1



            1     STATE OF INDIANA    )     IN THE KOSCIUSKO COUNTY COURT
                                      )ss:
            2     COUNTY OF KOSCIUSKO )     Cause No. 43C01-0310-PL-731

            3
                  CONCERNED CITIZENS FOR QUALITY EDUCATION      )
            4     INC., an Indiana not-for-profit corporation;  )
                  MARY GREEN; VALLERIE A. ROWLAND; REBECCA S.   )
            5     THOMAS and GORDON H. VANATOR,                 )
                                                                )
            6              Plaintiffs,                          )
                                                                )
            7     vs.                                           )
                                                                )
            8     WARSAW COMMUNITY SCHOOL CORPORATION; DR.      )
                  DAVID McGUIRE, Individually and as            )
            9     Superintendent of the Warsaw Community School )
                  Corporation; RANDE THORPE, Individually and   )
           10     as CFO of the Warsaw Community School         )
                  Corporation; CRAIG ALLEBACH, LARRY CHAMBERLIN,)
           11     CATHY FOLK, JAMES FOLK, MARK MINATEL, RON     )
                  YEITER, and GENE ENGLAND, Individually and as )
           12     Members of the Board of Trustees of Warsaw    )
                  Community School Corporation,                 )
           13                                                   )
                            Defendants.                         )
           14

           15                 The Deposition of Rande Thorpe

           16                  Date:  Friday, May 28, 2004

           17                  Time:  9:30 a.m.

           18                  Place: 1 Administrative Drive
                                      Warsaw, Indiana
           19

           20          Called as a witness herein in accordance
                       with the Rules of Civil Procedure
           21

           22     Before Lori F. Matthaidess, Certified Shorthand Reporter

           23
                                 SUMMIT CITY REPORTING, INC.
           24                   Certified Shorthand Reporters
                                    3492-B Stellhorn Road
           25                     Fort Wayne, Indiana 46815






                                                                          2



            1     APPEARANCES OF COUNSEL:

            2

            3             For the Plaintiffs:

            4                  John R. Price
                               Attorney At Law
            5                  John R. Price & Associates
                               9000 Keystone Crossing
            6                  Suite 150
                               Indianapolis, Indiana 46240
            7                  (317) 844-8822

            8

            9             For the Defendants:

           10                  Thomas E. Wheeler
                               Attorney At Law
           11                  Locke Reynolds, L.L.P.
                               201 North Illinois Street
           12                  Suite 1000
                               P.O. Box 44961
           13                  Indianapolis, Indiana 46244
                               (317) 237-3800
           14

           15             Also Present:

           16                  David McGuire
                               Jim Folk
           17                  Max Reed
                               Jeff Dotson
           18                  Lisa McCoy

           19

           20

           21

           22

           23

           24

           25






                                                                          3



            1                               INDEX

            2                  The Deposition of Rande Thorpe

            3     DIRECT EXAMINATION
                  By Mr. Price................................ Page 4
            4
                  CROSS-EXAMINATION
            5     By Mr. Wheeler.............................. Page 95

            6     REDIRECT EXAMINATION
                  By Mr. Price................................ Page 125
            7
                  RECROSS-EXAMINATION
            8     By Mr. Wheeler.............................. Page 135

            9     FURTHER REDIRECT EXAMINATION
                  By Mr. Price................................ Page 138
           10
                  FURTHER RECROSS-EXAMINATION
           11     By Mr. Wheeler.............................. Page 139

           12
                                          EXHIBITS
           13                                                       OFFERED

           14     Plaintiffs' Exhibits:

           15     A - Calendar Financial Report dated 1-31-01           8
                  B - Calendar Financial Report dated 1-28-02          10
           16     C - Calendar Financial Report dated 1-28-03          11
                  D - Calendar Financial Report dated 1-27-04          11
           17     E - Summary of Warsaw Schools Financial Data         12
                  F - Inflation Calculator                             14
           18     G - Report from Public Hearing for 2004 Budget       16
                  H - Projected Potential Maximum Cost Savings         26
           19     J - Times-Union Article dated June 27, 2000          45
                  K - Financial Update dated March 2003                60
           20     L - Silver Lake Elementary Proposed Savings          91

           21
                  Defendants' Exhibit:
           22
                  1 - Cost Per ADM - Elementary Schools               110
           23

           24

           25






                                                                          4



            1                           Rande Thorpe,

            2                    being previously duly sworn

            3                       testified as follows:

            4                        DIRECT EXAMINATION

            5     BY MR. PRICE:

            6     Q.     State your name please.

            7     A.     Rande Thorpe.

            8     Q.     Mr. Thorpe, have you had your deposition taken

            9            before?

           10     A.     Yes, I have.

           11     Q.     Okay.  So you know what I call the rules of

           12            engagement?

