News From Terre Haute, Indiana

November 23, 2013

Volatile combination: Declining enrollment, high costs

Sue Loughlin
The Tribune-Star

TERRE HAUTE — Northeast Sullivan School Corp. is spending more money than it is taking in, something that can’t continue, district officials say.

The district is dealing with declining enrollments and less state funding.

In recent years, the district has responded to budget concerns by cutting staff and programs, to the point where families are sending students to other school districts that have more to offer.

It has laid off 16 teachers. In addition, five who retired weren’t replaced. The district has cut art, music, physical education and band programs at the elementary level; the district doesn’t offer “shop” classes and only maintains limited career/technical programming in high school.

In the four elementary schools, there is only one teacher at each grade level, except for second-grade at Farmersburg Elementary, which has two teachers.

“There’s nothing else to cut,” superintendent Mark Baker said recently. The district must now consider a reorganization plan that would “get more kids into fewer buildings.”

A recent feasibility study, presented by the board Nov. 11, calls for closing both Union and Dugger Elementary. Two elementaries would remain: Hymera and Farmersburg. Shelburn Elementary would be closed, and instead it would become a 6/7/8 middle school, serving the entire school district. North Central would serve as the district’s sole high school.

What the board actually plans to vote on remains unclear.

On Monday, the board will hear from two groups, Save UHS [Union High School], which wants Dugger/Union schools to remain open, and Save NESC [Northeast Sullivan School Corp.], which supports the reorganization plan outlined in the feasibility study.

The board is expected to take action at its Dec. 2 meeting.

The dilemma

Nobody wants to close schools, Baker said.

“We’re at a point where something different needs to happen. The way we’re operating, we can’t continue to operate or we’re going to be out of money,” he said. “They [School Board] have a very tough decision to make.”

If the district does nothing, it won’t be able to pay its bills and it would be subject to state takeover, he said. “If that happens, you’ve lost control.”

Over the last five years, the district has lost 150 kids, representing more than $6,000 in state funding per student. Total district enrollment is 1,290 students.

During that same period, the Northeast general fund budget has declined $1.8 million — from $11.1 million to $9.2 million this year. The cash balance has declined more than $300,000.

The district can’t continue to spend down its cash balance, he said.

Also, the cost to operate Union High School is high, compared to North Central, district data indicates.

Union, which dates back to 1921, has 172 students this year and the cost per student by building breakdown is $9,170. North Central, with 484 students, has a cost per student of $5,891.

The district receives about $6,099 per student. Union is operating at a net loss of $528,212 this year, according to the school district.

The district takes out a $1 million temporary loan each year to meet cash flow needs, Baker said. Such temporary loans “are pretty common practice” for smaller districts, he said.

Compounding the problems is that cutbacks in programming may be prompting some students to go to other school districts.

A few years ago, the district had to cut its certified staff in art, music and physical education at the elementary level. Now, an instructional aide provides structured activities in each of those areas, under the supervision of the classroom teacher and principal.

Band and art teachers divide their time between Union and North Central high schools. The district has one media specialist, who oversees instructional aides in each of the buildings.

This year, about 90 to 100 students who live in the Northeast district are attending Southwest Sullivan schools. That represents more than $500,000 in lost revenue, Baker said.

The Northeast board hopes that by reorganizing, it will be able to save money and hopefully bring back some of the programs the district has had to cut, Baker said. It also hopes to add career/technical programs at the high school level and related introductory programs at the middle school level.

By strengthening programs, “We’re hoping we can get some of our kids back,” Baker said.

The district has focused on keeping all the buildings up and going, but to do so, “We’ve had to cut programs and staff,” Baker said. The district is now down to barebones staffing. “We can’t cut any more staff.”

In making a decision about reorganization, the board must act by next month, Baker said. If it decides to close any schools, those principals must be notified by Dec. 31 under the law.

More complications

If Union High School and Dugger Elementary close, the majority of people affected will probably send their kids to schools in Linton or Sullivan, which are closer but in separate districts: Linton-Stockton and Southwest Sullivan.

Linton-Stockton High School is about seven miles away, while Sullivan High School is about 10 miles away. For some living in the southernmost part of the Northeast district, North Knox school district is closer.

That also has implications for Northeast School Corp. If those students leave, so does the state funding — which may limit some of the program expansion at Northeast.

It also has implications for employees of the schools that close. If those students stay in Northeast, “Most people would keep their positions,” Baker said.

But if those students leave Northeast, the district wouldn’t have the funding to keep the same number of teachers.

Some residents have asked if consolidation with Southwest Sullivan School Corp. might be an answer to Northeast’s fiscal dilemma. “At different times people bring that up,” Baker said.

Fairly recently, Southwest was “informally” approached about the possibility. “At that point, they were not interested in meeting with us,” Baker said.

Chris Stitzle, Southwest superintendent, said that at this time, “I don’t think the [Southwest] board has a lot of interest.”

Southwest has had some financial difficulties of its own and has had to drop some programs over the years because of budget and enrollment issues. “I don’t think they [Southwest board members] see an advantage to joining forces,” Stitzle said.

The Southwest financial picture is improving, Stitzle said, and “we hope to end this year with a positive cash balance.”

State funding dilemma

Changes in the state’s school funding formula have not been kind to small, rural school districts.

The state’ philosophy and policy now is that money follows the child, said Dennis Costerison, executive director of the Indiana Association of School Business Officials.

Gone are guarantees in the formula that a district’s funding won’t decline from one year to the next.

Also gone is the so-called “deghoster,” which provided that even if a district lost enrollment, it didn’t lose all of that funding in one year. The funding loss could be spread out over several years.

“Those factors are no longer in there,” Costerison said. Now, “When you lose students, you lose money. It’s pretty simple.”

And many rural districts are losing enrollment. And funding.

Those forces might cause more smaller districts to consider consolidation, he said. They may find they can operate more efficiently and provide better programs if they do.

Sue Loughlin can be reached at 812-231-4235.