction, and improvements is the same; budgeted for just in case it is needed. Cronk said that she will bring a large expenditure in this category to the board at the next meeting and that it is budgeted for large repairs. Mumford expressed surprise that these 2023 budgeted amounts were so much larger than the historical spending in these categories. Reuter said that the budget process was different last year with the transitions of the new CFO. Witt said that the budget was set high to leave room. At the time we were going through an assessment of all our facilities and so we needed to be safe. Reuter said that we should always try to spend to our revenue, whether or not it is budgeted that way. Wang asked if there are regulations that say that we cannot spend more than the amount we have budgeted. Reuter said that the school corporation could use some of the cash balance to spend over what was budgeted.
1:52:38 – Mumford asked why $1.2 million from the rainy day fund was budgeted for 2023 to go to the office of the business manager. Cronk said that she believes they budgeted this money to make retirement severance payments but that she makes the payments from the administrator or teacher codes rather than the rainy day fund. Reuter said that the $1.2 million from the rainy day fund was not spent and that the little that was spent was for retention payments. Mumford asked about the $97,000 of severance payments listed in Cronk’s presentation. Cronk said that we always budget for this because we don’t know who may retire and these payments are in administrator and teacher contracts. Cronk said that it takes two months to get money appropriated if it isn’t in the budget, so during this budget process she makes a guess about how much might be needed in each category in order to prepare for what might happen.
1:57:01 – Mumford asked if it is correct that we have to list all the future projects that we think we might do on the capital projects plan and that we cannot do projects we do not have listed? Cronk said that this is not correct; we can always amend the capital project plan to include a new project. Witt said that the purpose is to make sure the board is aware of potential future projects. Mumford said that the capital project plan from last year listed dates for projects that are now passed and the projects were never started. Cronk said that the form asks for dates, but that the dates listed are purely a guess. Mumford asked about the missing date and project cost for the locker room renovations at the JSHS. Cronk said that this is a much more expensive project and that she didn’t know what to list because we would need to have more discussions about it. She said that this project may take place 5 or 6 years from now; she didn’t know. Reuter said that most school districts list everything they are thinking about doing and that many of the projects don’t happen. Cronk said that she uses the 10-year plan and works with the facilities director, Larry Daily, to determine which projects may happen in the next 3 years. Witt said that these projects are placeholders. The tennis court project didn’t happen in the first round, but maybe it will happen in the second round. Mumford said that she is surprised that we didn’t do 95 percent of the projects we listed last year. Cronk said that it all came down to a lack of money for projects and noted that she didn’t prepare last year’s capital projects plan. For this year, she tried to list projects that we know we need to get done. She tried to balance the dates for the projects across the three years so the spending per year is similar. Witt said that for every project, there is a process for getting bids which are then given to the board and that up until the board votes to approve a project, it doesn’t exist. Cronk said that she brings these projects to the board so the public knows what the schools are doing.
2:03:54 – Wang asked about the budgeted expenses for the phone system replacement, laptop replacements, and other IT expenses. Cronk said that the laptop replacement is for the teachers. One of the big expenses will be replacing the phone system because the existing phone system is almost obsolete.
2:05:09 – Wang asked about the notice to taxpayers and why the budget estimates are larger than what we discussed. Cronk said that these are advertised high because of the tax rate setting process at the DLGF review. Witt said that a reason we hired Reuter is to make sure we are doing this process correctly. Cronk said that she is aware of a situation where there was a typo on a form like this one that cost a different district over $1 million in tax revenue.
2:09:53 – With no other questions, Reuter said that he will not be coming to the next meeting. Cronk said that she would like to thank her staff for taking care of all the day-to-day operations and she would like to thank Reuter for all the help he provided over the past year. Wang offered his thanks to Cronk for her great work.
Location: Happy Hollow Building, LGI Room
Future Meetings (calendar link)
- Regular School Board Meeting – Monday, October 9 at 6pm at Happy Hollow LGI Room (enter from North side/pool side of building)
This document is my summary of the public school board meeting, not the official meeting minutes. My personal thoughts and opinions are given in italics and represent my own views which do not necessarily reflect those of any other member of the school board. I identify myself as Mumford in the summary but use first person when describing my personal thoughts and opinions. Previous agendas, minutes, and audio recordings can be found at the WLCSC website.
Dacia Mumford 