NEBRASKA CITY – Superintendent Mark Fritch gave a community presentation Wednesday describing a stranglehold of debt on Nebraska City school finances with roots dating back over four decades and the breathing room that voters are being asked to provide.

State Sen. Rob Clements, Mayor Bryan Bequette, county commissioners and business leaders were among those attending the presentation that began with the school district’s cash flow problems in the early 1980s and cost overruns of the 2007 school construction bonds.

The school district is not growing in enrollment. It is above the state average in the number of special education students, the number of English learner students and the number of students living in poverty.

It is also above the state average in cost per pupil, which is just over $14,000, but is below the state average in the number of high ability learners.

The school is $36 million in debt, including $2.1 million in local loans, $1.7 million in the line of credit and $2.4 million in the tax anticipation notes. The $950,000 sale of the Pioneer Academy lowers the debt total to closer to $35 million, of which $31 million is linked to the 2007 school construction bonds.

Fritch said the school district has not filled some open positions, has not updated technology and does not have a unified curriculum purchasing program.

Fritch: “We are a district operating in poverty.”

Fritch, who started work with the district in July, said his investigation shows that construction overages after the 2007 bond election led to the school board members dismissing their general contractor and paying for the subcontractors themselves.

To deal with the overages, Nebraska City took out tax anticipation notes that have now grown to $2.4 million. Those notes finished the construction, but cash flow struggles that date back to 1982 continued. The school board reached out to local lenders and opened a line of credit as high as $700,000.

Fritch said since the district’s enrollment is stable, state aid has not increased and the school is up against a $1.05 cap on property taxes. Of that $1.05 in the general fund, he said, four cents pays the principal and interest on debt.

The district is currently taxing at a rate of $1.24  and  is expected to ask voters in May for a levy override of 8 cents.

Fritch said if the levy override fails the school district will continue to tax at the “high rate” of $1.24, but the quality of education will change.

If the levy override passes, he said, there is a chance it will cover the debt expenses currently draining the general fund and start digging the district out of debt.

Fritch: “You feed an elephant one peanut at a time.”

Fritch said the levy override will only be for five years and gave “his word” that if the school’s financial situation improves from other sources the district would not use the entire 8 cents.

Fritch said recovery is an eight to 10-year process, leaving open the possibility of seeking another levy override after five years, but noted that revenue sources like state aid might improve over that time.

Fritch: “We can not afford the luxury of waiting. We must have added revenue as we make reductions.”

He said the school district’s financial situation improved with the sale of the Pioneer Academy to Southeast Community College and the Second Avenue school building and central office remain for sale.

Fritch is offering to give the presentation to anyone with an hour to listen.