           13     A.     Well, it was a long time ago.

           14     Q.     Let me just hit them real quick.

           15     A.     Sure.

           16     Q.     Probably the most important from the court

           17            reporter's view point, your answers have to be

           18            verbal.  There's a tendancy to give an uh-huh or

           19            head nod and she can't record those.  Secondly, my

           20            questions will occasionally be long, tortuous and

           21            difficult to understand, and at that point I want

           22            you to say to me, "That was long, tortuous and

           23            difficult to understand.  Could you please

           24            rephrase it?  Could you please state the question

           25            again?"  If you don't say to me, "I don't






                                                                          5



            1            understand your question"--

            2     A.     Uh-huh.

            3     Q.     --then I will assume that you do understand my

            4            question; is that fair?

            5     A.     Yes.

            6     Q.     If you need a restroom break at any time, just let

            7            me know.

            8     A.     I would ask one thing.

            9     Q.     Sure.

           10     A.     Can we turn the blinds town please?

           11     Q.     Sure.  We're going to be using exhibits here

           12            today, and I'll hand you various documents to

           13            examine them and ask you some questions.  I'm not

           14            hear today to try to trick you in any way.  I just

           15            want to get the facts.

           16     A.     Sure.

           17     Q.     Do you have any questions at this point before we

           18            get started?

           19     A.     No.

           20     Q.     What is your address?

           21     A.     3187 North Glen View Drive, Warsaw, Indiana.

           22     Q.     And your age?

           23     A.     47.

           24     Q.     Your marital status?

           25     A.     Married.






                                                                          6



            1     Q.     Children?

            2     A.     Two.

            3     Q.     Okay.  Your educational background please?

            4     A.     I have a undergraduate degree in religious

            5            education, associate's in arts.  I have

            6            associate's in general studies and I have an

            7            MBA.

            8     Q.     Where did you obtain those degrees?

            9     A.     Baptist College in Pennsylvania.  Indiana

           10            University and Indiana Wesleyan University.

           11     Q.     Your MBA is from?

           12     A.     Indiana Wesleyan.

           13     Q.     Okay.

           14     A.     I currently have some doctorate studies also.

           15     Q.     Tell me your work background, if you would, after

           16            college.

           17     A.     After college I spent two years as an independent

           18            Baptist minister and then worked for L.N. Berry

           19            (phonetic) for approximately seven-and-a-half

           20            years.  I've worked here for 16-and-a-half.

           21     Q.     When you say "here"--

           22     A.     Warsaw Community Schools.

           23     Q.     The beginning portion of that 16-and-a-half years

           24            coming up to today, tell me the positions that

           25            you've had by title.






                                                                          7



            1     A.     I started September of 1987 as transportation

            2            director to approximately January of 1988 so

            3            that's about three months.  In addition to

            4            transportation director, I assumed director of

            5            classified personnel which is support personnel.

            6            In March approximately of that year, I also

            7            assumed responsibility for the oversight of food

            8            service, maintenance, capital projects.

            9            Approximately July of that year, I also assumed

           10            responsibility for the business department with

           11            the exclusion of the finance--with exclusion of

           12            the budget.  Do you want me to continue after

           13            that?

           14     Q.     Yes.  Uh-huh.

           15     A.     Approximately a year after that I assumed the

           16            entire responsibility for everything including the

           17            budget.  Kent Adams was here at the time as a

           18            part-time employee, and he was partially involved

           19            in the budget at that time so there was a little

           20            bit of a vagueness as far as responsibilities but

           21            somewhere around, I think, 1990, then I became the

           22            business manager and chief financial officer

           23            whatnot.  The title has changed over the years but

           24            it's been basically the same position.

           25     Q.     Would it be equivalent in business to CFO?






                                                                          8



            1     A.     The title that we're using currently for the

            2            school district is chief financial officer.  There

            3            is some differences between the two but you could

            4            say it's similar.

            5     Q.     Similar duties and responsibilities?

            6     A.     It's school CFO and not a business CFO.

            7     Q.     As CFO you have the responsibility primarily for

            8            reporting to your other officers and board

            9            concerning financial matters?

           10     A.     I have a responsibility to report to the

           11            superintendent regarding finances.

           12     Q.     You don't report to the board?

           13     A.     Indirectly through the superintendent.

           14     Q.     Not directly?

           15     A.     Not directly, that's correct.

           16     Q.     Do you regularly attend board meetings?

           17     A.     Yes.

           18     Q.     And do you participate in the board meetings?

           19     A.     Yes, I do.

           20                              (Plaintiffs' Exhibit A was

           21                               introduced into evidence.)

           22     BY MR. PRICE:

           23     Q.     Mr. Thorpe, let's begin with some annualized

           24            financial data for Warsaw Community Schools.  I'm

           25            going to hand you what's been marked as






                                                                          9



            1            Plaintiffs' Exhibit A.

            2                    MR. PRICE:  Can we go off the record for a

            3            minute?

