The Mitchell Building Drains Funds From Decatur School District

The saga of dismal fiscal management by the Metropolitan School District of Decatur Township is typified by their lease of space in the Mitchell Building in Ameriplex Industrial Park. From breaking three laws regarding the lease and renovation of the space, to the continued use of district funds for three educational enterprises who use the space, all of which should be self-sufficient, we see what happens when there is virtually no oversight of the Administration of a school district.

The Indiana State Board of Accounts audit of the Decatur School District books released on May 29, 2008 (covering finances from July 1, 2005, to June 30, 2007), is a clear look at how Superintendent Don Stinson and Assistant Superintendent Jeff Baer, abetted by rubber-stamping School Board members, Don Huffman, Cathy Wiseman, Judy Collins, Larry Taylor, and Taylor's replacement, Dale Henson, ran the School District finances. I have already talked about the purchase of 4 properties during that time, without the required number of appraisals of the fair market value, clearly overpaying by 41% on one property - in violation of two aspects of state law. I have already talked about the reimbursement of credit card expenses without the proper receipts. And, I have already talked about how Stinson and Baer broke state law by spending millions of dollars more from funds than were appropriated by the School Board.

The audit released in 2008, which I again recommend all Decaturites review for themselves, speaks also to how Stinson and Baer broke state law by entering into the Mitchell Building lease contracts, broke state law by entering into a renovation agreement for the space, and broke state law by entering into a lease agreement over 10 years in term without the approval of the State Department of Local Government Finance (DLGF). In a single lease, they avoided the required review from the upper levels of government (the DLGF), and avoided the required review from the lower levels (the School Board), all in place to represent the best interests of the public and to protect the public from an overreaching or ill-informed District Administration.

Here's what the audit has to say about the Mitchell Building lease:

The School Corporation entered into a lease agreement with Mitchell Logistics Partners L.P. for the Decatur Discovery Academy. The original lease was signed by the Superintendent and was for a period of 127 months (10 years and 7 months). The School Corporation, in order to expand the Decatur Discovery Academy, paid $584,460 in 2006 for the renovation of additional office space owned by Mitchell Logistics Partners L.P. The Renovation Agreement was signed by the Assistant Superintendent of Business. The subsequent lease amendment for the expanded Decatur Discovery Academy increased the term by another 12 months and also was signed by the Assistant Superintendent of Business. No documentation was provided regarding approval by the Department of Local Government Finance for the lease to exceed a term of 10 years.

Indiana Code 20-26-4-8 states:
"Notwithstanding any other law, the president and secretary of the governing body of a school corporation are entitled, on behalf of the school corporation, to sign any contract, including employment contracts and contracts for goods and services. However, each contract must be approved by a majority of all members of the governing body. In the absence of either the president or secretary of the governing body, the vice president is entitled to sign the contracts with the officer who is present."

Indiana Code 36-1-10-5 states in part:
"Notwithstanding sections 6, 12, 16, and 17 of this chapter, the following procedure shall be followed whenever a lease does not contain an option to purchase:
(1) The term of the lease may not be longer than ten (10) years; however, a lease may be for a longer term if approved by the department of local government finance."

Indiana Code 36-1-10-10 states in part:
"(a) A lessor proposing to build, acquire, improve, remodel, or expand a structure for lease to a political subdivision or agency shall submit plans, specifications, and estimates to the leasing agent before executing a lease."

In entering into the initial 10 year 7 month lease for space in the Mitchell Building, Stinson and Baer violated two state laws -- one requiring prior approval of the DLGF and the other requiring the signature of School Board member(s) on the contract.

In entering into the $584,460 renovation agreement, Stinson and Baer violated two state laws -- one requiring the signature of School Board member(s) on all contracts and the other requiring detailed plans and cost estimates prior to signing the agreement.

In entering into the extension of the lease agreement for another 12 months, Stinson and Baer violated two state laws -- one requiring prior approval of the DLGF and the other requiring the signature of School Board member(s) on the contract.

The tenants of the Decatur School District's leased space are three enterprises that should be self-sufficient. All three are educational enterprises of which I highly approve; it is just using the District as a funding source that I strenuously object to.

First is Ivy Tech. Ivy Tech is in the business of education for a profit. Ivy Tech should be paying the rent on the space it uses in the Mitchell Building. Instead we find from Stinson's "Fiscal Restructuring Plan", that the District chips in at least $164,000 a year for Ivy Tech's space.

Second is the Challenger Center. Again, the Challenger Center was to become self-sufficient through charges for groups to use the facility. Instead, from the "Plan" we find that the District is covering at least $380,846 a year for the space and two teacher salaries.

And, third is the Decatur Discovery Academy, which is an alternative school that was created as a Charter School. Yet again, this enterprise should have been self-sufficient using Charter School funds. Instead we see that the District pays at least $265,501 a year for its space.

All together, the Mitchell Building lease exemplifies the fiscal mismanagement we see in the rest of the Decatur School District. State laws were broken to establish and extend the lease, state laws were broken to make renovations to the space, and the District is throwing over $810,000 a year at three worthwhile enterprises that should be self-sufficient. The long term lease agreement for the Mitchell Building space will run until at least 2016, draining much needed funds from the primary task of the School District - the education of Decatur's children.