By SEAN BATURA
The San Marcos City Council agreed last week to give The Master’s School two more years to repay a $345,000 loan the city granted last year under an economic development agreement.
The vote went 4-1 in favor of the extension.
The city originally gave The Master’s School one year from Aug, 14, 2008, to repay the loan, either in multiple installments or in one lump sum, plus three percent interest. The school failed to make any payments until more than a month after the loan became due, after the city sent multiple demand letters requesting full repayment.
In a letter he sent to the city on Oct. 9, Master’s School President David McCall apologized and cited confusion by the school’s board members about the loan’s due date, “the current economic climate,” and “significant unexpected cost overruns” associated with the building of a new campus.
McCall met with San Marcos City Manager Rick Menchaca on Aug. 25 to discuss the loan. After relaying the school’s request for an extension to the city council during an executive session on Sept. 15, Menchaca on Sept. 18 sent a demand letter notifying McCall that councilmembers wanted the full amount by Oct. 16.
The Master’s School, which requires every prospective student’s family to sign a “Statement of Faith” as a condition of admission, now has until Aug. 14, 2011 to pay the city back. The Master’s School last month offered to pay $34,500 on Nov. 2, $34,500 on Aug. 14, 2010, plus interest, and the remainder of the principle plus interest on Aug. 14, 2011. The council’s vote last week was effectively an acceptance of the school’s proposal.
Councilmember Gaylord Bose cast the lone vote against the extension. Councilmembers Chris Jones and John Thomaides were absent during the vote.
On Aug. 14, 2008, the city council passed a resolution (2008-114R) that declared The Master’s School loan “a public necessity.” Thomaides and Bose voted against 2008-114R.
The city offered the loan by using a state law that allows municipalities to develop programs “to promote state or local economic development and to stimulate business and commercial activity,” in the language of Chapter 380 of the Texas Local Government Code. Accordingly, 2008-114R states that the Master’s School loan is “necessary to stimulate business and commercial activity within the city” because the school increases the diversity of educational opportunities in the city, thereby enhancing the city’s ability to retain existing residents and employers and attract new ones.
Other benefits of the loan touted by 2008-114R include “new opportunity for other retail and service businesses that serve the needs of schools and their employees” and “10 new full-time employment positions with a projected payroll of $120,000.”
According to the San Marcos Baptist Academy’s current student handbook, “The Academy does not discriminate on the basis of faith, race, national or ethnic origins.” The Baptist School’s application for admission does not include the Statement of Faith required by the Master’s School.
According to a nondiscrimination clause in the Chapter 380 Economic Development Agreement between The Master’s School and the city established by 2008-114R, the school is prohibited from conducting “impermissible discrimination under applicable state and federal laws” in its provision of services or employment practices.
After last week’s vote, Bose said he voted against extending the loan to The Master’s School “on principles,” and said that though he is “all for the Biblical principles being taught” and “all for Christian schools,” he has seen too many cases where people compromised their religious values after receiving aid from government.
“I profess Christianity myself, but I’ve always been one to keep secular things and spiritual things separate,” Bose said. “And when religious or church things start asking, then you’re stepping away from your faith, and your principles you live by. And then when you start doing that, when you give your word about something, then you keep your word. I grew up in an area where when a man gave his word, that was it, and if you couldn’t do it, you made sure that everything was taken care of.”
The Master’s School declined to comment, and no representative of that organization addressed the council at the meeting before or after the council voted to extend the loan. The Master’s School later refused to comment.
“It’s our job to keep businesses and schools in business, and support them,” said Councilmember Pam Couch after vote. “I know we have a lot of people come up here and talk about how we need to support small businesses and keep small businesses going, and we do support a lot of businesses. And so this is kind of a good business (that is) investing in a lot of young lives that are putting back into our community.”
Couch said the one of the council’s goals is “to further education,” adding that some of the top students in San Marcos High School’s class of 2010 attended the Master’s School.
“So it’s a value to bring those kids back into the public school as strong students,” Couch said. “So there’s lot of good things that are coming out of that. They are just like everybody else. The economic climate has affected everything.”Email | Print
I want to know who did the underwriting and risk analysis on this loan. Seems like somebody missed the whole part on “ability to repay.” The city put itself in a damned if you do, damned if you don’t position. They can’t foreclose or seize assets without getting shredded in public relations. But, they can’t ignore the fact that the school has not lived up to its side of the agreement.
