What Could Happen to School Debt if We Reorganize?

What About Real Property?

Sep 28, 2024

The Bar Harbor Story is generously sponsored by Side Treats.

BAR HARBOR—How the transfer of an individual school’s property and the disposition of its debts to the Regional School Unit (RSU) would be handled under reorganization is still being hammered out by the district’s Reorganization Planning Committee (RPC). This topic was part of a reorganization update given by Superintendent Mike Zboray at the MDI High School Board of trustees meeting on September 23.

Reorganization refers to changing the model structure of multiple schools with town-run (Bar Harbor, Cranberry Isles, Frenchboro, Town of Mount Desert, Southwest Harbor, Tremont, Trenton, and Swan’s Island) budgets into what the AOS calls “a coherent and more equitable model to better serve our students and educators. It makes sense to look at how we can provide the best education for everyone with our collective resources.”

The restructuring would have to eventually be approved by voters of each town that is impacted. It also means that if approved, there would be just one budget for the schools and just one school board for the system rather than Bar Harbor having its own board and Trenton having another. That board would be elected by the voters of the towns involved. Similarly, teachers and staff would not be employed by each school but by the district.

WHAT COULD HAPPEN TO EXISTING SCHOOL DEBT

Board Chair Rob Jordan asked Zboray, “When all of the real estate, the schools and everything become part of that one unit, which is what you are talking about, what happens to the remaining debt on the bond in Bar Harbor?”

“The way that debt works in statute is that existing debt, which means any bond note or loan agreement, lease/purchase agreements, and other debt instruments issued prior to the operational year of the RSU, in statute, it stays with the town that incurred it,” said Zboray.

Zboray continued, “That is one of the options. However, when you are trying to join together and you’re looking at reorganization that also might have some reorganization of kids, you want to be able to share in terms of educating the regions students.”

According to Zboray, there are actually four different ways to handle debt distribution during reorganization and during the most recent RPC meeting on September 11, Zboray went over those four ways with the RPC.

Those four ways are:

Follow the statute and say that if you earned the debt before the operating year than you (the individual town) keep the debt;
The RSU absorbs all of the debt that was assumed before the formation of the RSU into the RSU budget;
The RSU assumes all debt incurred before the formation of the RSU into the RSU budget over a scheduled period of time;
The RSU assumes only a negotiated portion of the debt.

Zboray said that the RPC will be talking more about debt at its next meeting. The committee has to look at the totality of debts amongst all of the schools and see what that responsibility looks like and then it can create a financial plan that may include a schedule of debt incurment.

“I think around the table there is agreement that, yes, we are going to assume part of it or all of it (Bar Harbor’s new school debt), but what does that model look like?” he said.

The RPC has revised the cost sharing model that is used to distribute the high school budget amongst the individual towns and they are going to play with that a little bit for all nine of the participants that are part of the RPC. There are eight towns and the high school, totaling nine participating entities in the RPC.

TRANSFERENCE OF REAL PROPERTY UNDER REORGANIZATION

When a reorganization such as this occurs, the RSU takes over ownership of all of the buildings and property used for public educational purposes. The RSU also assumes all associated maintenance and upkeep costs and the RPC is also still working on this aspect of reorganization.

Some board members had concerns because, currently, these properties belongs to the individual towns in the majority of cases.

Zboray said, “The statute in Maine is pretty clear that when you transfer property from the municipality to the RSU, there are protections there so that the RSU just can’t get rid of a school. They can’t just sell it. It has to revert back to the municipality if it is no longer being used for purposes of education.”

However, the RSU doesn’t have to give the property back to the town immediately and can lease the building. The RPC has the ability to create limitations on the leases so that the building is not used for purposes that may not fit the desires of a town or the RSU. The RPC can also create rules on what can and what cannot be leased by the RSU.

A town cannot lease a building or property to the RSU.

Member Chad Terry said, “So you are saying that you can sublet?”

“Yes, you can basically sublet and then that money that you get from that can either go to pay down any debt that might be on that building, or it could go to operational expenses, or the overall school budget,” Zboray responded, speaking about the RSU.

Terry asked about maintenance issues such as lawn mowing and plowing, salting, and sanding since it is handled in different manners in different towns.

