LCSC Superintendent: “County Officials Didn’t Do Their Jobs”

Posted On November 17, 2015

By Mike Perleberg


(Lawrenceburg, Ind.) – Lawrenceburg Community Schools Superintendent Karl Galey is frank with his displeasure concerning a $1 million hit to the school district that may have been avoidable.

“How do I communicate to our staff, our parents, our community members about a $1 million loss and we had no involvement in it?” Galey asked in a meeting with local media on November 11. “Ultimately our students, parents, employees and community are paying for the mistake made in Dearborn County’s tax assessments.”

Hollywood Casino Lawrenceburg owner Penn National Gaming has been appealing the assessed valuation of the casino for the past several years. Hollywood’s assessed property value has been $1.4 million per acre for the past eight years while other casino properties around the state have valuation at around $200,000 per acre.

As the county realized that Hollywood would win its appeal, county officials initiated settlement negotiations with Penn National to avoid paying interest, penalties and attorney fees that could have greatly increased the settlement amount.

According to Dearborn County Attorney Andrew Baudendistel, the $3.227 million settlement reached earlier this year covers 2006 through 2013 property taxes and sets the valuation for 2015 and 2016 taxes. The county paid the lump sum of $2.62 million as well as a credit of $599,213 for the spring 2015 taxes.

LCSC’s loss this year under the casino property tax settlement is roughly $919,867, according to the county. Galey says that’s about 22 percent of the school corporation’s property tax revenue. Other entities impacted by the settlement include Dearborn County losing $629,382, City of Lawrenceburg $1.523 million, Lawrenceburg Public Library $103,283, Solid Waste $45,186, and Lawrenceburg Township at $6,455.


Lawrenceburg Schools Caught Off Guard

Last year, Galey said county officials informally told him that the school district’s estimated impact from a settlement in the works would be around $200,000 per year over five years. Yet, when the school district received its semiannual tax draw in May, Galey said they were surprised to see that it was only about 40 percent of what was expected.

“It was like, ‘Whoa. Why are we only receiving that?’” Galey said.

The district could not initially get any answers from the county at first, Galey claims, with Dearborn County Attorney Andrew Baudendistel citing a non-disclosure agreement that was part of the county’s settlement with the casino. The school district’s attorney asserted that the tax information was public record. Roughly a week after the school began asking to see it, the county eventually provided the terms of the settlement.

Baudendistel says that because the matter was pending litigation, it was never discussed in a public meeting with Dearborn County Commissioners or County Council.

The coming to grips with a $1 million loss for the school district became even more difficult when Galey read an October 20 news story on Eagle Country 99.3’s website concerning a very similar settlement between Ohio County and the current and former owners of Rising Star Casino in Rising Sun.

In Ohio County, County Assessor Ed Hautman called the settlement for taxes paid dating back to 2008 a win-win. Rising Sun-Ohio County Schools also saw its tax distribution impacted, however, Ohio County covered the school district’s loss with riverboat savings.

Galey believes Dearborn County, unlike Ohio County, failed to soften the blow for Lawrenceburg schools.

“Ohio County covered their school’s loss,” Galey said.

Baudendistel cited state law which states that the county auditor shall charge the amount refunded to the taxpayer against the accounts of the various taxing units to which the overpayment has been paid.

“Therefore, by statute, we were required to withhold each taxing entities portion of the refund.  Prior to doing so, we confirmed this procedure with the State Board of Accounts, the Department of Local Government Finance, and the State Auditor’s Office,” Baudendistel said.

Galey said the county could have used riverboat money, which “has a different set of rules”, to protect the school district. He insinuated that the county may be protecting its riverboat savings for a county courthouse expansion project.

Puzzling even more to Galey is the fact that Dearborn County hired the same attorney as Ohio County to defend against the appeal. Marilyn Meighen of Nexus Tax Group helped negotiate both settlements.

“How did Marilyn Meighen do both and you didn’t know (about using riverboat funds)?” Galey asks.

On October 26, Galey wrote a critical letter to county commissioners, county council, the county assessor and county attorney.

“Ohio County’s transparent, communicative, collaborative and fiscally responsible approach to the Rising Sun – Ohio County School Corporation in addressing the casino appeal and settlement stands in stark contrast to Dearborn County’s approach,” Kaley wrote.

Baudendistel says that representatives from Dearborn County and the school corporation did discuss ways in which the county could offer assistance.  According to him, state statute allows counties to advance property tax money to political subdivisions and, in regards to schools, the county could loan money for school construction or renovation.

“Dearborn County made it explicitly clear that we were willing to assist in any way possible so long as such assistance was permitted by State statute.  After discussing the options permitted by statute, the School Corporation ultimately decided not to seek assistance from Dearborn County,” Baudendistel said.

Galey said there is no lawsuit being considered at this time.


Impact on the Schools

Now that the damage is done, in what way will it affect LCSC?

“We have projects that we always put on our capital projects plan each year. We’ve had to delay them. We’ve had to push them off and will potentially have to stagger them because of that,” Galey said.

Those types of capital projects include windows, doors, and roofs.

“Could we borrow? Could we do those things? Yes, but we sat down and said that if we really tighten everything down and we push everything off, then we can probably weather the storm. But is that really good when you need to do those projects?”