This is starting to sound like state-sponsored religion to me. A lot of Muslim, Jewish, Hindu and other taxpayers are funding a school their children aren’t allowed to attend.
This does not teach those students the right lesson. This is an affront to the citizens of San Marcos. The excuses of “cost overruns” and “poor economy” sound just like the “hat in hand” young man who pitched the city council for an extra $4 million last fall for Stone Creek Crossing (and got the money). We need more fiscal responsibility from our city leaders.
Clearly there was no “risk analysis” done Hack. This is why the city should not operate like a bank.
Outrageous! What interest and late penalties are being charged for this clear violation of Separation of Church and State and failure of The Master’s School to even attempt to fulfill a contract? Who knew that private, religious education was so profitable?
Obviously, there was no credible risk analysis, and the taxpayers are the underwriters. Did the city receive the first payment or was that just another empty offer? The city should demand that the school cease requiring students’ families to sign a Statement of Faith immediately.
I just visited the church school’s website and read their Statement of Faith and list of sponsors. I certainly would never sign such a statement or support such an organization. Was The Master’s School created out of some rift with the Baptist Academy or Baptist theology? Why isn’t the City of San Marcos listed as a sponsor?
The Master’s school provides a rare opportunity for children in this area to get a decent education. That’s a “public necessity” if I ever heard of one, and in that regard I agree with the Council’s decision to label it as such.
I agree that it is troubling that the school isn’t paying as schuled on the loan, but what would all of you prefer….that the Council just shut them down and throw all the kids out? It’s not like this debt is being forgiven – the Council is just agreeing to work with them on the terms of the loan.
As to the comments about “state sponsored religion”, I would remind you all that there is no prohibition on government becoming involved in dealing with religiously-themed businesses. The only prohibition would be on our government favoring one religious belief over another. To that end, I would expect the Council to be open to funding a similar deal should a school catering to Jewish, Muslim, or Hindu students be established here.
At its heart, this story is about education, not religion. I believe that our children need the best education that they can get and in San Marcos, the Master’s school provides a far better education than our public schools.
I agree that we desperately need better education in San Marcos, but in my opinion, funding a school which only allows students of a certain faith to attend is favoring one belief over another.
All denominations need a better education in San Marcos and if this is truly seen as a public necessity by our council, I would much rather have them going out proactively looking for a way to use that money to benefit all of our students.
The argument that nobody else has come along with a proposal for a Hindu school doesn’t hold any water. I elected them to *lead* San Marcos, which involves more than sitting back, waiting to evaluate the ideas that others bring to them.
Our schools are terrible. If this is City Council’s way of saying that they agree and they are interested in helping to fix the problem, then I would hope to see them working toward identifying and implementing some programs which would help all of our students.
For example, a condition of the loan could have been a tutoring/mentoring program for economically disadvantaged San Marcos students, regardless of denomination.
We need to help -all- of our students, not just the ones whose parents can afford $4K tuition.
I do agree that our public schools need help. However, I strongly disagree with any notion that those who can afford “better” shouldn’t have access to “better”. That’s one of the nice things about the free enterprise system.
I’m sitting here eating Taco Bueno for lunch, but I’m not about to demand that someone replace it with Fogo de Chao.
Yes it’s trivial to compare our education system to my lunch, but the overriding concept is the same. People with more resources have access to better services – and I wouldn’t ever vote to change that.
Yes, but should the public, including those who cannot afford (or are not allowed) in, subsidize that school? Perhaps the tuition needs to be a little higher, or perhaps the church needs to pony up a little more cash.
I do agree with you there, Ted.
If the school’s finances are such that they can’t make their debt obligations, then it becomes incumbent upon the leadership to do something about it. Either cost cutting measures or an increase in tuition seems to be called for here.
I don’t however, consider this loan a “government subsidy” so much as I do “alternative financing”. If they end up not paying the loan back, then I will change my tune. But as it’s currently structured, it’s a loan to me….and I don’t have a problem with government offering loans to businesses that benefit the public (yes, even only those members of the public that can afford it).