Zboray said that the RPC hasn’t “gotten to that level of granularity yet.”

Some members expressed concerns about historic uses of school properties, especially in Southwest Harbor, for non-school related functions such as festivals or the sharing of outdoor spaces or equipment with other community-based entities that are not public education facilities such as the Harbor House.

Zboray said that he anticipates that those activities will most likely still be allowed to occur because they would fall under the same usages as are allowed now and the RPC would like to maintain that. Zboray did add that there may be some minor changes such as not allowing public birthday parties in the gym at the Tremont School any longer because they tend to damage the floor.

TIMELINE TO BRING THE PLAN TO VOTERS

“What is your timeline as far as having it ready for a vote?” Jordan asked.

Zboray responded that the RPC is looking at the spring of 2025. He said that once all of the components are put together into a package then the committee will send it out to all of the communities. That process will probably start with a summary to elected officials as first conversations and then they will set up community meetings in all of the RSU communities.

By statute, the RPC only has to have one community meeting before a vote, but the committee decided to do a meeting in each of the communities. Zboray said after receiving feedback from the community meetings, there will probably be some changes to the plan made based on the feedback.

Member Lawson Wulsin inquired into which towns have to vote on the issue of the reorganization. Zboray said that it would be every town in the RSU.

Zboray added that one thing the RPC has not talked about yet is the requirement for the reorganization plan to have a statement about what happens if a town votes no. The RPC can also write into the plan language regarding a core number of towns voting yes and if that number is met, even with a town or towns voting no, then it would still pass.

If one of the four island towns (Bar Harbor, Southwest Harbor, Tremont, and Mount Desert) votes no, then the reorganization will probably not move forward according to Zboray.

Terry said that it would be similar to a type of imminent domain application if a town voted no and the RSU still took possession of that town’s schools, but Zboray said that if a town decides not to be a part of the RSU, then that town would have to communicate with the superintendent and find out how to do everything to run their schools on their own.

Zboray added that as far as high school attendance for a town that chooses not to be part of the RSU, by statute, towns that have a choice in high school attendance will retain that choice, but the town will have to have its own tuition fund for kids not attending MDIHS.

WHY EVEN GO THROUGH ALL OF THIS AND REORGANIZE?

Jordan asked, “Historically, what is the driving force behind this?”

“The driving force is mostly behind the needs of students and teachers in schools where you are starting to see an increase of needs and more and more resources needed as we are asked to do more and more. So, when you think about staffing needs and you look at Tremont, Pemetic, Bar Harbor, and Mount Desert, and they have specific needs for behavioral programs because they are seeing more young students come in with specific needs and having to spread that out in an environment where it’s really hard to find people, strong individuals to meet those needs,” Zboray said.

He continued, “Then, there is the need for equity of students. You have students coming into this high school, still, after years and years, there is inequity in terms of the budgeting around, even if you just think of the four towns and what is a mechanism to create more equity so that whether you live in Southwest Harbor or Mount Desert or Trenton, you are going to have the same opportunities and programming that you would have (elsewhere) and the creation of an RSU helps to support that process.”

Zboray also added that the RSU would also create more opportunities for students based upon bigger schools with a larger student population, and it can help make teachers stronger by allowing teachers to have colleagues to work with rather then being the only teacher of a type or grade in an individual school.

LOCAL CONNECTION UNDER REORGANIZATION

At the RPC’s last meeting on September 11, the committee worked on finishing the school advisory council’s proposal. School advisory councils are part of the governance model that the RPC is exploring.

A school advisory council is “an avenue in which a community stays connected to their school, which has a connection to the larger board,” Zboray explained.

In a regional school district, there is only one board and the loss of local connection because of the loss of individual school committees is frequently the demise of RSUs.

Each school would, if this is the way the RPC decides to build out school governance under the RSU, have an advisory council. Each council would be run by the school’s principal and have a member of the RSU board, parent representation, and student representation at the high school to make up the council body. The council would help advise basic goal setting, budget, and other recommendations before those topics go to the RSU board.

According to the RPC’s meeting schedule, the next meeting should be October 9.

Information regarding the reorganization planning committee, the process, and the history can be found under “AOS Reorganization” on the right side of the MDIRSS website.