DUAB schedules Muncie public hearing Nov. 13

The Distressed Unit Appeals Board has scheduled a public hearing at 6 pm on November 13, at Northside Middle School Auditorium to discuss the financial status of the Muncie Community Schools.

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Board Update 10/24/2017

Emergency Manager Steve Edwards reported the following to the MCS board:

  1. Overview of town hall meetings with staff and later with the community on October 5, 2017
  2. Report to the Distressed Unit Appeals Board (DUAB) on October 11, 2017. These meetings are broadcast and available for viewing at  http://in.gov/dlgf/7175.htm.
  3. Debt refinancing that will secure approximately $1.9 million for 2017.
  4. Teacher negotiations. The next session is scheduled for November 2.
  5. Work with the IDOE that will allow members of the Delaware-Blackford County Special Education Cooperative to pay their transfer tuition and shared costs to MCS throughout the school year rather than the end of the year without increasing maintenance of effort (MOE) costs.
  6. Review efforts with Dr. Baule and legal counsel of proposals received for marketed properties.

More Frequently Asked Questions

(Originally posted September 1, 2017)

Why doesn’t MCS qualify for a loan through the Common School Fund?

The Common School Fund loan is dependent on the assessed valuation (AV) per pupil (ADM). Muncie Community Schools does not qualify because the AV per pupil does not fall within the lower 40% of all Indiana schools.

Is the district eligible for a loan from the DUAB?

Yes, this loan must be applied for by the school district and approved by the school board at the September 12 meeting. Even though the DUAB has determined MCS is a “financially impaired” district, there is no guarantee it will be granted.

How does a decline in enrollment affect the district financially?

The school district receives monies from the State for its General Fund on a per pupil basis. The official pupil (ADM) count day is September 15, 2017. A reduction of students from the previous year’s ADM count means less funding, so a significant loss of students will result in a significant loss of funds.

Is there any progress with the sale of buildings or real estate?

With the help of the Emergency Management Team, Dr. Baule and the school board will begin marketing potential properties for sale. No sale of any property can be made without the approval of the Emergency Management Team. According to the law, Ball State University has the first right of refusal for any MCS property, but all political subdivisions within the taxing area, as well as all institutions of higher learning must be made aware of the available property.

What is the purpose of the “Resolution for Contracted Bus Service”?

By approving the resolution, the district can then appeal to the State to use funds earmarked for the Bus Replacement Fund to help pay for some of the contracted bus service.

What has been the result of meetings with President Mearns of Ball State University, Mayor Dennis Still, Jay Julian CEO of Muncie-Delaware County Chamber of Commerce, and representatives of Prime Trust Credit Union?

Members of the AA Emergency Management Team report that each meeting was very productive and that all parties are supportive and willing to help in a variety of ways. At this point the details are not public, but AA is moving forward with results from those meetings

Can the Emergency Management Team recommend additional building closures and staff layoffs?

Not for this year, because employment contracts are set. However, they will be making recommendations for the future after reviewing every program in the district. Beginning with the 2018-2019 school year, MCS must live within its budget.

Board Updates

The Emergency Management Team, in a public meeting, recently reported progress to the Distressed Unit Appeals Board (DUAB). A similar report was shared by Steve Edwards, emergency manager, and Steve Wittenauer, Administrator Assistance co-owner, at recent MCS board meetings.

Highlights of those reports include:

  • a plan with the Muncie Classroom Teachers Association (MCTA) for teachers to reimburse the district the costs of their premium increases negotiated for the previous two contract years
  • marketing vacant buildings
  • meetings with Dr. Geoffrey Means, Ball State University president, and Muncie mayor Dennis Tyler to discuss financial possibilities/opportunities
  • beginning teacher contract negotiations October 3
  • continuing efforts to restructure existing bonds
  • cooperation of local banking institutions to review loan potential

MCS Emergency Manager Plans Town Hall Meeting

(Originally posted September 27, 2017)

The Muncie community is invited to attend a town hall meeting planned by the MCS Emergency Management Team on Thursday, October 5, at 7 p.m. in the Muncie Central auditorium. The purpose of the meeting is to provide an update on the progress being made to financially stabilize the district. Questions for the Emergency Management Team are requested in advance and can be sent to mcsfinanceupdate@muncieschools.org. Questions must be received by Wednesday, October 4. A 4 p.m. meeting is planned for MCS staff, also in the Central auditorium.