They already defaulted once and they are only offering to pay 10% this year. In two years, if they can’t come up with the 80% still due, plus interest (assuming they make the first two payments), will they get another extension to their alternative financing agreement?
What is wrong with the city attaching some benefit to lower-income families to this alternative financing agreement? Those are the families being under-served by our public schools.
The bottom line is that this council is much, much too free with our money. They give loans to big box retailers which are already locted here. They give loans to schools they think are deserving. They give loans to people they tink are deserving (Texas State professors, professionals at a hospital not even located in this city, etc.)
When will it stop.
Thar’s just plain wrong.
I send my kids to a private school because the schools here are sub-standard. And I damn sure don’t expect the taxpayers (many of whom can’t afford to send their kids to a private school) to pick up any portion of the tab.
Meanwhile, city leaders are pissing away tax dollars on a private school when they could be spending money bettering the public school, so maybe someday, my kids could go to a public school, like they should, on my tax dollars – but until then I get to pay for both.
Finally, why is this “loan” (anybody want to bet the “will” and I’ll take the “won’t” on repayment) going towards a school that excludes those who don’t share their faith.
Baker, I don’t think anyone on here will be taking that bet. Dano, you make a great point that it was the responsibility of the Master’s School administrator and board of directors to identify revenues weren’t sufficient to cover obligations and adjust accordingly. If they built a new school with no increase in tuition, well, then that’s probably the reason they had to get financing from the city rather than a conventional bank loan. If they were unwilling to raise tuition or secure other private funding, then they needed to scale-back the construction. Lucky for them (and unlucky for the taxpayers) that they found a lender that was willing to look past the obvious issues of financial stability, and, dare I say it… take it on “faith.”
Rasco, you and I are in agreement. Council plays way to fast and loose with the money. Perhaps its because so much of it comes from outsiders through sales tax, but that is no excuse for bad fiduciary behavior.
I’ll take your bet Baker. When the school pays the City back, I pick your Haloween costume.
Full disclosure, my children attend the Masters School but I did not and do not speak for the school on this or any other issue.
As I recall, the City stepped into the gap to front the money to bring city mandated water and power lines to the campus location in the ETJ. It was funded as an economic development loan, on the potential of 10 full-time positions and an established private school as an alternative option for economic development purposes.
The school failed to obtain an alternate source of funds, and made a proposal for an extension, which the City rejected. The school made a new proposal to pay off 10% of the total now and then 10% at the end of next year, plus a market rate of interest. The entire Council attended the meeting and discussion and only a single member voted against accepting the proposal.
I understand why city residents might be against the City funding private enterprise. Unfortunately, there appeared to be no good alternative for any party as to the extension. The City doesn’t want to be a landlord nor do they want to kick 100 kids out of school during the middle of a semester, and the school could have done without this negative attention.
As to your business ideas, tuition was increased, construction was scaled back to a bare minimum, donations were raised, and no tax dollar went to operating costs — i.e. you don’t pay for my kids to go to school. I don’t like the whole deal any better than most of you, but my children love their school. The school does an incredible job of providing the students with a foundation of knowledge and habits that profit the students when they graduate into the public schools.
As you continue to debate the merits of private-public partnerships, the school cannot avoid being the most recent example, but know that this situation is far different from one taxpayer cushioning the bottom line for a private, for-profit enterprise. Instead, this school is a non-profit that does its best to break even each year. Each educator takes less in pay and expends more in effort; each parent pays their school taxes and their child’s tuition; and the kids represent a cross-section of the community in every way. It has a human element that should not be entirely dismissed by the lesser policy discussion.
I’m not sure why the writer cites the San Marcos Academy here. It’s not the same entity. The Master’s School has always been separate.
Thanks for giving us “the rest of the story” John. Knowing this, I will stand by my original position that the Master’s school is important to San Marcos and that I support the Council’s decision in this matter.
BTW, those of you bouncing to the School’s website just to read and critique their statement of values….click on the next link down and look at their syllabus of classes. If public schools taught this stuff, there wouldn’t be so much trouble with the system.
Of course, our public schools are so busy trying to teach the bottom 10% to pass a standardized test that our gifted students don’t receive the attention they deserve….which is why public schools can’t teach this type of cirriculum and all the more reason why private school is an important option.