            4                    (Short recess.)

            5     BY MR. PRICE:

            6     Q.     Would you identify this document for me, please.

            7     A.     It appears to be what we commonly refer to as the

            8            Form 9, which we receive back from the State of

            9            Indiana after we submit our financial information

           10            at the end of each year.

           11     Q.     The Indiana Department of Education Division of

           12            School Finance generates this document back to

           13            you; is that correct?

           14     A.     Yes.

           15     Q.     And the source or input into this document for the

           16            Department of Education Division of School Finance

           17            is the Warsaw Community Schools?

           18     A.     Yes, that's correct.

           19     Q.     If you would go to page 38.

           20     A.     Where is the page number?

           21     Q.     The third page from the rear.

           22                    MR. WHEELER:  Is this it?

           23                    MR. PRICE:  Yeah.

           24     BY MR. PRICE:

           25     Q.     Can you tell me for the year January 1 through






                                                                         10



            1            December 31, 2000, what the grand total of all

            2            expenditures was for Warsaw Community Schools?

            3     A.     I just wanted to see what funds are included.  The

            4            total receipts or the total expenditures?

            5     Q.     The total expenditures please.

            6     A.     The total expenditures of this year according to

            7            the report are $54,858,889.55.

            8     Q.     Do you know if there are other expenditures to the

            9            school corporation in addition to this figure?

           10     A.     Based on what I'm seeing, it appears this is

           11            all.

           12     Q.     Okay.  If you would go to page 3 of Exhibit A.

           13            Can you tell me for the year 2000 going from

           14            January 1 to December 31, what was the cash

           15            balance as of December 31, 2000?

           16     A.     For all funds it's listed as $9,457,533.25.

           17                              (Plaintiffs' Exhibit B was

           18                               introduced into evidence.)

           19     BY MR. PRICE:

           20     Q.     Mr. Thorpe, I'm going to hand you what's been

           21            marked as Plaintiffs' Exhibit B, and here if you

           22            would identify that document for me please.

           23     A.     Again, it appears to be the Form 9 return from the

           24            State of Indiana.

           25     Q.     Would you go to page 36 this time, which again is






                                                                         11



            1            three pages from the back?

            2     A.     Sure.

            3     Q.     Tell me if you would please the grand total for

            4            all expenditures for 2001?

            5     A.     The grand total is $56,243,317.83.

            6     Q.     Okay.  And if you would go to page 3 of Exhibit B,

            7            what was the cash balance at the end of the year

            8            2001?

            9     A.     $11,023,804.18.

           10                              (Plaintiffs' Exhibit C was

           11                               introduced into evidence.)

           12     BY MR. PRICE:

           13     Q.     Mr. Thorpe, I'm going to hand you what's been

           14            marked as Exhibit C and ask you to identify that,

           15            if you would please.

           16     A.     Again, it appears to be the Form 9 from the State

           17            of Indiana.

           18                              (Plaintiffs' Exhibit D was

           19                               introduced into evidence.)

           20     BY MR. PRICE:

           21     Q.     If you would turn to page 34, three pages from the

           22            back, for the year of 2002, what was the grand

           23            total of all expenditures?

           24     A.     $62,427,050.13.

           25     Q.     The same drill.  If you would go to page 3 and






                                                                         12



            1            tell me the cash balance at the end of the year

            2            2002.

            3     A.     That's $10,913,825.30.

            4     Q.     I'm going to hand you and also your counsel a copy

            5            of Exhibit D and ask you to go to page 34 of

            6            Exhibit D.  Tell me for the calendar year 2003.

            7     A.     What page was that please?

            8     Q.     Page 34, three pages from the rear.

            9     A.     Sure.

           10     Q.     What was the grand total of all expenditures for

           11            the calendar year 2003 by Warsaw Community

           12            Schools?

           13     A.     $82,143,942.13.

           14     Q.     If you go to page 3, what was the cash balance at

           15            the end of the year 2003?

           16     A.     $13,433,427.66.

           17                              (Plaintiffs' Exhibit E was

           18                               introduced into evidence.)

           19     BY MR. PRICE:

           20     Q.     Now, keeping A, B, C and D handy there, if you

           21            would please, I'm going to hand you Plaintiffs'

           22            Exhibit E and ask you if you just take a moment

           23            and compare the numbers that are on this

           24            demonstrative exhibit with the numbers on the

           25            exhibits in front of you, A, B, C and D, to see if






                                                                         13



            1            there are any errors in those numbers and just

            2            take your time.

            3     A.     Based on the information included, the numbers are

            4            correct.

            5     Q.     Okay.  Is it accurate, Mr. Thorpe, that the Warsaw

            6            Community Schools' gross expenditures increased

            7            from 1-1-00 to 12-31 of '03, a four-year period in

            8            gross expenditures, approximately 49.7 percent,

            9            and I have a calculator here if you--

           10     A.     Yes, if you take into consideration temporary loan

           11            as expenditures, that's correct.