The improvements will be spread out over the course of the next few years. There will likely be less money to pay for them, however, because with the property tax settlement and more accurate valuation – again, down from about $1.4 million per acre to about $400,000 per – Hollywood Casino will be paying the more appropriate amount in property taxes going forward.

Galey said that funding for the new Lawrenceburg High School gymnasium is not what has put the district in an unenviable position. That project was funded by the City of Lawrenceburg which made an $8.9 million low interest loan to the school corporation and granted $4 million towards the gum.

“That’s a whole separate scenario. That funding was already set aside,” Galey said.


County Reaches Casino Property Tax Refund Settlement

smartjwNovember 17th, 2015 at 2:40 am

So maybe the schools shouldn’t rely on taxes generated by the casino as their windfall. That casino won’t be around for ever. I suggest learning how to tighten the belt on that little school district and stop spending money on frivolous projects like the football field. The school should have been rebuilt elsewhere to free up property to improve traffic flow, which in 10 years will be an absolute nightmare in the downtown area.

RBAE76November 17th, 2015 at 2:52 am

I can hear administrators from other schools laughing their tails off when they read this.  

The gym and football field are nice without a doubt, but were they essential and necessary for the EDUCATION of LCS students?

Outraged_2November 17th, 2015 at 4:14 am

Granted, the low-interest loan and grants from the city of Lawreneburg are separate from this issue, however, LCS is acting like a small child who lost one of its toys.  LCS has over the years received much more than the other 2 school districts  and those gifts are indirectly from casino gaming.  Get over it LCS.

RichardTonyFerreiraNovember 17th, 2015 at 5:11 am

The casino was voted in to Lawrenceburg because it promised good paying jobs and other perks to our county. Now they want to cut their tax burden after making hundreds of millions of dollars. I wonder how many would vote for them today knowing what we know now. I for one would rather live in the old Burg the way it used to be any day. Citizens are not controlled by Hollywood. Civil actions can stop these greed mongers. KICK THEM OUT.

TimelordVictorious513November 17th, 2015 at 5:48 am

This isn’t the first time something like this happened to LCSC. This happened to LCSC in either 2009 or 2010 and it was to the tune of about a million dollars if my memory serves. They were able to file a successful appeal.
One would think that in the intervening years, measures would have been enacted to insulate against another shortfall scenario like that, should it ever happen again. Superintendent Galey and the Board of Trustees should be called before a public meeting to explain why they did not exercise foresight in that regard.
Then they should resign.

Christine OsbornNovember 17th, 2015 at 6:04 am

RBAE76 The football field definitely not needed. Just do maintenance on the one that was there. The gym needed re-done for safety reasons but it DIDN’T need to be re-done that big or lavishly. Heck when they redid the auditorium they didn’t do anything fancy to it. Just replaced the wood on stage and the seats. But Lawrenceburg is all about the sports to heck with the fine arts and such.

I remember a no new fundraisers rule my junior and senior (1999 and 2000) year but the cheerleaders and other sports connected groups were having new fundraisers while choir was stuck with the old meat and cheese catalog sales (one piece of sheet music is was like $40 a pop…not counting everything Pizazz did) and SADD had to go before the school board to try and get a fundraiser to bring in more speakers (which we also sent to SD after speaking at LHS). We succeeded but not without a lot of hassle to get it done and it was only something like suckers after school kind of thing.

YorkvilleINovember 17th, 2015 at 6:35 am

Its about time the right thing was done for Dearborn County. It all doesnt evolve around Lawrenceburg. Let the folks in Lawrenceburg pay their own way rather than wait for another handout.

sonofripleyNovember 17th, 2015 at 8:29 am

smartjw  You are right!  The casino was built to draw gamblers from Cincinnati.  It was just a matter of time till Ohio got gambling.  Now they don’t have to come to Indiana.  Still we are left with the mess.  US 50 is a nightmare to me, I avoid it and the casino, downtown Lawrenceburg is a shadow of it’s form self and after all this the gambling revenue will drop and Dearborn county will be left with the mess.

ukred1963November 17th, 2015 at 8:52 am

So, the City of Lawrenceburg gave the school corporation a low interest loan of $8.9MM, which the city never would have had if not for Riverboat gambling money. Then when the business that has provided tens of millions in residual income to the city asks for a fair tax assessment, the community complains and goes public with their dirty laundry.    Yep, seems about par for the course in our community.

So, here is a cold-hard dose of reality for the  LCSC – life it hard, wear a helmet.

In my career, when revenues are down, my business makes tough choices to hold the bottom line together.   Revenues don’t go up forever, and you should always have a contingency plan for the day when you need to cut.   I have had my salary frozen, I have had my benefits reduced, we all make sacrifices in tough times.   Here is an idea, maybe the teachers and administrators have to go a year or two without a raise!   Nobody is entitled.  If the money isn’t there, it isn’t there.    Let’s be adults about it, and manage appropriately without finger pointing and blaming.   You have two brand new facilities that I am partially paying for in higher property taxes.  You also have brand new Tiger busses.  Hard for me to feel sympathy for your need to tighten the belt down there.