Fact finder blasts MCS, rules for teachers
MUNCIE, Ind. —
An independent fact-finder has ruled in favor of the Muncie Teachers Association after investigating a collective-bargaining deadlock between teachers and financially unstable Muncie Community Schools.
Fact-finder Sandra Jensen's 30-page report is a blow to the credibility of MCS's leadership. She repeatedly blisters Superintendent Steve Baule and the school board for inaccurate information, "unfounded" claims, lack of documentary evidence and a likely attempt to "create an artificial appearance."
Jensen called the school board/administration’s proposal “a patchwork of ideas and concepts that do not appear to have been thoroughly vetted.” She also says MCS’s reaction to the “extraordinarily difficult financial position” that it “created for itself” appears to be “haphazard and disorganized.”
The fact-finder was appointed by the Indiana Education Employment Relations Board to select one party's "last best offer" (LBO) as the binding labor agreement. She accepted the teachers' game plan.
"Without doubt MCS is facing significant consequences for past mishandling of financial resources," Jensen wrote. "The fact-finder clearly understands MCS's interest in improving its financial situation and building a small surplus for emergencies as quickly as possible. However, it is imprudent for MCS to act in such an aggressive manner to effect its financial recovery."
Pat Kennedy, president of MTA, told The Star Press: "No one is refuting that MCS has debt that needs to be erased. Erasing the debt all at once is not mandated by the state. We can take a more moderate approach that will preserve the quality of this school corporation as well as meet the needs of the community and its children. Allowing the board to continue with its scorched-earth approach to reducing debt will result in major negative consequences for this community."
MCS on Saturday issued a statement that read in part: "The fact-finder’s decision, which we hope will be overturned on appeal, leaves MCS in potentially the most perilous fiscal situation in the state. MCS will renew its efforts to reach out to all entities that can potentially be of assistance and would urge each individual to do the same. Difficult decisions to reduce MCS’s physical footprint will need to be made shortly. MCS still holds out hope that the community will be able to work together to move forward towards the vision of a digitally rich instructional environment that educates the whole child and provides children and their families the resources necessary to be successful today and throughout life."
Jensen acknowledged that the school district's financial condition must be stabilized. However, she found that MCS did not engage in deficit financing.
"In fact, the fact-finder concurs with MTA's conclusion that during FY 2016, MCS actually accumulated a surplus of $4,094,581 that should have applied to MCS's considerable deficit," Jensen wrote. "The evidence available substantiates MTA's position that its FY 2017 LBO … creates a budget surplus for FY 2017 of approximately $1,907,176."
Neither party's LBO would result in deficit financing, defined as "actual expenditures exceeding the employer's current year actual general fund revenue," Jensen determined.
The evidence established that the school district's FY 2016 teacher expense was $28.4 million, and the total non-teacher expense was $10.7 million, for total expenses of $39.2 million compared to FY 2016 revenue of $43.2 million.
"I want the community to understand that although this is a victory for teachers in Muncie, every teacher will be absorbing financial losses even through the MTA's last best offer," Kennedy said on Saturday. "There are no salary increases and teachers will pay more for insurance. In addition, every teacher loses professional development dollars and extra pay for additional duties — teaching an additional period per day at secondary schools."
Jensen did find huge problems with $10.7 million in general obligation bonds issued by the school district in 2014 for renovations and upgrades at numerous school buildings.
At a meeting on March 7, MCS's then-chief financial officer Bruce Perry said the actual cash from the bond sale had been put in the schools' main bank account and has been used to cover operating expenses, including salaries and benefits.
"MCS's use of these funds for purposes that may result in the voiding of the general obligation bond has created the serious financial obligations facing MCS presently and also creates questions regarding MCS's integrity and its modeling of district principles of transparency and ethical behavior with respect to financial concerns," Jensen ruled.
"MCS's failure to meet its financial obligations will cause a decrease in its bond rating and a likely increase in taxes to pay the debt," the fact-finder reported. "Furthermore, this mishandling of financial resources will potentially decrease MCS's ability to obtain tax anticipation loans at favorable interest rates."
MEET THE FACT FINDER: Who is Sandra Jensen?
MCS represented to the fact-finder that it is operating on an $11 million deficit and "must save approximately $3,000,000 in cash reserves from February 2017 through June 2017 and continue to save approximately $600,000 to $500,000 monthly through the spring of 2018" in order to meet its obligations on the $10.7 million bond issue by the deadline of April 2019.
"While it is important that through this fact-finding that MCS is placed on a path toward financial stability, MCS's stated need to save an additional approximately $5,000,000 by spring 2018 is a matter to be determined in FY 2018, which is beyond the scope of this fact-finding," Jensen determined.
She called the school district's reaction to the financial difficulties that it created for itself "haphazard and disorganized." "Numerous MCS claims lack appropriate and necessary support … as well as completely unsupported claims … MCS has simply failed to present these concepts in a logical and understandable manner … By all accounts MCS accrued a surplus of approximately $4 million in FY 2016 and MTA's LBO purports to create a surplus of approximately $1.9 million in FY 2017 …
The fact finder did determine that MTA underestimated its membership of only 330 teachers in FY 2016 and 310 for FY 2017, compared to the school district's accurate count of 445 members and 408 members in 2016 and 2017, respectively.
The Indiana State Teachers Association on Saturday said MCS's proposal "would have been catastrophic to Muncie teachers and likely would have led to hundreds of teachers leaving Muncie schools, leaving many kids without a qualified teacher."
“Congratulations to MTA President Pat Kennedy, MTA's officers, bargaining team, and MTA members for staying strong throughout this process,” ISTA President Teresa Meredith said in a statement. “Although there are still tough times to come, ISTA stands committed to MTA and its members and will continue to fight for Muncie teachers.”
Kennedy said: "Our goal was to submit an LBO that cut expenses but allowed teachers to remain in Muncie and make a livable wage. Throughout the report, the fact-finder noted that MCS presented concepts and financial figures that did not appear to be vetted and lacked data to support them. These comments are indicative of the frustration MTA has felt for the last 20 months with financial and health insurance information being communicated by MCS to staff and … the general public without appropriate data to support claims being made."
After both sides submitted their LBOs to the Indiana Education Employment Relations Board, MCS was advised that its LBO was not even fully compliant with all of the submission requirements. MCS was given 24 hours by the IEERB to correct the deficiencies.
The school administration has said several potential school closing scenarios would be shared with the school board after the fact-finder's decision.
Sarah Cudahy, director of the IEERB, said the next step is presentation of the fact-finding order to the IEERB, which may make additional findings and recommendations. The parties have 30 days to appeal to the IEERB Board. If appealed, the IEERB board will hear the case at a public meeting. After the public meeting, the IEERB board would issue a final order within 60 days from the date of appeal. The final order also can be appealed in court. The contract impasse is over the 2015-16 and 2016-17 school years.
Contact Seth Slabaugh at (765) 213-5834.