Monday, December 14, 2020

LOCAL GOVERNMENT CONDUCT - Charging Textbook Fees When Pandemic Closes Schools


"The Pandemic Hasn’t Stopped This School District From Suing Parents Over Unpaid Textbook Fees" by Ellis Simani ProPublica, and Kim Kilbride South Bend Tribune - ProPublica 12/12/2020

When Hannah Watts received a reminder notice in the mail in January for the $701.56 she still owed for her childrens’ textbook fees from last year, she decided to use her tax refund to pay it off in the spring.  But two months later, the coronavirus pandemic shut down Indiana.  Watts is a dental assistant, and her hours at work were slashed.  She had no choice but to use the refund to cover household expenses.

Watts, of Mishawaka, Indiana, says she didn’t hear anything else about the bill until Aug 7, when a notice appeared on her door.  School City of Mishawaka, the public school district her three children attend, had filed a lawsuit against her.

Watts called the law firm representing the school district, and she made arrangements to pay the balance in two installments using money she had saved to buy school clothes for her three high school students.  She said that a representative from the firm assured her that no further legal action would be taken as long as the full balance was received by her scheduled court date of Sept 14.

Bank records Watts provided to ProPublica and the South Bend Tribune show a payment of $400 cleared her bank on Aug 26 and another for $301.56 cleared on Sept 14.

But the hearing took place anyway.  And since Watts thought the matter was settled and didn’t show up to court, a default judgment was entered against her for attorney fees and court costs of $348.83.

As the coronavirus pandemic closed courtrooms and stunted the economy, court records show that several school districts in Indiana backed off from suing parents for unpaid textbook fees, including Penn-Harris-Madison School Corp., which neighbors School City of Mishawaka.

But in July, School City of Mishawaka filed 202 lawsuits against parents, with 80 more in August.  All told, court records show the district has filed 294 cases since late March, which represents about 5% of its enrollment of approximately 5,300 students in the 2019-20 school year.

The Mishawaka suits came as critical pandemic relief measures began to expire around the country.  Millions of Americans had been kept afloat by stimulus checks, eviction bans and expanded unemployment benefits, but in July and August, some landlords and debt collectors returned to court to seek money from those who didn’t pay up.

A Mishawaka schools spokeswoman said the judgment was entered against Watts because, though she paid the balance of the textbook fees online on the date of the hearing, she didn’t pay the attorney fees of $233.83 that had been added to her account.

For her part, Watts said she wasn’t aware.

“I recognize the fact it’s my responsibility to pay, and I should have had it paid on time,” Watts said of the book fees.  “But my issue is now I have (attorney and) court fees when I did exactly what they asked.”

After being questioned about the case, School City of Mishawaka said it was confident Watts had been notified about the attorney fees, but it later announced it would forgive the fees and seek to vacate the judgment against her.  Court records show that the district filed a motion to vacate the judgment on Dec 8.

Indiana is one of at least nine states that allow school districts to charge fees for required textbooks, according to the Education Commission of the States, a national education policy organization.

The state reimburses districts for textbook rental and materials fees only for those who qualify for free or reduced-priced meals.  Otherwise, parents must pick up the bill.  When they can’t or don’t pay, schools can file small claims lawsuits against them, resulting in added attorney fees and court costs.

Online court records show at least 38 school districts across Indiana listed as plaintiffs in small claims lawsuits since the beginning of the year.  Of those, Mishawaka has filed the most cases since March, when the coronavirus began to spread across the country.  (This tally does not include districts that may employ third-party debt collection agencies to pursue debt and file lawsuits on behalf of the districts.)

Judy Fox, head of the Economic Justice Clinic at the University of Notre Dame, says suing parents for book fees, especially amid the pandemic, when covering rent and groceries may already be a struggle, can set off a chain reaction of negative outcomes.  If courts rule in favor of school districts, they can garnish parents’ wages.  That could lead to evictions, leaving families struggling to find housing at a time when staying home is essential.  And unpaid bills sent to collection agencies may surface on background reports used by landlords to screen potential tenants.

“It’s just a vicious, vicious cycle,” she said.

