Reorganization back on table for Harmony, Van Buren schools

KEOSAUQUA - Suddenly, reorganization between Van Buren and Harmony school districts is in the picture and back on the table.

All it took was a glance at a financial estimate and spotting the $2 million improvement to the bottom line from reorganization.

Both school boards moved closer to reorganization last week, as Harmony and Van Buren agreed to form a citizen committee that will come up with three names for the reorganized school district.

And if the boards can?t come to agreement then, a name would be chosen at random, using the three names recommended by the citizen committee.

Van Buren and Harmony school boards met June 21 for a joint board meeting, something they have been doing on a quarterly basis after both districts approved a whole-grade sharing agreement, set to begin its second year this August.

Both sides agreed to begin reorganization talks last  January, but talks quickly hit a snag at the last quarterly meeting in March after Harmony and Van Buren could not agree on the name of the new district and the process to decide mascot and colors.

Something that was placed ?off the table,? was put back on the front burners last week after both school boards digested the financial implications of reorganization versus doing nothing or waiting another year.

Van Buren Superintendent Dr. Pam Ewell said after the March meeting, which put the reorganization talks on hold, she decided to look closer at the financial implications of merging the district and concerns she said of the ?funding cliff? if the districts wait too long.

She knew the ?cliff? would come after the 2019 fiscal year and worked backwards and concluded that in order to avoid the funding gap, both districts would have to restart the process this summer, or face serious budget shortfalls in fiscal year 2020.

In order to continue receiving the three-year sharing money, both districts must demonstrate to the State of Iowa Department of Education that they are working towards reorganization, Ewell said.

?We can?t wait until September to begin talks of reorganization,? Ewell said, ?otherwise we have a gap year in funding.?

The goal, she said, would be reorganization by July 1, 2019, to avoid a gap in state incentives.

After each school district provided important enrollment and current financial numbers, financial advisor Gary Sinclair plugged in certain assumptions about enrollment trends and estimated state aid to generate a five-year forecast for each district and a reorganized district.

It turns out reorganizing sooner than later will increase the unspent authorized budget in the new district, a critical sign of financial health for a school, by more than $2 million by 2022, than if both districts stay separate, according to Sinclair.

Nearly all of that comes from the $1.5 million in state incentives for reorganization.

The new district, by 2022, would have $4.1 million in its unspent authorized budget, Sinclair estimates, using current assumptions regarding enrollment trends, expected increases in transportation costs and staffing levels needed to run the new district. That compares to $2.1 million the new district is expected to have in FY20, the first year possible for a reorganization.

While those assumptions which drive the estimates will change over time, ?this gives you a snapshot four or five years out that really helps you make informed choices today,? Sinclair said. Sinclair also pointed out benefits of whole-grade sharing to both districts, especially Van Buren, which will grow its unspent authorized budget.

from $663,000 this year to $1 million in next year?s budget.




the new district should be in solid financial footing when state incentives are taken away, Sinclair noted.

In addition, property taxpayers in both districts should notice a sizable reduction, Sinclair estimates, especially in the Harmony district.

In the current budget year, Harmony property taxpayers have a tax rate of $18.8951 per $1,000 valuation and Van Buren taxpayers have  a rate of $13.3754.

However, if both districts reorganized, Van Buren taxpayers will pay an estimated rate of $11.9 by 2022 and Harmony even less, due to higher property tax incentives available for smaller districts.

In essence, Harmony property taxpayers can see a reduction of 40 percent off their property tax bill by 2022, Sinclair estimates, and Van Buren can expect a 10 percent reduction off their  school district tax rate.

Even without reorganization, both districts could see property taxes decrease- although by a smaller percentage, Sinclair said. That?s because both districts have taken steps to better their financial position and Harmony, after the joint meeting, voted to redeem bonds on their debt service four years earlier, which will drop the property tax asking after the fiscal year 2018 budget, according to superintendent Kerry Philips (see article inside).

Harmony reduced positions and ?Van Buren added a lot of students through whole-grade sharing without greatly increasing salary expense,? Sinclair said.

However, many of the improvements will be wiped away by 2019, Sinclair said, the last year the state will give each district ?supplementary weighting? to encourage the whole-grade sharing agreement.

After that, Harmony will expect to deplete all of their unspent authorized budget by 2022 and Van Buren would have around $2.1 million, half of the $4.1 million a combined district is expected to have.

Not being in solid financial shape impacts academics, Sinclair said.