Board Updates

(Originally posted September 28, 2017)

The Emergency Management Team, in a public meeting, recently reported progress to the Distressed Unit Appeals Board (DUAB). A similar report was shared by Steve Edwards, emergency manager, and Steve Wittenauer, Administrator Assistance co-owner, at recent MCS board meetings.

Highlights of those reports include:

  • a plan with the Muncie Classroom Teachers Association (MCTA) for teachers to reimburse the district the costs of their premium increases negotiated for the previous two contract years
  • marketing vacant buildings
  • meetings with Dr. Geoffrey Means, Ball State University president, and Muncie mayor Dennis Tyler to discuss financial possibilities/opportunities
  • beginning teacher contract negotiations October 3
  • continuing efforts to restructure existing bonds
  • cooperation of local banking institutions to review loan potential

Frequently Asked Questions

(Originally posted August 3, 2017)

  1. How did MCS get to this point?
  • There are many factors that have contributed over time. Some factors were within the control of the MCS though many were not:
  • Property tax caps and multiple legislative decisions that either limit or reduce funding for school districts.
  • Steadily shrinking enrollment – Enrollment in 2012-2013 was 6800. Current enrollment is around 5300 (although the official number won’t be recorded until Sept. 15, which is the enrollment number the State uses for funding). The loss of 1,500 students in five years is dramatic and equates to a loss of over $10 million dollars in state funding.
  • The failed referendum in 2013 – 53.7% voted NO to increase the tax base to support the transportation fund, which was impacted by protected taxes to the tune of $9 million.
  • Denial by the IDOE of a waiver to stop school bus transportation in 2015 in response to the failed referendum.
  • Questionable financial decisions over a multi-year span.
  1. What has the district done to reduce spending?
  • Consolidated high schools
  • Sale of Wilson Middle School
  • Selling Storer, Mitchell, Sutton Elementary Schools
  • Changed bus service provider to save $1.3 M
  • Board voted unanimously to stop bus service in 2018 to reduce cost to around $400,000/yr. Although the state granted that waiver, the MCS has the option not to use it.
  1. Why was it necessary to engage an emergency management team?

The decision was made by the State legislature, which has the right to step in when school districts are seriously in debt and having difficulty meeting their obligations. Usually the State will step in at a district’s request, which was the case with Gary Schools. MCS, however, did not request help. Legislative action for MCS was added to the takeover language for Gary Schools and then passed by the General Assembly.

  1. What is the Distressed Unit Appeals Board and what do they do?

The Indiana Distressed Unit Appeals Board or DUAB is a unit of the Department of Local Government Finance or DLGF. According to the website, “The DLGF is responsible for ensuring property tax assessment and local government budgeting are carried out in accordance with Indiana law. The Department is charged with publishing property tax assessment rules and annually reviewing and approving the tax rates and levies of every political subdivision in the state, including all counties, cities, towns, townships, school corporations, libraries, and other entities with tax levy authority.”

The DUAB receives petitions from distressed political subdivisions and school corporations in need of relief and determines what action, if any should be taken. (see question 11).

  1. How was the emergency management team selected?

Once legislative action passed, the Distressed Unit Appeals Board (DUAB) requested a hearing with entities interested in stepping in as emergency managers for the struggling district. Two other companies, The Robert Bobb Group LLC and Crowe Horwath, LLP were also considered, as was Steve Baule MCS superintendent.

  1. Is Dr. Baule still the superintendent?

Yes. Nothing has changed academically or administratively with the district. The AA team is providing financial oversight and aggressively developing a strategic plan to restore the district’s financial health.

  1. How will this affect students?

It is a goal of the AA Emergency Management Team and MCS to keep negative changes in the financial structure as far away from classrooms and student programs as possible. It will be impossible to shield them from all changes, but we are confident in the ability and professionalism of our staff to maintain a positive learning environment.