           12     Q.     Let's look at cash balance.  Is it accurate that

           13            for the same period from looking at the cash

           14            balance at the end of 2000 and the cash balance at

           15            the end 2003, that the cash balance had increased

           16            by 42 percent?

           17     A.     Yes.  The total cash balances that would be

           18            accurate as of December 31 of the end of the year,

           19            that's correct.

           20     Q.     Let's come back to your testimony concerning

           21            increases and expenditures.  Tell me what you mean

           22            by temporary loans.

           23     A.     Temporary loans included dollars that we borrow

           24            for cash flow purposes throughout the year, and

           25            those do show up as expenditures.






                                                                         14



            1     Q.     Do they show up when you spend them or when you

            2            borrow them?

            3     A.     They would show up when they're expended because I

            4            believe that's what this report is listing.

            5     Q.     Let me see if I understand your testimony.

            6            Whether you borrowed the money or whether it came

            7            in taxes or the sale of hot dogs at football

            8            games, the gross expenditures that you testified

            9            to concerning--or from A, B, C and D and

           10            summarized in E, would be accurate in terms of

           11            dollars spent?

           12     A.     It would appear to include--  Let me look at this

           13            a moment, please.  I don't seem to find the sheet.

           14            Here we go.  For debt service, that's correct.  It

           15            doesn't--  It would include all expenditures made

           16            through that year, that's correct.

           17                              (Plaintiffs' Exhibit F was

           18                               introduced into evidence.)

           19     BY MR. PRICE:

           20     Q.     Thank you.  Mr. Thorpe, I'm going to hand you

           21            what's been marked as Plaintiffs' Exhibit F.  Do

           22            you know what the inflation rate was for the

           23            period of January 2000 to January of 2004?

           24     A.     Well, according to the document you provided, it

           25            states that the inflation rate is 9.72 percent.






                                                                         15



            1     Q.     And there's this nifty little Internet website

            2            where you can plug in periods and it gives the

            3            calculation?

            4     A.     I'm assuming that's accumulative.

            5     Q.     The one thing I learned is you can't add up each

            6            year because there's a cumulative way of looking

            7            at it?

            8     A.     That's right.

            9     Q.     Do you have any reason to doubt that the

           10            information from InflationData.com is 9.72

           11            percent?

           12     A.     No.  This would be CPI-U so correct.

           13     Q.     Can you tell me, Mr. Thorpe, for the period of the

           14            last four years, the same four years we've been

           15            looking at in these documents, what the increase

           16            in student population was in Warsaw Community

           17            Schools?

           18     A.     Off the top of my head, no, I don't know.  I mean,

           19            it is included in our budget, but I don't remember

           20            off the top of my head.

           21     Q.     Let me give you a couple numbers and see if you

           22            agree or disagree.

           23     A.     Sure.

           24     Q.     In Mr. McGuire's affidavit he told the Court that

           25            the school has 6,464 students.






                                                                         16



            1     A.     I would say that's accurate.

            2     Q.     I'll represent to you in going through the

            3            documents that we were provided, I found a number

            4            in 1999 in the community-based planning study by

            5            Boyd and Ellis that showed at that time that the

            6            student population was 6,285.  Would you agree

            7            that's probably correct, if you know?

            8     A.     I don't know.  I would have to see if it's ADM or

            9            what it is.  I really don't know.

           10                              (Plaintiffs' Exhibit G was

           11                               introduced into evidence.)

           12     BY MR. PRICE:

           13     Q.     That's fine.  I'm going to hand you what's been

           14            marked as Plaintiffs' Exhibit G.  If you would go

           15            to the third page of this document.  Up at the top

           16            it says page 3.  Do you see the sentence at the

           17            end of this paragraph which says, "Significant

           18            cuts to our 2003 budget assisted in the recovery,

           19            but additional, substantial and painful cuts will

           20            still be necessary to bring us in balance"?

           21     A.     You're asking if I see the sentence?

           22     Q.     Yes.

           23     A.     Yes, I do.

           24     Q.     Did you write that sentence?

           25     A.     Yes, I did.






                                                                         17



            1     Q.     And, in fact, you were the author of Exhibit G; is

            2            that correct?

