An underlying tension filled the Chesterton High School auditorium on Monday night when more than 230 community members turned out to hear details of a possible referendum to raise funds for Duneland Schools.

Duneland Superintendent Dirk Baer tried to cut the tension before getting down to business. “I’m hoping you all are in good spirits assuming you are all Giants fans,” Baer said and quickly changed the topic to the elephant in the room, the possible next step school officials will take to relieve the financial strain put upon them by the state legislature.

“We’re at a precipice, at the edge of a cliff, through no fault of our own,” he said.

Monday marked the first of two input sessions the Duneland School Board is holding this week to exchange views with residents on solutions to the impending school funding crisis.

The board will hold a meeting Monday, Feb. 13, where action will be taken on whether or not to file for a referendum to allow a property tax.

School officials presented two slideshows explaining to the community how the crisis came to be. While many factors played a part, the problems started in 2008 when the Indiana General Assembly ruled the state would be the sole source of money for school districts’ General Funds (GF) instead of using local property taxes.

School funding now comes from an additional one percent increase in state income tax paid by all Hoosiers.

By chart, Assistant Superinten-dent Dave Pruis showed that Duneland raised close to $42 million for the General Fund in 2008, which has dropped more than $7 million since.

Enrollment in the Duneland Schools rose close to 5,900 three years ago but numbers are shrinking slightly due to students leaving to go to charter schools. The count this year is down to 5,725. The state determines funding based on official enrollment with the fewer students, the deeper the cuts.

The state gives Duneland $4,971 per student through its formula, close to the “bottom of the barrel”, with Duneland ranking 23rd to last in the state, said financial advisor Curt Pletcher of Umbaugh & Associates. The amount is exactly the same for Discovery Charter School in Chesterton.

The state average is $5,664 per student this year and many high performing schools are seeing the deepest cuts.

Meanwhile, the Gary School systems gets the top amount in the state: $8,411 per student.

Duneland has four categories of funding: the General Fund, Debt Service, Transportation and Capital Projects.

Baer and Pruis made it clear that the funds are set up for specific uses and that by law no money can be transferred from one fund to another.

Pruis refuted the misconception that the new $750,000 synthetic turf athletic field was paid for with General Fund money. None of the money came from the GF, Pruis said, as it was paid for with a mixture of Rainy Day fund money (much was money left over from the Capital Projects fund) and various community groups which raised more than $100,000 for the field, most notably the non-profit Friends of Duneland Youth.

Pruis added the new turf field is now used five and a half times more by the school and community compared to Fall 2010. A fact sheet made available to the Tribune showed 194 activities on the field in 2011 vs. 37 in 2011 including 35 community activities vs. none in 2011.

Pletcher presented three options the board could choose from if a referendum enacting a property tax is pursued.

The three possibilities consist of a 22-cent, a 25-cent and a 33-cent option for each $100 of assessed value.

For a home with an assessed value (AV) of $100,000, the amount on which tax is paid is whittled down to $32,750 once the homestead deduction of $45,000 kicks in followed by $19,250 in supplemental deduction and possibly more by mortgage deduction.

The taxable amount would be $32,750. The formula then divides that amount by $100 -- $327.50 -- and multiplied by 22 cents would equal about $72.05 annually, or roughly $6 per month. For the 25-cent option, the amount would be $82 annually and 33 cents would bring in $108 per year on a $100,000 home.

The average AV for a home in Duneland is approximately $178,800 and with the 22-cent increase, the homeowner would pay approximately $185 additional per year, Pletcher said, or $15.39 per month.

The tax rate would be in effect for seven years, from 2013 until 2019.

As printed Friday in the Chesterton Tribune, the language for the referendum would appear as this on the May 8 ballot if the school board decided to choose the 22-cent option:

“For the seven calendar years immediately following the holding of the referendum, shall Duneland School Corporation impose a property tax rate that does not exceed 22 cents ($0.22) on each one hundred dollars ($100) of assessed valuation and that is in addition to all other property tax levies by the school corporation.”

The property tax money will be collected by the county which will then turn the money over to the school district.

Baer said if the referendum passes, Duneland can continue its current programs, albeit with a few “unnoticeable” changes.

If it doesn’t, then the result will prompt “a change in the history of the Duneland School Corporation,” and not for the better, he warned. Deficits of more than $40 million could be seen by 2019.

After the slideshow, the public was invited to the school cafeteria to ask questions of school officials representing each school within the district. The comments were then shared for the school board to consider.

More than half the comments addressing the referendum seemed to be in favor of it with a good chunk aggressively calling for the 33-cent option to guarantee a steady stream of income for years to come. Four or five participants said simply “no” to the referendum while a few others feared that the state would decrease their funding even more once a local tax option was in place.

Others asked why the referendum wasn’t sought earlier by the school board, before the first round of cuts was made. Some were apprehensive about whether they would be able to afford the tax hikes. Some said higher taxes would make it less desirable for people and businesses who want to move here. But the majority seemed to show the community would be willing to pay some form of tax to help the school district.

Further comments included: lobby state lawmakers to use the $320 million recently discovered in the state coffers for education, holding more public forums at schools to market the referendum, address how class size would be affected, extending the referendum beyond seven years, have companies buy advertising space on school buses, seek additional funding sources other than a referendum, keep funding for art and technology programs intact, disclosing specific details on what the schools’ cash balances are, what programs and positions have been cut, and what exactly the referendum would do.

Baer immediately addressed some of the questions reiterating that the state took local control of the funding away from school districts when it enacted the tax reform in 2008 to give property owners a break.

Baer said school officials knew there were going to be problems once the reform was made and if passed, the restored tax rates could return some local control.

“In essence, we’re asking you to give us back a portion of what you’ve saved,” said Baer.

The problems cannot be resolved by simply filling the gaps with a one- time fix, Baer said. In order to make the problems go away completely, a “steady flow of reoccurring revenue” would be needed.

Baer said the school board would establish an independent committee if the referendum passes to advise the school board on where it would like to see the additional funding be appropriated. None of the committee members would be employees or affiliates of Duneland Schools, Baer said.

Assistant Superintendent Monte Moffett said parents and community members are welcome to write letters or e-mail school administrators and board members any questions they have regarding the referendum. The list of e-mails can be found on the Duneland’s Web site, www.duneland.k12.in.us

Baer said the schools are developing a referendum page on the school’s website that will specifically address frequently asked questions. The presentation from last night’s forum will also be found there.

Putting a positive spin on the crisis, school officials showed a three-minute video featuring teachers expounding on “the Duneland Difference” that produces high performing students and attracts people and businesses to the area.

School Board President Janice Custer gave her own words as to what the Duneland difference is.

“It means we’re just a little bit better,” Custer said. “However, to continue that difference, we will have to make some changes. We will have to make some decisions.”

The first thing people ask when moving to a new area is “What are the schools like?” said Custer. Duneland’s high performance rating has helped raise property value on homes.

Custer reminded the public to feel free to talk with school board members.

“Please give us all very special thought,” she said.

The second input session will take place on Thursday at 7 p.m. at the Chesterton High School auditorium (2125 S. 11th Street).

Posted 2/7/2012