Catawba Indian leader says $4.5 million debt to Rock Hill schools is hardship for tribe
The Rock Hill school district’s latest attempt to collect a decades-long $4.5 million debt from the Catawba Indian Nation would hurt the tribe’s future, says Chief Bill Harris.
After failed attempts to have the tribe pay a debt it owes from an agreement in the 1990s, the Rock Hill school board is moving through the legal process to have tribal property sold at public auction, said Mychal Frost, director of communications for Rock Hill schools.
Tribal property is not a source of tax income for school operations. The Catawba Indian Nation, located east of Rock Hill, agreed in 1993 to pay out-of-district tuition fees for its schoolchildren in lieu of taxes.
In 1999, the district was awarded a court judgment of $405,605 plus interest to cover those fees, according to school board documents.
A second lawsuit was filed in 2003 seeking non-paid fees from subsequent school years. In that case, the S.C. Supreme Court awarded $2.5 million to the district in May 2008, documents state. Since Act 388 removed residential property from school tax rolls in 2006 in South Carolina, the Catawba Nation no longer owes the school district tuition. However, with interest, the tribe’s previous debt has grown to $4.5 million.
Property the tribe owns, which is not part of the reservation, and funds earned from the tribe’s commercial activities, such as bingo games, can be seized, documents state.
“If the school district successfully forces the sale of the tribe’s non-reservation properties, you will have taken our last remaining resource,” Harris said in a letter to school district officials sent in November. “In advancing your mission by taking these lands, the school district would simultaneously destroy our hope that we can uplift ourselves economically for the benefit of our people and our neighbors.”
Harris’ letter outlines the tribe’s inability to pay the debt. He said the tribe has not seen any profit from bingo operations, which were re-established in July 2014.
After expenses, the tribe reported a loss of more than $200,000 from its bingo operations in 2014 and a loss of more than $700,000 in 2015, according to the S.C. Secretary of State Public Charities Division.
The tribe’s bingo operations are considered a nonprofit organization under the Catawba Indian Claims Settlement Act.
The goal of the tribe is to become economically viable and self-sufficient. If one of our few resources to help attract business partners and use for startup capital is taken away, then it makes this goal even harder, indeed nearly impossible, to reach.
Chief Bill Harris
Before expenses, the tribe had $2.5 million in gross revenue from bingo operations in 2014, $5.4 million in 2015 and had $4 million as of Dec. 29, 2016, according to the S.C. Department of Revenue.
By law, the tribe has to pay 10 percent of the face value of bingo paper to the state and set aside at least 50 percent of its gross sales for prizes, according to the state Department of Revenue. The remaining money goes to operations and pay.
The tribe receives federal funding through the Bureau of Indian Affairs. However, that money must pay for social services the tribe provides its members, such as children’s welfare, clothing and food to needy members, as well as economic development and financial aid to the tribe’s government, which funds administrative duties.
“These funds can only be used for the purposes outlined by that government agency,” Harris wrote in an email to The Herald. “It would be a violation of federal law to use those funds to pay down the school debt.”
When the settlement was reached, Harris said the tribe and the school district thought the obligation would be met, at least in part, by federal Impact Aid, a program that provides funding to school districts to offset the impact of tax-exempt federal property, including Indian lands.
However, that program applies only when the number of students is equal to 400 or 3 percent of daily attendance. About 100 children who live on the reservation currently attend Rock Hill schools, Harris said.
“This number and percentage are far greater than the number and percentage of Catawba children in the local school district,” Harris said. “If the Tribe, and probably the school district, had understood this something very different and more rational would have been negotiated.”
The tribe has been unable to secure federal funds for its schoolchildren’s tuition. Last June, state lawmakers denied adding a $500,000 Senate proviso that would have helped the tribe make a dent in the 20-year-old tuition bill, with state Rep. Gary Simrill, R-Rock Hill, stating that it was tribe’s responsibility to pay.
According to 2000 Census data, the most recent available, the per capita income of the Catawbas was $11,096.
“Ironically, when we read the South Carolina Constitution and see that it guarantees a free education to all children in the state, we wonder why the Catawba Indian Nation, one of the poorest communities in South Carolina, has been charged so much,” Harris said in the letter.
Any attempts on (the tribe’s) part are delaying what they know to be true, which is that they owe a debt to the school district.
Mychal Frost
Rock Hill school district spokesmanFrost said the school district is taking steps to get the debt paid.
“Any attempts on (the tribe’s) part are delaying what they know to be true, which is that they owe a debt to the school district,” he said. “We are simply acting at the pleasure of the school board to move forward with this action.”
The tribe recently offered a settlement of $1 million, to be paid through two properties deeded to the district with a value of $391,200 and an annual payment of 20 percent of the tribe’s net commercial revenue until either the payment has been made or 10 years has passed, according to school board documents.
“We do not have a tax base, so it is only through economic development that we can generate the revenues needed to meet our obligations as a government to address the welfare of the Catawba people,” Harris wrote in an email. “The goal of the tribe is to become economically viable and self-sufficient. If one of our few resources to help attract business partners and use for startup capital is taken away, then it makes this goal even harder, indeed nearly impossible, to reach.”
Frost said the tribe’s offer would not fulfill even half of the debt.
“The tribe is not meeting the obligation,” he said.
Harris requested the district hold off on legal action until an agreement can be reached.
“We would like to settle for a lesser, more fair amount that would not have the effect of bankrupting the tribe, but we need time to try to find the money to pay the district,” he said in the letter. “We want the school district to be successful and well-financed, but it is not fair that this should come at the expense of the future of our tribe.”
The district has until May to take legal action as a result of the 2003 lawsuit, Frost said.
This story was originally published January 22, 2017 at 3:47 PM with the headline "Catawba Indian leader says $4.5 million debt to Rock Hill schools is hardship for tribe."