By Michael Hicks
Plenty has been written about the Great Legislative Meltdown of 2018. I will only add that the state GOP seems to be unburdening itself from the vexing demands of a supermajority, while the superminority has no real plan to spare them that affliction.
Sadly, the outline for the May special session might be worse than the legislative session. For those unaware, the May session involves some no-brainer tax work, school safety funding and the rescue of two distressed school districts.
The proposed school safety funding comprises a boost of $5 million, which is less than $2,600 per school. The General Assembly should not reconvene to consider safety funding that is on par with a slightly ambitious bake sale. This appears unserious, and unseriousness is a good segue into the problems with Muncie and Gary schools.
One important lesson from the debacle of Muncie and Gary schools is that our state’s Distressed Unit Appeals Board does not possess the necessary tools for the lengthy takeover that both school districts require. Part of this is due to the toothless nature of the State Board of Accounts. However, a larger part of the problem is the astonishing lack of candor displayed by those who argue for the status quo. So, let me offer some unvarnished facts that might serve to focus attention.
Both schools are dead broke and facing certain budget declines each year into the distant future as enrollment continues to plummet. While Gary is suffering the limbo of litigation, Muncie must spend almost $10 million it does not possess on repairs. This must be done by summer’s end. If it does not, Muncie faces private lawsuits from bondholders, a potential suit by the Internal Revenue Service and the suspension of all state financing until the obligations of the referendum are met. No one has made clear this looming potential disaster. It is real and urgent.
Muncie Community Schools cannot obtain a private loan because it can barely make ends meet even after selling four schools, including one where about 15 percent of its students currently attend class. To be clear, Muncie cannot, and probably should not, repay this proposed $12 million loan. Let me offer a more reasoned approach.
Muncie School Corporation is in the grips of a death spiral of declining academic ranking, declining enrollment and declining funding. The governor has said this is not yet an urgent matter. He is mistaken. Every extra dollar must be spent on educating Muncie’s children and restoring confidence in the future. Even a talented emergency manager is an unstable arrangement. Now is not the time for more debt or moderate approaches. Muncie needs its schools and its schools need long-term stability.
If the state won’t take the stabilizing effort of placing Muncie Community Schools under Ball State control, it would be best to dispense with the charade. Simply call this loan for what it is – a bailout of MCS – and return the school to the elected school board. Do the same for Gary and let these communities succeed or, more likely, fail on their own terms. Half measures are no remedy here.
Finally, it is useful to place into context the size of the problem at Gary and Muncie schools. With the state poised to spend $30,000 per day on a special session, the superminority is gloating. Let’s put that in perspective. Given the beclowning opposition to real changes in Muncie and Gary schools, it is helpful to review the reckless status quo. To amass its current debt would have required Muncie Community Schools to overspend by $30,000 per school day for more than two and a half years. That is just how bad these school finances are, and why the time has passed for the politically comfortable middle ground.
Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University.