Caston schools superintendent Douglass outlines finances as it loses enrollment

In her 4-square-mile block of the Caston countryside, children spilled out of every house and onto the bus.

Last year, in that same block, one child boarded the bus. That was Eli Douglass, her son. And he has now gone on to college.

That drop in population, Douglass explained Thursday, is one of the reasons rural schools – having seen a loss of small family farms and corresponding local income – face a funding shortage these days.

Schools receive money from the state to support the educational process based on student population.

Caston isn’t in dire straights yet, but since 2013 it’s chipped away at its general fund cash balance, to the tune of $1 million. When that’s gone, changes will be necessary.

Douglass was making her State of the School address. It followed a Fulton County Chamber of Commerce Business After Hours there.

Loss of population isn’t Caston’s only problem.

Three major state decisions since 2008 have significantly impacted public school funding, she explained.

The first was the shift from real property taxes supporting school general funds to the state’s takeover of general funds and using sales tax as the source of that funding.

Second, former Gov. Mitch Daniels cut $300 million from public school budgets in 2009 and that funding has never been restored.

Third, property tax caps in 2010 further cut the amount of revenue schools could generate for their other funds.

In addition, Douglass said, state funding to charter schools hasn’t helped one bit.

She quoted an Indianapolis Star newspaper investigation that found charter schools reap $665 per student more than traditional public schools. Indiana’s voucher program – allowing public school students to switch to charter and private schools and take funding with them – now covers 40,000 students and uses $260 million that previously went to public schools, Douglass said.

Caston’s state funding has dropped from $4.9 to $4.2 million since 2009. Its enrollment has dropped 700 students since the 2008-2009 school year.

Losing just 10 students is losing the amount of money it takes to pay a full-time teacher.

But those students, when they move or leave the district, are from across all grades. “It is very difficult to reduce your cost of running a school,” Douglass said. “You get to the point where you’ve cut whatever you can cut.”

For the later grades, cutting staff normally means cutting a program. “At the high school, if you cut a teacher you cut a program, which you don’t want to do.”

Caston does have a historically healthy cash balance, and it has low debt. In fact, Douglass said, “We have some of the lowest debt of school corporations in the state.”

She sees a new way of separating school money that begins in 2019 as a further challenge. School districts will have four separate funds within their budgets instead of six. They’ll keep debt service and rainy day funds as they are. general fund will become the new educational fund. The new operational fund will include the present transportation, bus replacement and capital projects funds.

The state will fully support the educational fund, but what that money can be spent on will be more limited in scope.

Some things that now come out of the general fund will have to come out of the locally supported operational fund.

Douglass estimates Caston will see $750,000 of expenses – all custodial staff and supplies, central office staff, utilities, property and liability insurance, building and grounds maintenance and supplies – switched to the local taxpayers’ responsibility.

The need for additional revenue, Douglass said, can be satisfied one of two ways: by assessing higher property taxes; or by increasing the assessed valuation of the corporation with the addition of manufacturing or large businesses, new housing additions or other increases in the value of real property.

“Something that would suddenly increase the value of our corporation,” Douglass said. She didn’t specifically mention a wind energy system, but did talk about that after the meeting with Fulton County Commissioner Steve Metzger.

Douglass said she didn’t believe revenue from a wind farm would hurt the corporation’s ability to raise taxes because the new legislation that takes effect in 2019 calls for maximum levies. It could only help.

If revenue doesn’t increase, the alternatives are cuts in staff, finding private or foundational financial support or consolidation, either with another district or in services and resources.

“We could cut programs. We could expenses. But we all know the result of that. It’s not good outcomes for our kids,” Douglass said.

Consolidation, she said, will probably never be forced. Conditions, however, may require it although it’s more likely schools will begin to find ways of consolidating services.