Evansville Vanderburgh School Corp. officials projected a loss of more than $2 million in money the district uses to pay for school buses and transportation services under a new law set to take effect this year.
However, legislation advancing in the Indiana General Assembly would give EVSC and 91 other school districts a reprieve from following the new law for three years.
Indiana school districts collect property taxes to pay for buses, building repairs and debt. But legislation passed in 2012 would require the bulk of a school district’s property tax revenue to go toward paying down debt, leaving fewer dollars for other items such as school buses and capital projects.
At present, school districts can use their debt service fund to help cover losses in property tax revenue due to Indiana’s tax caps, but the practice is barred under the “protected levy” law, said Dennis Costerison, executive director of the Indiana Association of School Business Officials.
“I don’t think anyone really realized the impact (when lawmakers passed the bill in 2012),” said Costerison.
EVSC is in line to receive relief because it stands to lose at least 10 percent of its transportation fund levy under the new law. The district will use the additional time to plan for the lower revenue and adjust expenses, said Carl Underwood, the district’s chief financial officer.
Costerison said exempting the school districts will allow them to function as they currently do through the end of 2016. He said the organization will continue to work toward a long-term solution to the “protected levy” law.
“This is a short-term fix to a long-term problem our hope is to work behind the scenes to get something of a long-term fix,” Costerison said.
Even without adhering to the new law, EVSC still expects to see about a $1.6 million loss to its transportation fund this year, comparable to 2013, Underwood said.
In the same legislation containing the reprieve for EVSC, the General Assembly is weighing a pilot program to give three Central Indiana school districts the ability to place advertisements on school buses to support their transportation fund. The finance director of Beech Grove Community Schools that will serve as a pilot district told Underwood advertising is really a “last resort.”
Underwood said while it seems like a great opportunity for those districts to get some of the revenue back, EVSC has not had conversations on whether to request the ability to advertise on its buses.
The district has a cash balance to help with losses to its transportation and other property tax-backed funds, but Underwood expects the district’s general fund — mainly used to pay for salaries — will eventually have to be used.
“We can’t withstand too many years of that before it starts to impact other funds,” Underwood said.
The legislation will now head to a conference committee where lawmakers from the House and Senate will work to finalize the bill before the General Assembly ends by March 14.