Newport schools 'nickel tax' encounters resistance among residents who want more accountability

Petitions circulated to stop new levy
Newport schools 'nickel tax' encounters resistance among residents who want more accountability
Posted at 7:00 AM, Feb 27, 2017
and last updated 2017-02-27 07:00:39-05

NEWPORT, Ky. -- A special tax approved by the Newport School Board last month is getting pushback from residents who want to see improved student performance and better financial accountability from the district.

Called the "nickel tax levy" because it adds about 5 cents per $100 of property valuation, it affords Kentucky School districts a way to finance a bond -- that is, borrow a large chunk of money at one time -- to pay for capital projects, such as roof replacements or school construction. The tax, expected to take effect in the fall, will raise property taxes for a $100,000 home by about $58 per year and allow Newport schools to borrow up to $7.8 million.

A petition has been circulating to put the issue before district voters. Once filed with the needed 450 signatures, it would recall the tax levy until an election can be held. The deadline to file the petition with the county clerk was Feb. 23.

Whether capital improvements should be tied to test scores or state report cards is being debated across the city. For years Newport Independent School District has been near the bottom of state rankings. State report cards are improving, but some residents don't think it's fast enough.

"If I had confidence that the NISD was making the most of tax money to benefit the children that attend, I'd support the increase," said west-side Newport resident Kyle Randall.

Tom Ferrara, a former city commissioner who started the petition, also said there needs to be some connection to performance, adding that the district is in the top three of expenditures per student compared to the state.

It's not about how the school is ranked, said Jeff Scott of Newport. "Critics always make comparisons to other districts based on an unfair school ranking system. They make those comparisons as if the playing field is level, which it's not."

What about the money?

For Randall, it's an issue of community trust.

He supports public schools, but wrote in an email that "the (Newport Independent Schools) administration have not demonstrated financial responsibility or administrative belt-tightening in the past."

Randall and Ferrara both said the district hasn't explained why maintenance on the high school's HVAC or school roofs hasn't been kept up.

Superintendent Kelly Middleton said the high school's 37-year-old HVAC system was near the end of its life and the roofs are leaking.

Scott said that when his daughter started in the third grade at the 4th Street school, "there was no air conditioning, and there were days school was canceled because it was too hot."

"To expect any learning to occur in that kind of environment is inconceivable," he said.

For Scott, the bottom line is that things that need repair or replacement need to be fixed.

"As a homeowner, it's not a wise idea to continue to repair something that's exceeded its lifespan," he said.

Ferrara also said that several buildings had been sold.

"What happened to that money?" he asked.

In 2014, the district spent $11.5 million for renovations in 2014 using state and local facilities funding, a pot of money that had grown over the years. Renovations were part of the district's plan to consolidate schools for efficiency.

At the time, Middleton told local media that it would be a long time before Newport Independent could do major upgrades to buildings.

The administration building sold in 2014 for $250,000, according to the Campbell County PVA website, and the 4th Street school is under contract for $2.6 million, according to the district. Another school, Mildred Dean Elementary, located on property where St. Elizabeth Health Primary and Urgent Care clinic now sits, was sold in 2010 for $1.9 million, according to the PVA website.

Money from those sales is in the district's contingency fund, said Middleton.

But "we don't have enough money in our contingency to cover (the capital projects) and have any left," said Middleton. "It would be crazy to wipe out all the money we have."

The nickel tax levy gives districts the ability to borrow money through a bond, and the payoff is usually about 20 years, said Turner. Newport Independent needs only $5.59 million now.

The nickel tax can be repealed, but the district is likely to leave it in place.

The state's philosophy, officials said, is that by the time this bond is paid off, you're probably going to have additional needs.

Projects that use the tax and/or bond money have to be approved by the state, and they can only be capital projects. Newport projects on the list include two schools in need of roof replacements, the 37-year-old HVAC at the high school, as well as replacing carpet in two schools for health reasons, and updating security cameras at the elementary school, Turner said.

Taxes are the bottom line

Ferrara said the district is already increasing property taxes, noting that his home assessment had not changed over several years, but he was paying more for schools.

The district has not used the annual 4 percent increase allowed by the state since the 2011-12 school year, said Tete Turner, treasurer and financial officer for the district. The board has, however, approved use of the compensating rate -- a tax increase determined by the state to keep incoming property taxes level each year. The district could vote to move forward with the 4 percent increase in September.

"It's very close to what the nickel tax could be -- it would bring in about $250,000 a year that could be used for anything," said Middleton. "That's a lot more taxation (if it's renewed annually)."

Randall is skeptical of the district's transparency, noting that the school board didn't want residents to know they had passed the tax.

"(The school board) knew this increase would be controversial and they opted to pass it through quietly, following minimal legal requirements," he said.

"What I do have confidence in, is the ability of the board to 'find' sufficient funds to address the 'needs' without having to further increase taxes," he wrote.

"If we don't get it," Middleton said, "we are going to smile and keep on going." But the bottom line is "our kids need classrooms where the temperature is not going out. It's hard to pay for capital projects with local tax dollars."