By: Todd Smekens
BLOG – Several months ago, the credit grading services of Standard &Poors (S&P) downgraded the school systems credit rating by four notches. That’s not good news. This comes on the heels of losing nearly $5 million in revenue as a result of declining enrollment. The primary reasons for the downgrade are:
The downgrade reflects S&P’s view of the school district’s depleted reserves in key operating funds; long history of operating deficits; backlog of unpaid bills and inter-fund borrowing; very limited opportunities for growth in property tax revenue; declining enrollment; and low household incomes in Muncie.
I already covered the financial problems here even though we have a large swath of Muncie residents blaming the current superintendent. MCS has been living beyond its means for decades. The union controlled the school board members and the administration. The district maintained too many schools with too many teachers benefitting the teachers and the students but defied reality. In order not to bounce payroll, the administration took money from funds dedicated for other purposes. Time ran out and now the state handles the finances for now.
However, buried in the S&P report is this pertinent nugget:
Nearly 49 percent of assessed value in the district is tax-exempt due to the presence of two large not-for-profit entities (Ball State and IU Health Ball Memorial Hospital). In addition, development opportunities are minimal due to economic challenges, so tax growth opportunities are limited.
Nonprofits Are Killing Muncie
Yes, in my city district alone, tax-exempts own over 60% of the property meaning the city and schools get no financial support. As I’ve recommended for years, Muncie needs a Payment in Lieu of Taxes (PILOT) which can be assessed against the commercial non-profits like IU Health, Ball State, Meridian, and YMCA to name a few of the bigger ones. Many locals recommend a user fee on churches in Muncie. It may require a state law, but everyone should pay for local government services. The fire department will show up to a dorm, office or church if 911 is called.
Compounding this problem is corrupt Democratic officials have developed slush funds by creating TIFs all over Muncie siphoning off revenue growth from local government entities like the school district. This is done in the name of “economic development”. Nonsense.
According to a 2015 Ball State study:
Local governments appear to be shifting the tax burden from TIF to non-TIF taxpayers to maintain constant levels of public service, Faulk said.
Are you beginning to see the picture?
We have a plethora of nonprofits not contributing to the tax base coupled with a corrupt local government using TIF dollars to create pockets within the community which drain away jobs and resources from non-TIF areas. To pay for the bonds they float, the TIFs capture future tax revenue which steals dollars away from the school district.
It’s a wicked jab and right hook against local schools and homeowners. It’s also why the propaganda media in town works overtime to create the facade of goodwill. When the state orchestrated the theft of Northside Middle School which was recently executed by the emergency managers hired by the state, it adds further insult to injury.
Muncie is redefining the concept of the “serving the public interest.” The number of nonprofits isn’t an accident either. More on this in coming articles.