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Faced With Deficit, South Bend School Board

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South Bend, Ind--Last fall, when inflation and a rollback in state aid made a generous three-year teacher contract unaffordable midway through its second year, the South Bend Community School Board set out to save some $2.67 million by reducing the size and the salaries of the teaching staff.

Authority for the action, the board claimed, came from the Indiana teacher collective-bargaining law, P.L. 217, which forbids a school system to "enter into" a contract it cannot afford.

Honor the Contract

But on Dec. 30, a special St. Joseph County circuit court judge stopped the board from carrying out its plans, ordering it to honor the contract.

The board had previously tried to persuade the National Education Association (nea)-South Bend to renegotiate the contract, but the association repeatedly refused. So the board announced its intent to cut dental-insurance benefits, to eliminate at least 100 teaching positions by increasing class sizes, and to reduce employees' salaries by six-tenths of one percent.

The school board filed a suit asking the circuit court to declare the contract void under P.L. 217. In response, the teachers' association went to court to prevent the board from making the cuts.

In a day-long hearing on Dec. 29, before Special Judge John G. Baker, attorneys for the nea local asserted that "entering into" a teacher contract meant something completely different from breaking a contract already in force.

Settled in Court

The teachers' association asked that the school system be enjoined from taking unilateral action until the issue could be settled in court.

But after quickly sifting through the presented evidence, Judge Baker ordered the school corporation (Indiana's term for the school board) to "comply in all respects with the provisions of the collective-bargaining agreement and the individual teacher contracts."

School administrators and nea-South Bend officials alike expressed shock at the breadth of Judge Baker's decision, which served to cancel the trial that had been expected in February.

Immediately following Judge Baker's decision, nea officials declared their three-year contract safe from school officials' tampering until it expires in the spring of 1983.

School Superintendent James Scamman, however, summarized Judge Baker's decision this way: "If there are $40 million in teacher-contract costs and $40 million in the budget, the teachers get it all. If there are 40 million and one dollars in the budget, the teachers get the $40 million, and we can use the one dollar to run the buildings."

Officials Pessimistic

An appeal of the judge's decision is being filed in the Indiana Court of Appeals, but school officials are not optimistic. While they believe the judge was wrong, Mr. Scamman ex-plained, an appeal could take years.

In the meantime, the school system has a projected $3.5-million deficit for 1982, and the cuts planned will save only $1.15 million. Debt is mounting at a rate of $188,000 per month, school officials say.

School officials, the nea, and even Judge Baker are in agreement about one thing: The deficit is the fault of a state legislature which froze the tax rate in 1973, later froze the revenue school systems could raise through property taxes, and approved only a 2-percent increase in state aid to public schools in its 1980 session.

Also at fault, the parties agree, are budget agencies such as the School Property Tax Control Board and the State Board of Tax Commissioners, which have the power to bail school systems out of financial trouble.

Fund Transfers

State tax agencies have the right to allow South Bend to erase its deficit with transfers from the system's building fund. In 1981, South Bend schools were allowed to tap that fund for $3.5 million to make ends meet; they will be allowed to transfer $3 million from the building fund this year.

But the state tax agents, once considered lenient, are growing more conservative by the year, observers note. As Robert Augspurg, executive director of the tax-control board, acknowledged, "The control board has taken a get-tough policy. They're not going to be a mini-legislature, handing out money."

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