I am glad we enjoy the freedom to speak and discuss issues. While there may be disagreements from time to time, we are still all members of this wonderful community called San Marcos. From what I’ve heard, The Master’s School is a positive element in our community. The disagreement I have with the City Council on this topic is the fact they used our public funds to selectively support private education for the 97 students currently enrolled at The Master’s School. I believe our public funds should correlate to public education, and let the private funds support private schools.
Dano, whatever success our schools see, it is with the top 10% of the students, not the bottom 90 (much less the bottom 10).
I’m not sure why you would expect me to change my mind after reading the syllabus. Our economically disadvantaged students should not be funding a superior school which they cannot attend because of financial wherewithal or religious views.
If there were some benefit to the larger population of students in San Marcos, I’d be more receptive.
Also, if tuition was raised, construction was scaled back to a minimum, donations were raised and the teachers are paid less than at other schools, yet the organization does its best to break even each year, how is the loan going to be repaid?
Ted, $34,000 was repaid this month. I don’t know of a single other debtor to the City that paid off 10% of its debt this year. The same will happen next year and alternate financing will pay the other 80%. This was and will be done by parents giving more and the school continuing to spend less.
Your argument about economically disadvantaged students funding a school they cannot attend is not true, as they are net tax beneficiaries and therefore fund nothing beyond their needs. This is as it should be but undermines your point.
I don’t understand your second point. They pay taxes that go into the city’s coffers, which funded this loan.
The comments by Dano and J. McGlothlin make perfect sense to me. There’s no violation of “separation.” That concept is commonly misconstrued, and Dano’s response is accurate and helpful.
As John points out, the Council originally sought to address an unusual situation involving the property’s ETJ status. I don’t know enough to judge how extraordinary the remedies were. But there’s nothing to warrant “the City of San Marcos listed as a sponsor,” as R. Bowen contends.
Rick proposes something to the effect that religious education is excessively profitable, or it is so in this case. Of course there must be no unethical profiteering in any of our City’s affairs. Rick’s opinion seems to fall short of an allegation, however, and I dismiss it accordingly.
My children have been enrolled a collective 10 years at The Master’s School and 5 years in SMCISD. They are both in SMCISD now.
I warmly respect Mr. Bose’ view as reported in the article. I don’t object to the current situation and I’m glad our City Council members can each offer their wisdom and vote their conscience.
If person A pays $1,000 in City taxes and receives $3,000 in City benefits, it seems inaccurate to suggest that person A has funded anything beyond his/her own City benefits.
They paid taxes to fund their school and they paid taxes to fund your school.
I still have not heard ANY reason why some benefit could not be provided to the larger community, in exchange for this assistance.
The school signed a CONTRACT. They committed to the citizens of SM to pay 100% of the loan by now. The fact that they paid 10% of the loan this year is not a positive thing.
At a minimum, some of that money could have been used for the “stuff the backpacks” month.
$350,000 would fill 7,000 backpacks (before any volume pricing or matching donations were negotiated). We could have supplied hundreds of our poorest students with the basic tools they need to even go to school, every year, for that money.
I agree that we need better schools.
I agree that there is significant economic benefit to having better schools.
I’m just having trouble reconciling the idea that a segment of our population with every advantage needs one more advantage tossed their way, while we have huge school supply drives every year and only about 15% of our economically disadvantaged students graduate college ready.
It would seem to be the Christian thing to do, to reach out to the larger community with a program to help even a small segment of these students.
It would also seem prudent for the City Council to look into what they can and cannot do, to help our public schools along.
According to the City, many companies are looking for diversity of educational opportunities when considering cities to relocate. The Council determined that TMS is an economic benefit (the broader benefit) in providing an established private school. Therefore, the City provided a bridge loan that allowed the necessary infrastructure to be completed in time for the school to open in 2008-09.
This month, the City extended 90% of the loan while 10% was paid off. The 10% was paid off in accodance with the current contract between TMS and the City, a contract that is not in default.
I am not saying the loan was a good idea last year, but this month’s extension was the best way forward, as evidenced by the fact that only 1 councilmember voted against it. I expect the School to pay off the loan in accordance with the terms of the extension, and I feel confident that they will.