            3     A.     That's correct.

            4     Q.     Look at the last page of this document, page 6.

            5            Question 6:  "What are we doing to bring general

            6            fund revenue and expenses back in balance?"  The

            7            answer here--

            8     A.     I'm sorry.  What page?

            9                    MR. WHEELER:  The last page.

           10                    MR. PRICE:  This page.

           11                    THE WITNESS:  Okay.

           12     BY MR. PRICE:

           13     Q.     I'm on Question 6.

           14     A.     Uh-huh.

           15     Q.     And the answer is, "Since 1990, we have eliminated

           16            expenses wherever possibly.  Our primary approach

           17            has been to reduce cost in areas that would have

           18            the least effect in student education programs,"

           19            and below that it says, "We anticipate that

           20            further extensive cuts will be required to bring

           21            receipts and expenses into balance."  Do you see

           22            that

           23     A.     Yes.

           24     Q.     Can you square for me, Mr. Thorpe, the claim in

           25            this document that there have been additional,






                                                                         18



            1            substantial and painful cuts and further extensive

            2            cuts with the financial records which appear to

            3            show that as a gross expenditure matter, the

            4            spending by Warsaw Community School Corporation in

            5            the last four years has gone up by about 50

            6            percent?

            7     A.     Sure.  Looking first at page 3 of the document

            8            you're referring to--

            9                    MR. WHEELER:  That's referring to Exhibit

           10            G?

           11                    THE WITNESS:  Referring to Exhibit G,

           12            that's correct.

           13     A.     We're talking about in that paragraph there that

           14            the percentage of increase in revenue was actually

           15            going to grow greater than the percentage of the

           16            budget increase.  By that I'm referring to when

           17            the budget is built for the years prior to that,

           18            the percentage increase in revenue had been less

           19            than the percent that the budget had increased,

           20            so, in other words, the budget was growing faster

           21            than the revenue was growing than we were

           22            projected to receive.

           23     BY MR. PRICE:

           24     Q.     Your testimony is that the percentages of the

           25            increase in the budget were different than the






                                                                         19



            1            percentages of the increase in your income?

            2     A.     That's correct.

            3     Q.     Now, let's go back to actual expenditures.  The

            4            school corporation in the last four years, for

            5            each one of those four years, has spent more than

            6            the prior year; isn't that correct?

            7     A.     That's correct.

            8     Q.     Let's go to page 6 again, Question 2.  The

            9            question was, "As expenses have been exceeding our

           10            revenue, how have we been able to pay our bills?"

           11            And the very last sentence-  Well, let me read

           12            read the last few sentences and I'll ask you about

           13            those.  "We've been using the cash balance the

           14            past eight years to make up the difference.  The

           15            existence of a cash balance has given us time to

           16            make changes.  In a worse case scenario, our cash

           17            would be depleted in 2004."  Exhibit D, if you

           18            could grab that for a minute, page 3 appears to

           19            show that as of last December, approximately five

           20            months ago, the cash balance for the school

           21            corporation was over $13 million; is that

           22            accurate?

           23     A.     That's an accurate statement but that's not what

           24            this is referring to.

           25     Q.     I see.  What is--






                                                                         20



            1     A.     This is referring to the general fund cash

            2            balance.

            3     Q.     I see.

            4     A.     Which the general fund cash balance has declined

            5            in these documents.

            6                    MR. WHEELER:  If you're referring to

            7            exhibits, start with A and B and work your way

            8            through so he understands what you mean.

            9     A.     That's correct.  I'm sorry.  In Exhibit A, the

           10            cash balance was $3,493,000.

           11                    MR. WHEELER:  What page are you referring

           12            to?

           13     BY MR. PRICE:

           14     Q.     Tell me which page you're on.

           15     A.     Page 1, Plaintiffs' Exhibit A.  Cash balance was

           16            $3 million--

           17                    MR. WHEELER:  Just for clarification,

           18            there are a series of fund numbers at the far left

           19            end of each of those documents?

           20                    THE WITNESS:  That's correct.

           21                    MR. WHEELER:  As I understand it, Fund 010

           22            is what we are referring to as the general fund;

           23            is that correct?

           24                    THE WITNESS:  Yes.

           25                    MR. WHEELER:  That's the first line on






                                                                         21



            1            each the documents?

            2                    THE WITNESS:  That's correct

            3                    MR. WHEELER:  When you're referring to the

            4            general fund, that's Fund 010?

            5                    THE WITNESS:  That's correct.

            6                    MR. WHEELER:  Refer to what you were.

            7     A.     If we look at the various exhibits starting with

            8            Exhibit A, the general fund cash balance on

            9            Exhibit A is $3,493,793.21.  On Exhibit B, that

           10            number is $3,193,789.72.  On Exhibit C, it's

           11            $2,700,002.69.  On Exhibit D, which is December 31

           12            2003, it's $1,224,103.41, and it was projected I

           13            believe in our budget information that we had at

           14            the time, that if receipts and disbursements came

           15            in as they were projected and based on the

           16            information we had from the state at that time,

           17            that we could end the year 2004 with our cash

           18            balance depleted for the general fund.

           19     BY MR. PRICE:

           20     Q.     That did not happen; correct?

           21     A.     We're not through 2004, so I don't know.

           22     Q.     Your halfway through so what do you think?

           23     A.     Well, the projection that I receive from the

           24            treasurer yesterday shows a deficit at the end of

           25            the year of $343,000.






