CVS says debt due to economy, lack of funding

By: Robert Guttersohn | Macomb Township Chronicle | Published December 12, 2012

CLINTON TOWNSHIP — The Chippewa Valley Schools Board of Education is asking critics of the bonding practices, which have landed the district in $143 million in debt, what they would have done differently.

“People who are criticizing our district for funding our buildings this way — what was their recommendation?” board member Frank Bednard said at the Dec. 3 board meeting.

For a year, state lawmakers have pointed at CVS’ debt as the reason why the Bond Qualification and Loan Program needs to be altered.

The district, according to records from the Michigan Department of Treasury, has been borrowing bond money from the program since 1967. Like other districts, it has used the loan money to help pay for capital improvements. Unlike most districts, it has yet to pay back the state.

The CVS board and the administration said the district’s debt is rather a symptom of low per-pupil funding, lack of infrastructure funding from the state and a bad economy, rather than any fault of their own or of past school administrators.

A bill passed earlier this year in the Senate and being debated in the House Appropriations Committee would alter drastically the program and lessen school districts’ ability to issue bonds. Critics’ greatest point of connection with the bill is a $1.8 billon cap that the law would place on the program. Because the House Fiscal Agency predicts the program would hit that cap by 2014, critics say it would prevent districts from issuing bonds without raising local property taxes.

“If this program wasn’t in place, you’d have to raise your millage every single time you went to the public for a bond,” said Scott Sederlund, CVS assistant superintendent for business and operations.

Superintendent Ronald Roberts argued that CVS receives the smallest amount of per-pupil foundation funding at $6,966 per student, and therefore has less money to spend away from operational expenses. Roberts said he’d be OK with the $1.8 billion cap if the state gave CVS the maximum amount of per-pupil funding. “And we won’t go back to the well,” he said.

Bethany Wicksall, a senior analyst from the House Fiscal Agency, said school districts can spend extra foundation on money on infrastructure and technology but added a majority of school districts across Michigan receive the minimum amount of per-pupil funding. She said with overall foundation reductions, it is not likely any district has enough to spare on capital improvements.

Roberts added that the bond program worked until housing values fell, due to the economy. “Bankers decide they’re going to give out mortgages that they shouldn’t give out and the economy crashes — no fault of anyone in this community,” Roberts said. Because of the drop in housing values, the millage CVS assess on its property owners brings in less money.

Ultimately, the board and the administration say they did nothing illegal when requesting the bond money and see the new bond program law as punishment toward CVS and the community.

“This was all approved though the treasury, at the time,” said board member Denise Aquino.

“We have participated in this following the rules set by (the state),” Roberts said. “We didn’t make the rules; they made the rules.”

Roberts said lawmakers need to search for a middle-ground solution.