  1. What does this mean for MCS administrators, teachers, and staff?

It means that everyone must recognize the urgent and critical financial situation MCS is in. It means sharing the sacrifices that must be made, supporting efforts to reduce the debt and strengthening the mission. It means remaining dedicated to the education of the children of Muncie.

  1. How does the Emergency Management Team plan to resolve this financial crisis?

The plan, as outlined by Emergency Manager Steve Edwards at a July school board meeting:

  • Assist with development of a strategic plan to bring about financial stability.
  • Negotiate the labor contract with teachers for 2017-18.
  • Meet with leaders of Muncie Teachers Association regularly.
  • Meet with MCS support staff and administrators.
  • Review staffing levels and recommend changes if necessary.
  • Review use of facilities and recommend changes if necessary.
  • Provide an outside perspective on improved efficiency and best management practices.
  • Review all facets of school district operations, both educational and non-educational, that have a fiscal impact and recommend changes if necessary.
  • Work with the district in a “collaborative and cooperative process” to develop a “holistic” debt reduction plan.
  • Meet with local elected officials, the Chamber of Commerce, state lawmakers, Ball State University representatives, Ivy Tech Community College representatives, the Delaware County Coalition for Public Education, the League of Women Voters and others.
  1. What if the Emergency Management Team cannot resolve the financial crisis?

The Emergency Management Team is optimistic that will not be the case. The DUAB has identified the district as “financially impaired” and allowed six months (essentially a probation period) for progress on a debt reduction plan. In December, the DUAB will review MCS’s progress.  If enough has been made, district officials regain control.  If not, Muncie will be designated a “distressed unit” and a full state takeover begins.

  1. How is a State takeover different than this “probation” time?

The DUAB appoints an emergency manager who has near-total control to introduce academic and financial changes, renegotiate teacher contracts and run district schools. In other words, the school board and the superintendent have no official say in decisions made by the emergency manager, who is subject only to informal review by a local advisory board and the DUAB. A school district only emerges from state control when it shows two years of “positive cash flow”.

  1. Are Gary Schools in a similar situation?

Gary Schools have been affected to a significantly greater degree by many of the same factors – loss of industry, shrinking enrollment, low assessed valuation – and their debt is greater, which is why the State has officially taken over management of the school district.

  1. Where will the money come from?

There are only two ways to balance a budget – make more and spend less. In this situation, all options are being examined.

In addition to cost-saving measures mentioned in question 2:

  • Additional MCS properties could be sold or leased. There has been public discussion of moving to a single middle school.
  • Grant monies could be given to the MCS
  • Financial gifts could be secured
  • Additional cuts to budget items could be made, for example: staff reductions, reductions in benefits, implementing an energy conservation plan, a hiring freeze, increasing class sizes
  • “In kind” services from another government entity
  • A referendum
  • A loan from the Common School Fund
  • Financial help from the DUAB
  • Legislative action
  • How can the community help?
  • The community can best help by:
  • supporting the difficult decisions that need to be made
  • supporting the needs of our schools and students, both financially and through volunteer efforts
  • encouraging others to provide whatever support they can
  • staying informed through the regular updates that will be provided on this website, as well as through local and social media

Q & A from the Oct. 5 Town Hall

When will you be sharing your new budget plan with the MCS Board?

  • We are working closely with Robert Coddington, MCS CFO, on the development of the budget. It is apparent that substantial cost saving measures will have to be taken for the upcoming year. Those measures will be made in the form of recommendations to the Board as the Emergency Management Team is working in collaboration with the school district and will not have the final say on many of the recommended cost savings items.  Outside of contract teacher contract negotiations, which is a fluid process, the recommendations will be specific and, in terms of teacher contract negotiations, we will be providing a general cost savings that needs to be generated.These recommendations will be made over the next two months. The Board is aware the recommended goal would be to reduce spending by $4 – 6 million through
  • Staffing reductions
  • Program modifications and elimination
  • Facility planning for a district of 4,000 students
  • Significant savings in teacher health insurance costs

What are your hours every day? At what number can people call you?