                                                                         22



            1     Q.     At the same time these general fund balances have

            2            been declining as you testified, your total cash

            3            balance for the corporation has been increasing by

            4            42 percent; is that correct?

            5     A.     That's probably correct, yes.

            6     Q.     Go back to Question 2 on page 6 of Exhibit G, if

            7            you would please.

            8     A.     I'm sorry.  What was that?

            9     Q.     Page 6, Question 2.

           10     A.     Okay.

           11     Q.     In the middle of this--  And by the way, there's

           12            no place in this paragraph that refers to the cash

           13            balance in the general fund.  You only use the

           14            generic phrase cash balance; correct?

           15     A.     On that section right there, that's correct.  This

           16            was a document that was discussed at a meeting, so

           17            I believe that is accurate.

           18     Q.     In the middle of your answer to Question 2 is the

           19            sentence, "We immediately took steps to control

           20            expenditures to save funds for the future."  Do

           21            you see that sentence?

           22     A.     Yes, I do.

           23     Q.     If a man from Mars were to drop in here and look

           24            at these four years of financial statements, A, B,

           25            C and D and see the gross expenditures increasing






                                                                         23



            1            over the four years by 49.7 percent, would he be

            2            correct in concluding that the school corporation

            3            from the beginning of 2000 to the end 2003 has

            4            shown a pattern--a financial pattern of spending

            5            more each year than the prior year?

            6     A.     If I understand your question you're asking, have

            7            we spent more each year than we did the previous

            8            year?

            9     Q.     Correct.

           10     A.     Are you referring to any specific fund or are you

           11            talking total funds?

           12     Q.     Grand total expenditures.

           13     A.     Yes, we've spent more each year.

           14     Q.     Okay.  How does Warsaw--

           15                    THE WITNESS:  Excuse me one second.

           16                    MR. PRICE:  Do you need to take a break?

           17                    THE WITNESS:  Sorry.  I'm fine.  Thank

           18            you.

           19     BY MR. PRICE:

           20     Q.     How does Warsaw rank in the state among the 294

           21            school districts in total annual expenditures, if

           22            you know?

           23     A.     I believe that's included in a document that's

           24            been provided to the board.  We do look at that.

           25            I don't recall off the top of my head.






                                                                         24



            1     Q.     Would you agree or disagree that you are 157 out

            2            of the 294?

            3     A.     Do you have a document that shows that that I

            4            could see?

            5     Q.     If you would like my note but that won't help you

            6            too much?

            7     A.     In gross annual expenditures, general fund, I

            8            don't know.  I would have to look at it.  It's

            9            possible but I'm not sure.

           10     Q.     That's fine.  In July of 2003, did the Warsaw

           11            Community Schools approve the hiring of a varsity

           12            football assistant coach and two varsity football

           13            assistant co-coaches?

           14     A.     I'm sorry?

           15     Q.     In July of 2003--

           16     A.     Okay.

           17     Q.     --did Warsaw Community Schools approve the hiring

           18            of a varsity football assistant coach and two

           19            varsity football assistant co-coaches?

           20     A.     I don't have any idea.  I'm assuming we did.  I

           21            don't pay attention to the hiring of

           22            extracurricular positions usually.

           23     Q.     That doesn't pass through your office?

           24     A.     Extracurricular positions I do not approve, no.

           25     Q.     So you wouldn't know about the football freshman






                                                                         25



            1            assistant coaches or co-coaches either?

            2     A.     I would not know.  It's reported at a board

            3            meeting but that's not something that I--  I do

            4            not approve the hiring of extracurricular

            5            positions, no.

            6     Q.     Mr. Thorpe, are you projecting for this year--

            7            And are you on a calendar year basis or school

            8            year?

            9     A.     We're on calendar.

           10     Q.     Are you projecting for this year, 2004, an

           11            operating deficit?  I.E., that you will actually

           12            spend more money than you take in as a school

           13            corporation?

           14     A.     In the general fund, yes.

           15     Q.     I mean, for the entire school corporation.

           16     A.     I don't project for the entire school corporation.

           17            We project for the general fund.

           18     Q.     You're not testifying, are you, that the school

           19            corporation on gross expenditures will spend more

           20            than gross revenues?

           21     A.     For the entire school district, no, we cannot.

           22     Q.     If Atwood, Claypool and Silver Lake Elementary

           23            Schools are closed, what do you project that the

           24            school corporation will save net closing cost and

           25            net of added expenses to transport and educate the






                                                                         26



            1            437 students at the relocation schools?

            2     A.     When?

            3     Q.     For the next school year.

            4     A.     School year being defined as--  Are we talking

            5            about 2004-2005 school year?

            6     Q.     The best way I can answer your question to me is

            7            to ask you, when you projected savings over a

            8            period of $688,053, was that for a school year or

            9            calendar year?