Mishawaka Moves Forward

Alex Newman, chief financial officer of School City of Mishawaka, said the district debated whether to pursue unpaid fees over the summer.  It ultimately decided to file the suits because the fees dated back to the fall of 2019 and were originally due in November of last year, before the pandemic.

“We looked at the data — there was no drastic increase in terms of the number of families, or the number of cases, or the amount, and so we decided to move forward,” Newman said.

Each year, he said, families are given information multiple times about how to apply for free textbooks.  They’re also sent notices of textbook fees and given opportunities to set up payment plans at least four times before their accounts are turned over to attorneys.

The final statement that’s sent by the district, after Nov 1, explains that if textbook fees aren’t paid, the account will be sent to collections and may include additional attorney fees and court costs.  And even after the accounts are referred for collections, parents are notified of the balances and are able to set up a payment plan with the attorneys before any court action is taken.

In a typical school year, unpaid accounts are not turned over to attorneys until March.  Because of the pandemic, that didn’t happen until June this year.

The district’s agreement with its attorneys, Krisor & Associates, says the law firm can charge families an additional 33% of their unpaid balance, which it keeps.  In recent years, Newman estimated, the district has referred between $40,000 to $60,000 in unpaid debt annually, and the firm has returned about $25,000 to $35,000 to the school district.

Collecting unpaid fees is a necessity, Newman said, to keep the district’s textbook fund in the black and ensure it doesn’t have to compensate by using money earmarked for other priorities.

“This is probably the least favorite part of my job,” Newman said.  “We like to support our families.”  But ultimately, he said, “We feel we have an obligation to the parents who do pay their fees to collect from those who don’t but appear to have the means to pay them.”

While small claims lawsuits filed by districts fell substantially in the wake of the pandemic in March, some other districts have returned to court over the past two months.  After pausing lawsuits against parents in March, Goshen Community Schools, which serves about 6,600 students and lies about 20 miles southeast of Mishawaka, resumed lawsuits in November.

In a Nov 11 letter to families, Steven Hope, who was then the interim superintendent for Goshen, announced a pivot to virtual learning for some students in the district due to “increasing rates of positive COVID cases along with the number of students and staff in quarantine, absences of students, staff, and teachers, the added demands on nursing staff, custodial staff and bus drivers due to a lack of substitutes.”

Court records show that the district filed small claims lawsuits against 21 parents that same day, and it would go on to file nearly 200 cases in total in November.

“We knew that it was still a painful time, but it wasn’t going to change the fact that the debt was still owed later on,” said Kelley Kitchen, executive director of finance for Goshen.  “We’re trying very hard to balance the needs of the school district with the needs of families.”

“I Can’t Pay It, So Whatever”

Most Mishawaka families who were sued by the district during the pandemic didn’t show up to court, and default judgments were awarded to the district (meaning the court ruled in favor of the plaintiff because the defendant did not appear).  About 100 of the cases filed were later dismissed, which the district says is usually because the parent has paid off the debt in full or an error was made in the filing.

Pamela Foohey, a law professor at Indiana University Bloomington who specializes in consumer, bankruptcy and commercial law, said filing small claims suits against parents is likely a useful way to collect unpaid fees for school districts.  The filing fees are low, the courts rule in plaintiffs’ favor when defendants don’t show up and once a district has a judgment, it can return to court to seek a garnishment of a parent’s wages or, in some cases, their assets.

Unpaid debts can also be reported to credit bureaus, leading to additional consequences.  “While a judgment on the default does not affect a consumer’s credit score, the default on the debt will appear on a consumer’s credit report and will negatively affect the credit score,” Foohey said.  “Both the default and the default judgment could be viewed negatively by a prospective landlord or employer.”

Fox, from Notre Dame, has represented parents in the past who were sued for book fees.  Many of them, she said, had income levels just slightly above the eligibility guidelines for free textbooks, which for a family of four is an annual income of $48,470 or less.  Others qualified but didn’t understand they needed to fill out paperwork each school year to get the benefit.

“You can have a $100 school fee very soon blown into a $1,000 debt,” she said.  “They keep growing and growing and growing.  People do not understand that, but again I think a lot of these folks are like, ‘I can’t pay it, so whatever.’”

