Midwest Floods Cause Disruption in Flow of School Funds

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As flood waters recede and schools across the soggy Midwest reopen, state and local officials are beginning to face another casualty of the summer disaster--an eroded property-tax base.

Corn and bean fields in Illinois, Iowa, and Missouri were wiped out by the high waters on the Mississippi River and its tributaries, in many cases leaving land that will be unproductive or perhaps submerged for years to come.

Combined with staggering residential and business losses, officials in many river communities said last week, the legacy of the floods may be a cash-flow crisis for schools.

"Some of this land may be reassessed down to the point of being worthless,'' said Gary Ey, the assistant state superintendent for school finance in Illinois. "We're concerned because of the magnitude of districts that are affected.''

Along with the Mississippi, the Illinois and Missouri rivers also experienced significant flooding. Broken levees along each of the waterways quickly engulfed thousands of acres of prime farmland, officials said.

Even as many communities begin to restore order and reclaim their territory, state and local tax assessors and collectors are grappling with a host of tough questions.

Most pressing, perhaps, is whether residents will have the ability to pay this year's property-tax bills, which will provide much of the money required to run schools. But while immediate funding needs in many cases will be covered by emergency federal aid, the flood has left behind vast changes that have permanently altered the fiscal as well as the physical landscape.

"The more local you get on this,'' said Mark Ward, the Missouri state budget director, "the greater the financial strain.''

Flooded Land, Lower Revenues

In Adams County, Ill., officials expect to lose $5.6 million from the local property-tax base because of farm damage alone. More than 40,000 acres remain under water that is not receding, officials said.

While the property losses seem small compared to the county's $455 million tax base, most of the flooding has been concentrated in a single small school district.

About 30,000 acres valued at $4.4 million could become valued at half that after the flooding, according to Gerhard Jung, the superintendent of the 830-student Mendon Community Unit School District #4. An even worse scenario would be that the area could be declared a federally protected wetland if the water does not recede or if levees are not rebuilt, he said.

Further down the Mississippi, in Monroe County, Ill., 60,000 acres have been flooded, including the community of Valmeyer. Officials expect to lose $7 million of the county's $221 million in property value.

Like many of his counterparts across the region, Kevin Shevlin, the Monroe County supervisor of assessments, is awaiting word on emergency property reassessments. While payment of this year's property taxes is a concern, Mr. Shevlin explained, the adjusted assessments also will mean lower receipts for schools and other local agencies from next year's tax bill.

Because Illinois taxes farmland based on its productivity and residential and commercial property based on its market value, flood damage will be obvious.

"Some people have been completely wiped out,'' Mr. Shevlin said.

Merrill Prange, the Monroe County treasurer, has waived penalties for late payments on this summer's tax bills. Nevertheless, he said, collections are running at their usual pace.

"We've told people not to make it their first priority, but a lot of them are going ahead and paying the taxes anyway,'' he said. "That's allowing us to carry those who can't.''

How Many Will Return?

Another issue facing officials up and down swollen Midwestern rivers is how many people will be on their tax rolls in the wake of the record flooding.

"The long term is difficult to project because we don't know how many people are going to go back,'' Mr. Prange said.

In the hard-hit Valmeyer school district, where 40 percent of the local tax base has been claimed by the flood, about 450 of the 550 students were dislocated by the water. Officials predict that 100 children will be permanently lost from the pupil rolls.

With nearby towns like Waterloo, Red Bud, and Columbia also reeling from the calamity, many families have moved to larger places like St. Louis, according to Harold Baum, the superintendent of the Valmeyer district.

Tax-base issues seem a distant concern to Valmeyer school officials, who have been scrambling to reopen schools for the coming year. Even before the levees broke on Aug. 1, some 100 volunteers had loaded 11 tractor-trailers with furniture and books. Since then, residents have helped assemble 30 classrooms and a cafeteria in three temporary buildings.

The permanent school buildings, meanwhile, continue to hold five feet of river water. "All you can do is eyeball the damage from a boat,'' Mr. Baum said.

The cost of the temporary buildings is $300,000. Flood insurance will cover the first $200,000 in building damages, leaving Mr. Baum with not much more than hope that the district will somehow make ends meet.

"That's the most frustrating thing about this process,'' he said. "You can't get a straight answer from anybody. Everyone is so disoriented. You need the money, but you just don't know where it's going to come from.''

Federal Rescue

For the short term, federal aid is expected to help most districts get by.

The $4.8 billion flood-disaster-relief bill signed by President Clinton last month contains $100 million for education programs.

The bill, HR 2667, includes $70 million in impact aid for elementary and secondary schools. Another $30 million in Pell Grants will go to students who are made newly eligible for the income-sensitive grant, or for higher awards, as a result of the flood.

As the impact-aid funds help replace lost state per-pupil funding, funds from the Federal Emergency Management Agency will help rebuild structures claimed by the flood.

Under existing cost-sharing rules, FEMA will pick up 75 percent of rebuilding costs, with the remainder coming from local coffers. Midwestern governors have been pressing the Clinton Administration to fund the entire cost.

State Damage Estimates

State officials, meanwhile, continue to calculate ever-higher damage totals. In Missouri, the $2 billion estimate of crop damage is expected to be updated soon. Also rising is the state's projection of $68 million necessary to provide matching funds or pay for state and local relief efforts.

Across Missouri, 30,000 workers were temporarily or permanently displaced by the flooding, leaving state officials unable to forecast the long-term picture.

"This is a significant economic event that is translating assets into economic activity,'' Mr. Ward, the state budget director, noted.

Part of what has been washed away or sunk in property damages and lost in local tax collections, in other words, will be made up in purchases or construction that creates state tax revenues and borrowing.

Missouri officials report that state tax revenue continues to meet expectations, hampered only by interrupted mail delivery at the height of the flooding.

Illinois officials agree that the calamity is creating mostly local problems. Yet, they also expect that local officials will call on the state as they search for relief.

Extra help may be needed because the Illinois school-funding formula calculates aid to schools based on a multiyear picture. As a result, districts might not be able to recoup their tax-base losses until two years from now. Lawmakers and state officials are considering changes in the procedure, Mr. Ey, the assistant Illinois superintendent, said.

As schools along the river begin classes, administrators are focusing on trying to restore a sense of normalcy and community for students and parents.

Looking Ahead

"The streets are a total mess and a deck from someone's house slid into our food-service area,'' said John Rodemann, the director of transportation, safety, and health services for the Cedar City, Mo., district along the Missouri River. "We've tried to prepare our counselors for the needs the kids will have due to the summer experience.''

While the floods did not do any major damage to school buildings in the Muscatine, Iowa, school district, administrators are having to implement extensive bus rerouting because of construction projects.

For officials in the West Pike Community Unit School District #2 in Hull, Ill., basic questions about the future of their school operations are on the table.

Some West Pike students crossed the Mississippi to Hannibal, Mo., and have not yet been able to get back across the impassable river. Many more have scattered to neighboring communities.

Although many of the students had returned by registration time late last month, Superintendent Rodger Hannel is concerned about what lies ahead.

"We will either survive as a K-12 district, or we may end up being just an elementary district and send our high school students on tuition to area schools if their families don't return,'' he said. "I'm not so worried about this year because the property tax has already been collected. It's next year and the years after that.''

Staff Writer Lynn Schnaiberg also contributed to this story.

Vol. 13, Issue 01

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