It is a less than ideal solution, no doubt. But Chicken Little efforts to paint the school as deadbeats, profiteers, or taking from the less privileged are inaccurate and unproductive. Sean Batura already did his best at that, and I hope that NS next executive council leak provides the full story or NS hires a journalist who will go and get it.
Two of the council members were not present to vote. To presume to know how they would have voted is self-serving and unproductive.
Also, history has demonstrated that even a majority vote on council does not always equate to “the best way forward.”
Lastly, to turn this around and paint the school as a victim of some sort is also inaccurate and unproductive. Legitimate concerns were raised here about whether this is a good use of the city’s money. The easiest way to avoid such scrutiny is to not accept public funds.
There used to be wrist bands worn with initials “WWJD” and the answer to the question it posed, based on his words, would have been to do as Ted suggested and spend the money on the less fortunate children who struggle in school here because they don’t have the supplies, etc. rather than help those who can afford the luxury of private schools. And, as a former public school teacher for a brief period of time, if you want to improve our local schools two simple answers would do it:
One, find a better way of accountability than the stupid tests which result in “teaching to the test.” (After all, didn’t kids come out smarter in the 50’s-60’s before that crap when it was just final exams like college??). Second, and MOST important, lower the student-teacher ratio by half so our teachers can devote the quality time to students!
You get what you pay for.
I am hoping that there is more to this story… Am I correct to understand that the City of San Marcos has extended an economic benefit to an entity that discriminates based on creed?
@Ted: I just saw this comment that you made yesterday and wanted to follow up on it. You said “whatever success our schools see, it is with the top 10% of the students, not the bottom 90 (much less the bottom 10).”
I agree with this statement wholeheartedly and wanted to make sure you hadn’t misconstrued my comment on this point. My complaint is that our public school systems extend a MASSIVE amount of resources on the lower tier of students. Whether it’s trying to mainstream the lower performing students or catering to those at risk of dropping out, our education system spends a ton of money on the bottom end of our student population.
On the other hand, as you pointed out, the top 10% of our students are where our promise in our future lies. These are the leaders of tomorrow, and yet you constantly hear about G&T programs being scaled back or cut and honor programs being eliminated in favor of “mainstreaming” these students. How can a gifted kid truly learn to excel if they’re being taught on a pace set for the slowest kid in the class?
I guess they don’t want to hurt the other kids’ feelings by putting forth the idea that some are simply smarter than others.
I don’t have a problem with assisting students in need, but in no way should the focus of our education system be anywhere but on the highest-performing. Instead of teaching mediocrity, we should be teaching excellence.
I am not sure that we agree. If most of the money is being spent on the kids at the bottom, it is not being spent well. Schools in surrounding districts do a much better job of educating these kids and schools outside of Texas blow us out of the water.
The majority of our students are economically disadvantaged and only 15% of those students graduate college ready. That is appalling, by any standard and a failure of our school system.
I would question whether any appreciable resources are being dedicated to these kids.
BTW, I graduated at the bottom of my class…
Maybe this is why the City is so tolerant with the loan default.
According to a July 16, 2008 published report by Brad Rollins (Mercury), Jeff Etheredge, son of former Hays County Judge Eddy Etheredge, is alleged to have improperly diverted money from the Master’s School to secure a personal bank loan, resulting in a lawsuit filed in state district court.
As president of the Master’s School board, Etheredge was authorized to oversee the sale of 40 acres on McCarty Lane, a transaction that was finalized in August 2007.
The suit alleges that Etheredge diverted $281,000 to a certificate of deposit in his name at Broadway National Bank. Etheredge then used the certificate of deposit as collateral on a $281,000 personal loan from the bank.
Broadway National Bank filed suit against Master’s School of San Marcos and Jefferson Etheredge on June 30, 2008 in Texas Western District Court (Case No. 5:2008cv00521). That appears to have been settled with an insurance payment.
Now, Broadway National Bank has sued Jefferson R. Etheredge in the 207th District Court. Case No 09-0711, was filed 05/05/09.
County Judge Eddy Etheredge and Pct 2 County Commissioner Jeff Barton were both booted out of office in 1997 amid cries of corruption. Jeff’s father, Bob Barton, has quite a reputation himself. Bud Burnett resigned from the PEC board last year amid cries of corruption, and his son, Bill Burnett engaged in an egregious conflict of interest involving the 2001 road bond while Pct 3 county commissioner.