A review of court records suggests that the majority of parents sued by Mishawaka schools this year owed money for textbooks, but at least two were for unpaid preschool tuition.

Melissa Madou, of Mishawaka, whose two daughters attend school in the district, says she was sued in July for $240 worth of chocolate bars that she was supposed to help her daughter, then in eighth grade, sell.

“The candy bars were for a trip they had planned, but they canceled the trip because of COVID and they wanted all their money back,” Madou said.

Court records show that after Madou missed her court date on Sept 14, a default judgment was entered against her for the $240 she owed the district, plus $115 in court costs.

Madou, who is deaf, expressed concerns over the prospect of going to court during a pandemic, and she also said that she was unsure whether the court would provide her with a sign language interpreter.

In a statement provided to ProPublica and the Tribune, a Mishawaka schools spokeswoman said that Madou was mailed two notices about her outstanding debt from not selling or returning the chocolate bars and was also contacted over the phone through a relay service to discuss the issue.

In October, Madou said that she was able to work out a payment arrangement with the district after repeated efforts to contact it.

“I just said I was sorry and that I would pay $50 a month.  I’ll just have to accept it and move on.”

Moving Away From Court Cases

Jerry Hawkins, executive director of business services for Penn-Harris-Madison School Corp., said the district paused collections because of the pandemic.  Even before that decision, it had transitioned away from a collection practice that is centered on taking parents to small claims court.

Penn-Harris-Madison filed more than 400 lawsuits against parents in 2018.  But after hiring a collection agency to send additional notices to parents about their debt, Hawkins said, the district was able to drastically reduce the number of potential small claims cases it was handing over to attorneys to file in the following years.

“Most parents have been appreciative and willing to work with us,” Hawkins said.  “We would say that we still have too many that haven’t paid, but I don’t think it’s as severe a situation as it could be.  The hope is that by working with more parents that will serve us well in the long run.”

South Bend Community School Corporation, which neighbors Mishawaka and has about 16,700 students, filed lawsuits against nearly 800 families in 2019 and more than 1,000 in 2018.  This year, the district filed none.

Kareemah Fowler, chief financial officer for South Bend schools, said that the district is currently reviewing its policy on using the courts to collect unpaid fees from families.  Previously, Fowler noted, some students were unable to receive their diplomas because of outstanding balances for textbook fees.  (Indiana state law says that a school corporation cannot withhold curricular materials or deny a student any privileges because of a parent’s failure to pay required fees.)

Fowler also suggested that some of the families the district had been taking to court may have actually qualified for free textbooks.  “Seventy percent of our kids qualify for free and reduced lunch, but not all of them sign up,” Fowler said.  “There are 20% that probably can’t afford the fees but just have not gone through the proper procedure.”  She noted that the district has taken steps to encourage more parents to sign up, including through community and social media outreach, as well as providing the forms online.

The district said the 2017-18 school year was the last for which it sent outstanding textbook fees to collections.  Since then, its textbook rental fund has been steadily losing money.  Alex Flores, South Bend’s director of internal audit, estimates that the fund has lost more than $500,000 over the last three years.  “We’ll have to reallocate resources from other places if this continues going forward,” Flores said.

Indiana is one of just a handful of states, including Wisconsin, South Carolina, and Kansas, that allows parents to be charged for books and other curricular fees.  Education advocates say that the state’s constitution guarantees a “tuition-free” education, not a free education.

State Rep. Ryan Hatfield (D-Evansville) is one lawmaker who has tried to change that throughout the years by proposing legislation that would provide funding for textbooks for all, though the bills have never passed.

“These families oftentimes are struggling with other parts of life that can impact a students’ ability to get ahead.  And we as a school system are handcuffing them further by not providing the materials that we require them to use,” Hatfield said.

[State] Rep. Bob Behning (R-In) chairman of the [Indiana] House Education Committee for the past six years, said textbooks for all would come with a $70 million a year price tag.

Amid a national teacher shortage, Behning said, “the bigger issue is teacher pay.”

Newman, the Mishawaka CFO, agrees educator raises are a priority.  But, he also thinks the state should try to find a way to reimburse districts for textbooks.

“We’re here to educate students,” he said.  “We’re not here to collect money.”



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