  • The hours of the Emergency Manager on site range from 8:00 a.m. to 4:30 p.m. or 8:30 a.m. to 5:00 p.m.
  • Other members of the team travel greater distances and generally are on site for six or more hours sporadically as needed, generally at least one or two days a week.
  • Individuals can reach the Emergency Manager at 765-747-5237

How much are you being paid? Since the paper said you still don’t have a contract, how much are you asking for?

  • It’s important to understand that the Emergency Management Team is state-contracted and state-funded. One would need to contact the Distressed Unit Appeals Board (DUAB) for that information.

What grant opportunities have you found for MCS?

  • Have not identified grant opportunities that can reduce the debt. Most grant awards are not for specific debt reduction.

What new ideas for funding have you shared with the Board?

  • Revenue sources are limited for a public-school district and are generally generated through student enrollment.
  • In our plan, we will strongly encourage the district to explore all options for advertising the good things going on the district in an effort to retain and recruit students.
  • Restructuring the debt

When will the teacher’s contract be completed? How much do you anticipate saving?

  • The completion date by law is November 15th; however, if the contract is not settled by that point, the district could enter into impasse.
  • It is the goal of the Emergency Manager to reduce costs next year by $4 million to $6 million dollars with a significant portion of that being in savings generated from teacher health insurance costs.

What do you think is the total savings that you have accomplished so far? How is that being measured?

  • To be clear, the work of the emergency management team is to work with the district to develop a plan to reduce the debt.
  • The district made sizable personnel cuts this year leading into the start of school and the Emergency Management Team will most likely recommend further personnel cuts to be implemented in 2018.
  • Many of the things the Emergency Management Team will recommend cannot be accomplished until 2018 and most likely the start of school in 2018.
  • We are working with the district to identify areas where savings can be made going forward and that will be emphasis.
  • The Emergency Management Team was able to work with the Muncie Teachers Association to develop a Memorandum of Understanding to clarify how teachers would reimburse the district for higher insurance premiums for the last two contract years as determined by the last best contract offer accepted by the Indiana Education Employment Relations (IEERB) Board in this past spring. If the district is successful in collecting the total reimbursement, it will be approximately $720,000.

Have you discussed with law enforcement the potential to press criminal charges against anyone?

  • We are not in a position to suggest any criminal actions have occurred.

What has Mr. Edwards done with the money the teachers’ gave him for his campaign?

  • He was required to file financial disclosure forms with the county. Anyone seeking more detailed information about the financial aspects of Mr. Edwards’ campaign is directed to the county and Mr. Edwards’ financial disclosure forms.

Does EM anticipate the state will exercise a complete takeover of MCS after  Dec. 31?

  • This is not a question the Emergency Management Team can answer.

Have any steps been taken to have Ball State takeover public education in Muncie?

  • No

What have you done specifically to assist with transportation issues? I have heard a rumor you have recommended retaining the current company? Is that true? Why?

  • The Emergency Management Team is reviewing the operation of the transportation system. No formal recommendation has been made by the Emergency Management Team.

Who did you discuss the date with before scheduling this event on one of the busiest days of the Muncie calendar? Did the MCS board or administration approve this date? Did you check with them beforehand?

  • It was certainly never our intention to create a conflict with such a popular event. We involved a number of people in the decision, including district employees, and publically announced the date early in Sept. There was not a red flag raised until we were too close to change the date and reorganize.
  • For those who were unable to attend the town hall, we will do our best to make sure all information, including questions and answers, is available on the website   mcsfinanceupdate.org which can be found under the Finance tab on the Muncie Schools webpage.
  • In addition, video broadcasts will be available soon.

Why don’t retirees have their insurance back yet?

  • This is a legal matter that the Emergency Management Team cannot respond to at this time.

Are the e-mails you send for this work all subject to FOIA? Are you willing to put copies of all documents and reports you have made to the state available for the public to see? If not, why not. If so, when?

  • FOIA (Freedom of Information Act) applies only to government agencies. AA (Administrator Assistance) is not a governmental agency. However, AA is employed by a governmental agency, DUAB (Distressed Unit Appeals Board), pursuant to the statute. DUAB is ultimately responsible for the emergency manager, so these kinds of questions should be directed to DUAB.