Like fathers, like sons. The torch is passed to a new generation in Hays County.
Dano, from one who’s taught in public schools (not San Marcos), the money is spent on those at the top–with small teacher/student ratio G&T classes, and those at the bottom in terms of “special education” or discipline issues.
But it is the vast majority in between that lose out with terrible teacher/student ratio classes and much less individual attention simply because the teachers are overwhelmed by the numbers. Hmm, see any relation to how the middle class is treated in general by our tax laws?
Therein is the real cause of the problem: Don’t be stupid enough to fall for the myth or trap of blaming local school employees/leadership—blame the state and federal politicians (both parties) who create the “feel good” laws that have gotten us into this situation and the voters (or lack thereof) who consistently elect them.
We the people have the opportunity (and duty) to change this. That’s why we celebrate veteran’s day because others paid the ultimate price for our freedom to make choices—too bad we have made bad ones when it comes to quality education of our kids, our future.
Master’s School parents = Susan supporters = political power base.
Follow the money.
It’s spent from YOUR taxes.
It’s enabled with your vote last, and next November.
The only thing that gets in the way of B. Franklin’s paranoia is that his base assumption is not true. I did not recognize a single name on Susan’s fundraising filings as a TMS parent. There is no money to follow.
Gregson and the posters are seeing shadows and just throwing mud out to see what sticks. The school is not a political entity, but rather a small faith-based private school alternative which does a superb job of preparing its students for academic success and life. The kids should not be something Scott Gregson steps on as a part of his broader obsession with the Mayor.
B. Franklin stayed too long at O’Dell’s groundwater pool party. I’m waiting for them to connect the dots to … Ramusgate!
I still believe our public funds should correlate to public education, and let private funds support private schools. While that opinion differs from the leadership of The Master’s School and the majority our City Council, there are plenty of citizens who would prefer more openness and greater fiscal responsibility by city government.
O’Dell, get your head out of your ass. Your implication that people are guilty merely by association (or genetics) is total bullshit. And you know it. Is that the best that the President of the Ethical Society of Austin can do?
The 1998 election was ruled by one thing – George Bush’s re-election as Governor of Texas. There were no charges of corruption against Etheredge or Barton. The Republicans took over the County that year – and the fact that we had a 500 year flood right before the election didn’t help voter turn-out any. Oh, wait a minute. You didn’t even live in Hays County back then – so you wouldn’t really have anyway of knowing this. Sorry, I forgot there was a reason for your being so misinformed on the subject.
And as for Bob Barton’s reputation. Maybe you need to ask around a bit more about that reputation. I think you might be quite surprised to learn about it. Corruption? No. Greed? No. But you really should do some “real” research on the topic.
like father like sons, eh Chucky “gobbels” odell. where did you learn to lie like you do ? was this something one of your parents taught you so that you would help cover up some of the things they were doing they didnt want their spouse to learn of.
That is probably not the only thing that gets in the way of my paranoia, but I will say this:
I am not speaking of campaign contributions per se, but rather of buying political influence and perhaps even votes with our tax dollars, much like the StoneCreek debacle, as well as the ill fated Springtown giveaway.
What definitely aggravates my paranoia, is the feeling that we have a deep rooted cancer within our city government that operates according to its own self serving agenda, funded by you and me (the taxpayers) and that we have completely lost any sense of control over it (for the people and by the people, remember?) and that there is no solution or end to it, in sight.
Yes, I’m paranoid; most definitely.
I am going to assume finance is not a course offered at this school?
I’m not paranoid, if you want paranoid look at O’Dell’s posts. And we the taxpayers, or least the 2000 of us who actually bother to vote in municipal elections, can do something about. That goes a long way to explaining why Thomides got such a resounding victory.
Part of the problem is that until Newstreamz and to a leaser extent Mercury came around, it was hard to keep informed as to what was going at city hall. All we had was the almost Daily Record, which meant we had next to nothing.
Look I’m sure the Masters school is a wonderful school, but it also obviously has some pretty serious finacial problems. Municipal government should not act as a bank, and should use incentives sparingly.
I wholeheartedly agree with Larry (“municipal government should not act as a bank, and should use incentives sparingly”).