VIEWS DIVIDED ON STATE'S NEW SOLVENCY LAW

Even though he voted for the measure, Sen. Jerry Howard says he is concerned that a bill, signed into law by Gov. John Ashcroft to deal with schools that are insolvent, will increase the number of school districts merging in the state.

But Rebecca Cook, an attorney from Cape Girardeau who serves on the State Board of Education, believes just the opposite is true because it provides early warning signs of financial stress that could enable districts to make adjustments and avoid consolidation.

One provision of the bill establishes several indicators of financial stress and sets up a process in which the State Board of Education notifies districts that are showing such signs.

The bill also gives school boards the option of initiating consolidation votes and outlines a process for disposing of buildings, settling debts, and other issues when a district merges or dissolves.

The bill was initiated last fall by the board after the Missouri Department of Elementary and Secondary Education realized it had a limited role to play legally in dealing with financially troubled school districts. There were no clear state statutes concerning schools that went bankrupt.

Howard said he made a commitment to people in his district that he would vote for anything he thought would help education, and for that reason voted for the bill. But the Dexter Democrat fears consolidation will increase quickly as a result of this new law.

The education department has projected that about 50 of the state's 540 school districts could have negative balances in key bank accounts by mid-summer. Those school districts could include some in Southeast Missouri. Many others are facing cutbacks and seeking approval of tax levy increases from voters.

"This bill, in my view, pushes consolidation more," said Howard. "It sets up the mechanisms whereby schools in certain financial stress situations can consolidate. When school districts are in trouble, they can consolidate easier.

"Consolidation is all right and necessary in certain circumstances, but it moves your school further from community and family," said Howard. "If anything, in this day and time, schools need to be less centralized and more community-oriented and family-oriented. Anytime you take a community that has a good school-community-family focus you have a better school, better students, and a better community."

Cook said when the bill was debated by the education department and board members there were two differences of opinion on its impact.

"Some felt it encouraged consolidation and others felt that it kept consolidation at bay. That's the way I see it," explained Cook. "But it was clear that others saw it a different way."

Howard said he feels the bill will have a tendency to encourage districts to consolidate because of some of the provisions that are designed to make it easier to merge schools.

But Cook said there are enough incentives in the bill to give districts an opportunity to try and buy time and resolve their situation.

One such provision is that school boards can vote to bypass the Proposition C property tax levy rollback for up to two years if certain financial conditions warrant it.

"This provides another alternative to schools so they have time to consider other options and have time to consider increasing the levy or decreasing the budget," said Cook.

"We have had this horrible one year drop in income both locally and statewide," she noted, referring to budget cuts and withholdings because of the state's tight financial situation. "Sometimes you can make it, even in a very tight situation, if you have several years to handle that loss and readjust your budgeting."

Cook pointed out that the bill became a top priority last fall after the Poplar Bluff school district, with about 5,000 students, notified the department it might not have enough funds to make it through the school year.

"We had no brilliant idea on what we could do and would do," said Cook. "Luckily, to the credit of Poplar Bluff, those people came up with various ways of easing the situation with immediate budget cuts and have passed a levy increase. They are back on track.

"But it was a scary thought to think we would have that number of kids without a classroom to go to."

Before this new law was passed, Cook said school district officials could call up and say they were not having school tomorrow due to a shortage of funds, and there wasn't anything the department could do.

"The main purpose of this bill, from my perspective, was to allow school districts to be fully are of their problems and to let the department tell schools we feel these pieces of information to be indicative of problems in your districts," Cook said.

The new law has three major indicators of insolvency and if a school district reaches one of those conditions, the state department of education is required to alert members of the school board and members of school boards in adjoining districts of the financial problems.

There are also nine other indicators of insolvency and if three of those apply to a district, the department has the option of notifying the district and adjoining districts.

School districts must file financial statements by July 15 for the fiscal year ending June 30. The department subsequently would notify those districts showing signs of financial stress.