Debt service figures reflect EVSC's
Special to the Evansville Courier & Press
By DAVID COKER
March 5, 2004
The recent suggestion that the Evansville-Vanderburgh School Corp. could end the 2005
fiscal year with a surplus of $1 million may be welcomed news to citizens who remain
concerned about the school corporations parlous financial situation. However, this move by
the School Board appears to be a tiny attempt to hide an enormous problem that will ultimately
confront local taxpayers.
For the past several months, volunteers with the Vanderburgh County Taxpayers Association
have been examining the EVST debt situation and attempting to learn the arcane language of
local school finance. What they have learned is disturbing.
It appears as if the school corporation has encumbered the county tax base with more than
$150 million in debt service payments over the next two decades.
From fiscal year 2002 until the proposed budget for 2004, annual debt service payments have
increased from $2.9 million to more than $11.9 million.
This explosion in debt payments is part of the $182 million 2004 budget in which the EVSC
requested a $13 million increase in its annual tax levy, still pending a decision by the state
Department of Local Government Finance.
These debt payments included the recent $50 million Vocational Technical School bond (total cost
more that $77.3 million through 2022) and a recent $30 million severance bond (total
payments $39 million by 2011). On these two debt instruments alone, taxpayers will be required
to pay more than $36 million in interest through 2022.
During the past four years, this debt service has included $116 million in "warrants" issued through
the Advanced Funding Credit program -- short term borrowing issued for one year in annual
amounts up to $37 million this year -- operated by the Indiana Bond Bank. It was apparently
necessary for the EVSC to receive nearly a third of this money on January 2 simply to pay
salaries and keep the school corporation running.
It is interesting to note that while school administrators requested that this funding be received
shortly after the first of the year, the first $986,660 installment on the Vocational Technical
bond was due Jan.15, giving the impression that EVSC is borrowing money against future.
tax receipts simply to make other scheduled debt service payments.
Beyond all this, the minutes of the November 24th School Board meeting record a discussion
with Ed Chang, former Evansville Teachers Association president, regarding an estimated
$168 million in unfunded pension obligations. This obligation does not include what are
termed "uncertified staff" so the real total is even larger that this staggering figure.
While all of this remains among the community's dirty little secrets, one cannot help
but wonder if a local school system awash in so much red ink will eventually have a long-term
local economic development impact.
Likewise, when one looks across Indiana, fro a state policy perspective one must question
the wisdom of using all this local debt to finance local education.
Much of the blame rests with the General Assembly and the O'Bannon-Kernan administration.
They have repeatedly failed to live up to their obligations to fund local schools and have
created incentives to local districts to borrow all this money.
At the root of the problem is this state's institutional reluctance to move away from using
our antiquated system of property taxation to finance such a large percentage of local
school expenses. With these enormous debt service payments looming -- and the ominous
local demographic trends -- property taxpayers stand to lose even more in future years if
the tax system is not changed.
Its time to stop the finger-pointing and rhetorical bluster. It is time for state policymakers
to give serious thought to solving this financial mess they have created for the taxpayers.
David Coker is the president of the Vanderburgh County Taxpayers Association.
His email address is oldcars55@ aol.com.