Missouri Board Moves To Close Bankrupt District

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The Missouri state board of education for the first time has moved to close a bankrupt school district and transfer its students to a fiscally solvent district nearby.

While the closed district was small, state officials warned that its financial problems could be a harbinger of a wave of bankruptcies involving some two dozen districts this year.

Acting at a special meeting late last month, the state board voted unanimously to combine the bankrupt Cedar Creek school district with the neighboring Forsyth district. The action came despite emotional pleas from Cedar Creek parents to keep their schools open.

The board ordered the merger under authority given to it by the legislature in the last days of this year's session. The new law allows the panel to take such actions when a district's operating and other funds reach dangerously low levels.

Officials said the main purpose of the law is to ensure that students' education will not be disrupted by financial failure.

Last month's action could be the first of a number of similar steps as the school year progresses, noted Joel Denney, the state's deputy commissioner of education.

"We are in the process of reviewing the year-end data'' from the state's roughly 540 districts, said Mr. Denney, "and we know that there are going to be at least 25 school districts'' in similar circumstances.

"Is this the start of things to come? The answer is, I don't know,'' he said. "All I know is that there is a growing number of school districts where that financial margin is growing smaller and smaller.''

Mr. Denney said that officials of the 70-student Cedar Creek district notified the state board this summer that they probably could not afford to operate in the 1992-93 school year.

Officials said the board was hoping that local voters would approve a proposed 70 cent levy increase in order to stave off bankruptcy.

But the measure was defeated early last month, as two other tax proposals in the past two years had been.

At the state board meeting, however, some parents said they had not realized that voting down the tax proposal would mean the end of their district.

The new law does not offer any recourse to parents if the state deems that a district should be merged with another.

Vol. 12, Issue 01, Page 28

Published in Print: September 9, 1992, as Missouri Board Moves To Close Bankrupt District
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