           10     A.     The projection that I believe you're referring to

           11            was a presentation that was made at a board

           12            meeting in response to a question from the public

           13            as to what accounts in the budget would show a

           14            savings if the school was closed.  I prepared that

           15            during a board meeting, and it showed the various

           16            accounts that could be eliminated in the budget,

           17            which would be calendar year, if those buildings

           18            were no longer in operation.

           19                              (Plaintiffs' Exhibit H was

           20                               introduced into evidence.)

           21     BY MR. PRICE:

           22     Q.     Let me just hand you Plaintiffs' Exhibit H, the

           23            document to which I think you were just referring.

           24            I have a few questions to ask you about that.

           25     A.     Sure.






                                                                         27



            1     Q.     Did you develop this document during the board

            2            meeting of August 18, 2003?

            3     A.     I opened the budget book and on a piece of paper--

            4            actually it was an overhead.  On a piece of

            5            acetate, I listed the buildings and the

            6            information that was included in the budget and

            7            placed it on a sheet of paper.  My recollection

            8            was the question at that time was, I believe it

            9            would have been stated, that the potential savings

           10            from closing these buildings would be about

           11            $300,000, which is the number I believe that had

           12            been used all along, which is approximately half,

           13            not quite half, of this amount, and someone had

           14            asked where that was in the budget, and I opened

           15            the budget book and wrote these numbers down.

           16     Q.     Did Jeff Dotson--  Was he the one that asked you

           17            to show the savings?

           18     A.     I don't know who it was.  I believe that would

           19            probably be in the--it might be in the board

           20            minutes.

           21     Q.     And you used the projected budget for 2004 for

           22            your figures; is that correct?

           23     A.     8-19, yes, that would be 2004.

           24     Q.     These are the figures that you presented in answer

           25            to that question?






                                                                         28



            1     A.     That's correct.

            2     Q.     Is there any other document in which the potential

            3            projected maximum savings, or any other savings

            4            for that matter, from the closing of the schools

            5            is set forth in writing except for this one?

            6     A.     Another document?  I'm sure there are probably

            7            other working documents, yes.

            8     Q.     What documents would those be?

            9     A.     Probably personal notes, budget notes, that type

           10            of information.

           11     Q.     Anything formally prepared and given to the board?

           12     A.     There may have been included in the budget

           13            presentation.  In fact, I know it had been

           14            discussed several times in board meetings by Dr.

           15            McGuire what those savings were based on

           16            conversations that we had.

           17     Q.     But my question relates to a document.  Was there

           18            a document besides this one--

           19     A.     I--

           20     Q.     --which sets forth the projected savings?

           21     A.     I don't have all of the documents that were

           22            presented in the last two years in front of me.

           23            But I believe--  I don't know.  There may be,

           24            there may not be.  I'm not sure.  I guess that's

           25            the best honest answer I can give you.






                                                                         29



            1                    MR. PRICE:  Let me ask you and your

            2            counsel.  If there is such a document, if that

            3            could be produced on a relatively expedited basis

            4            if it's exists.  Any problem with that?

            5                    MR. WHEELER:  If it exists.  I don't know

            6            if I've seen anything beyond what we've already

            7            produced.

            8                    MR. PRICE:  I'm assuming if you've seen

            9            it, it would be attached because it's a pretty

           10            relevant document to the affidavit.

           11                    MR. WHEELER:  If it's part of the budget

           12            presentation.  I don't know the answer to that.

           13                    THE WITNESS:  A lot of times during the

           14            budget presentation, we'll provide a guideline

           15            such as what you see.

           16                    MR. WHEELER:  When you say you "see,"

           17            you're referring to--

           18                    THE WITNESS:  Exhibit G.  The document we

           19            have as Exhibit G, this is at the public hearing.

           20            There was another document provided at the budget

           21            meeting, and in there many times we will

           22            then--using this as a basis, we will discuss what

           23            we're going to do or proposing to do.

           24     BY MR. PRICE

           25     Q.     Mr. Thorpe, we have a June 4 deadline by the






                                                                         30



            1            Court.  If you're able to find any other document

            2            that sets forth with black letters on white paper

            3            projected savings for the closing, if you could

            4            give that to your counsel, I would appreciate it.

            5     A.     Okay.

            6     Q.     Thank you.  During the August 18, 2003, meeting,

            7            did any board member question you about the

            8            contents of Exhibit H?

            9     A.     Exhibit H?  Yes, that was placed on the board-- on

           10            the overhead and there was discussion on the

           11            document.

           12     Q.     By the board members?

           13     A.     I don't recall specifically who asked questions,

           14            but I do know there were some questions.