?School districts usually become educationally bankrupt before they become financially insolvent,? Sinclair said. ?Usually they have too much pride and you can only cut so much before you hurt academics.?

Ewell stressed that even with reorganization beginning on July 1, 2019, ?the new district should not overdo it with hiring and salary increases, because in 2022 the incentive money ends.?

Sinclair?s estimates prodded both boards to seriously consider reorganization work towards an amicable solution on the important differences that stalled the talks in March.

?I think this shows how much both districts need each other,? said Harmony board president Dan Smith. ?It becomes black and white with the data. We didn?t have that before.

?It is very clear that we are better together than apart,? said Harmony superintendent Kerry Phillips.

?We owe it to our kids to remain a vibrant school,? Ewell said.

But she admitted that the ?big elephant in the room? is what to do about school name, mascot and colors.

The boards found a way to move forward.

Ewell recommended that each board appoint a special citizens advisory committee on the issue of school name and other issues that might crop up.

Ewell said before the boards could tackle other issues facing them concerning reorganization, it would have to deal with what to name the new district.

?You can?t have a petition,  you can?t have a vote without telling voters the name of the new district,? Ewell said.

?Having a citizens advisory committee would decentralize the emotions and keep it from this group (both boards),? Ewell said. The state Board of Education even anticipates such committees during reorganization or whole-grade sharing process, she said.

It would be up to each board to agree on the parameters of the committee.

Van Buren board member Bob Steingreaber said that before he would support a committee, there needed to be a fallback in case the boards were still deadlocked.

He suggested the committee come up with list of names the boards would consider and if the boards can?t agree, then ?put the names in a hat and  draw one out.?

He sited the example of Ixonia, WI, which was named in a similar way when the residents could not agree on a name in 1841. The name was chosen by drawing letters at random.

?All I want to do is whatever it takes to get a yes vote in each school district,? Steingreaber said.

The parameters of the committee became the main sticking point last week. However, this time, each board compromised and voted to form the advisory committee, made up of one person from each director district other than at large districts.

Cody Warth, who voted against the motion for a committee, said she wanted to make sure the committee would be required to come up with a name that ?didn?t include Van Buren, that didn?t include Harmony.?

Steingreaber said his study of reorganizations showed that in a majority of cases, at least one of the names of the previous district was used.

?Sixty-four percent included both names, 10 percent did letters of the combined district and 10 percent used the name of the larger district. Very few did a new name. However, whatever gets us to a yes vote, that?s what we need to support.?

Van Buren board president Rick Plowman and board member Jayne Wells said both have heard complaints from patrons in the former Fox Valley school district, if the district changes the name.

?Residents of the former Fox Valley district told me they made one change and they are proud to be a Van Buren Warrior, why do we have to change again?? said Wells.

Harmony board president Dan Smith said that if the Harmony patrons were asked to vote on reorganization without a name change, before mascot was chosen, ?there would be a sense of insecurity in their vote.?

Other Harmony board members said a school name was important to the kids of the district and that colors and mascot ?do matter.?

Plowman said there could be push back from Van Buren patrons on a name change.

Ewell said her recommendation is ?not tie the hands of the committee, see what they decide and come back with. What do we have to lose??

Phillips suggested having the advisory committee hold at least one public meeting where input could be made.

Van Buren board members asked the cost, should the mascot and colors be changed.

Bob Steingreaber suggested that if there was a change, uniforms could be phased in whenever the district has to replace them.

?That?s what we said before,? said Warth, ?it doesn?t have to be immediate.?

Andrew Lydolph suggested that any new school colors incorporate one or more of the colors of at least one district.

?That way, instead of repainting two buildings, you repaint just one,? Lydolph said.

Van Buren board member Sheila Parsons said she would be uncomfortable ?dictating to the committee? what they could or couldn?t do.

In the end, each school board passed a motion that was originally made by Van Buren board member Andrew Lydolph, to set up an advisory committee made up of five members of each district. This committee, which would be facilitated by a representative of the AEA, would be tasked with coming up with three names by August 16 for each district to consider. If there would be a deadlock, then one of those three names would be chosen at random. That name would be the one used on any petition used for reorganization.

?The committee might come up with something new, we don?t know,? said Lydolph.

Harmony board member Joe Kite said he was willing to move forward using this plan.

The motion passed unanimously by the Van Buren board and 3-1 by the Harmony board, with Cody Warth voting no.

The committee will meet July 5.