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State board denies funding

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By Kevin Koelling, Managing Editor

Cannelton school superintendent calls it a setback, says he's moving forward

INDIANAPOLIS - Cannelton City Schools Superintendent Al Chapman had hoped to convince one more member of the Indiana Board of Education to bless his attempt to correct financial problems that had built up before he took the job. The board voted instead to disapprove his request Wednesday and suggested he seek help from the General Assembly.

As The News reported Oct. 23, Chapman defended at an Oct. 1 meeting of the board his efforts to defer corporation debts and make energy-saving renovations to the city's high school by issuing up to $2.8 million in bonds and, in an effort to cut interest costs, borrowing from the state's Common School Fund.

The debts had mounted through previous borrowing uncovered, he explained in the past, when he took the job and began converting to a computer-based accounting system. The school system has also had to repay state funding after student populations were found to have been inflated for a number of years.

The state education officials expressed concern at the October meeting that approving Chapman's request would violate a 1959 law enacted to prevent school corporations from running up debts that would make consolidations with other systems undesirable.

Chapman took 33 letters of support containing nearly 1,100 signatures "and one great big sign that was made by students," he told the state officials. In addition, the students "are all sitting at home in their black and gold," he said, "and they had a voluntary prayer session at 3 o'clock yesterday after school let out. They believe in the school corporation and we believe in the school corporation."

"We" included school-board President Bill Garrett, who attended the state meeting with Chapman.

"We've been working very hard in our school corporation to bring change, to bring the kind of movement progressively, economically that's been needed there for some time," Chapman said at the meeting, of which audio and video recordings are available at http://media.doe.in. gov/sbe/2008-11-05.html.

Chapman mentioned at the previous meeting he'd been working to cut spending.

"I didn't realize the dollar amount, but I knew it had been quite a lengthy road that we had traveled," he said at the recent meeting. The cuts totaled $792,000, he said. "That represents a third of our budget that we've cut. That's not just a superintendent talking about cuts. These are real people."

Despite those drastic measures, "we are providing the things we need to provide our kids," he continued. "If you look at ISTEP scores on the DOE Web site, you'll see we've been progressing every year."

The state board had asked Chapman to provide financial information to help them make their decision. Five members voted at their Oct. 1 meeting to support him, one shy of the number needed.

Chapman told them this month the projected cash flow for 2009, boosted by a gain in student enrollment and changes to the way state funds are provided, looks better than it has for years.

"We're looking at about a 14.6-percent increase," he said, "which is significant dollars for us. We have not received a gain like that for some time."

"Students come to our schools for one reason," the superintendent told the board. "They know they're going to get small numbers in classes. They know they're going to get individual attention and they're going to be cared about. That's what these letters say."

One board member asked Chapman how much he expects the school corporation to grow over next five years.

Chapman replied that census information shows an average of 20 to 23 children each year in groups up to 5 years old.

"That seems small, but it's a little above average for us," he said, adding that growth could range from 5 to 10 percent. "If we get less, we would have to make the necessary cuts, but ... we have no indication that that's going to happen."

Another state board member noted the Cannelton school system's financial circumstances are complicated.

"I don't think any of the existing laws contemplate this situation," he said, adding that if bonds aren't issued, the corporation may face municipal bankruptcy. "I would prefer to keep an option open to deal with it," he said. "I don't want the state to be in position where one of its municipalities is in bankruptcy. This really is something that requires legislative relief. ... I would ask the district and the board of representatives to talk to the legislator to see if they cannot work through the legislature, an issue not only for this instant case, but what if there are other districts similarly situated? How would the state want to deal with this, because one of the other issues is even if you look at consolidation, who is responsible for the debt? Who has the authority to issue the bonds? Do you make it a condition of merger and consolidation? Those are legislative issues that need to be addressed by the legislature."

"If the legislature doesn't act," he continued, "we're in a situation where we have to deal with the issue of what do we do if we say no, and the impact that's going to have on the school district. I'm not inclined to feel pressure to make a decision today."

He suggested the issue be tabled as legislative relief is explored.

Another member opposed a tabling, suggesting the issue be withdrawn. Allowing it to remain under consideration could signal either an endorsement or negative board opinion, he said.

"I'd rather be clear," he said. "This is a district ... in desperate financial circumstances. When I look at the cuts, they've cut muscle. They've cut teachers. They've cut educational leadership. They've cut the engine that drives learning, and to leave on the table the possibility of a bond that basically builds a building but leaves all that yet unremedied, to me, is really a problematic decision."

"If they want to leave it on the table, I'd just as soon reject it and let them go to the legislature with the fact that we've rejected it. They can say they've exhausted their remedies, to use a legal phrase. If they want to go neutrally, I'd suggest they withdraw."

Chapman said Friday he was disappointed in the board's disapproval, but he doesn't foresee bankruptcy in the system's future.

"The tax money that is yet to come in will bring us to a pretty good situation to the end of the year," he said. "We'll have everything caught up except having the banks repaid and repayments for the overcounts."

Of the home-based support he felt while in Indianapolis, he said, "the parents and kids were great. They put in a lot of time and effort, and they did those things on their own."

A legislative remedy is possible, Chapman said, and representatives are aware of the issue. While he said he was advised not to discuss specifics, "we will continue to move forward," he said. "There's been a lot of speculation about what might happen, but we plan to stay open and continue to move forward."

"This is a setback - that's how we're looking at it," he said.