           15     Q.     Let's look at this document for just a moment.

           16            The first item on the left shows librarians with a

           17            total of $40,166.  Dr. McGuire has stated a number

           18            of times in the discourse with the public there

           19            wouldn't be any layoffs.  Maybe I don't understand

           20            what you meant when you wrote librarians at the

           21            three schools.  Do those costs savings of $40,166

           22            represent layoffs or decreases in payment?  What

           23            does this mean?

           24                    MR. WHEELER:  I'm going to object to the

           25            question to the extent it mischaracterizes Dr.






                                                                         31



            1            McGuire's statements saying there would be no

            2            layoffs.  Dr. McGuire said there would be no cuts

            3            in certified staff.  With that you can answer.

            4     A.     Sure.  What this document was, again, is a

            5            projected potential maximum cost savings for

            6            closing Atwood, Claypool and Silver Lake.  This

            7            document was provided from the information that

            8            had been included in the budget showing if those

            9            buildings were closed, ultimately what positions

           10            wouldn't need to be replicated or duplicated.  In

           11            discussions in the board meeting, and I believe at

           12            that board meeting, the comment was made that

           13            attrition would take care of some of these

           14            positions.  What I was doing was showing the

           15            maximum and the document or the number that had

           16            been discussed in the board meetings prior to that

           17            time and after that time of the potential savings,

           18            have been estimated approximately $300,000 would

           19            be saved.  We had not used this $688,053 at any

           20            prior meeting that I recall as the dollar amount,

           21            because that was never the number we had been

           22            using.

           23     Q.     Is it your testimony that you project in the next

           24            two years that you're going to have the attrition

           25            of three librarians, I don't know how many






                                                                         32



            1            administrative people, three principal

            2            secretaries, three maybe six, custodians from the

            3            staffs or the general staff of Warsaw Community

            4            Schools?  Is that your testimony?

            5     A.     No, that's not my testimony.  The projection of

            6            the document is if these people were no longer

            7            employed, that's what the savings would be.

            8            However, the administrators--  You asked that

            9            question.  The administrators, yes, I do project

           10            they would be eliminated which is $185,211.

           11     Q.     Let me stop you for a second because I will have

           12            to come back to it otherwise.

           13     A.     Uh-huh.

           14     Q.     Do these numbers represent individuals at each

           15            school, or is that more than one person at each

           16            school?

           17     A.     In certain categories it represents an individual.

           18            In certain categories it may represent more than

           19            one individual.

           20                    MR. WHEELER:  Why don't you tell us.

           21                    THE WITNESS:  Okay.

           22     A.     The librarians, it appears to be an individual in

           23            each one of those.

           24     BY MR. PRICE:

           25     Q.     Let me stop you there.  Again, I apologize.  I






                                                                         33



            1            need to probe a little bit.  I think this is a

            2            better way to do it, if we can.  Since th'is is a

            3            two-year projected savings, does that mean at

            4            Atwood you're only paying the librarian about

            5            $6,500?

            6     A.     You've mentioned that before.  I don't recall this

            7            ever being stated as a two-year projected cost

            8            savings.  I've never stated that, at least not

            9            intentionally.  I believe you stated that but that

           10            is not my intent.

           11     Q.     Can I read to you from Dr. McGuire's affidavit

           12            that he submitted to the Court?

           13     A.     I didn't say that.  I don't know what he said.

           14     Q.     That's fine.  I'm not asking you to say whether he

           15            said it or not.  I just want to know how you react

           16            to what he said.

           17     A.     Sure.

           18     Q.     He said in paragraph 4, page 2, at the bottom

           19            after telling us that the school had posted the

           20            projected saving of $688,053 at the website, at

           21            the bottom he said, "The figures contained in the

           22            projected savings come from the board approved

           23            2004 budget, a true, accurate and authentic

           24            complete copy which is also attached under Exhibit

           25            A.  In that budget because it contains expenses






                                                                         34



            1            from the school years 2003 to 4 and 2004 to 5, the

            2            school will not achieve the full amount of the

            3            savings in one year, but in that time frame, the

            4            projected savings total approximately $300,000.

            5            The remaining savings of the $388,053 will take

            6            place in the subsequent year."

            7            Do you agree or disagree with this statement?

            8     A.     Well, again, I may be a little more technically

            9            oriented in the way I would have stated that, but

           10            I would say the intent of that I would agree with.

           11            In the sense that the first year, whatever that

           12            time frame would be, whenever the school was

           13            actually closed, the first year the savings would

           14            be approximately, I would say, $300,000 is a very

           15            good, reasonable number to use, and I would guess

           16            that the second year, whenever that would be, that

           17            probably we would be getting very close to

           18            probably saving the total $688,000, assuming these

           19            positions were eliminated.

           20     Q.     Mr. Thorpe, let me bring you back then to my

           21            question that took us down this path.

           22     A.     Uh-huh.

           23     Q.     Under librarians you're saying that over a two-

           24            year period of the time line--of Dr. McGuire's

           25            time line--at Atwood you're going to save $11,837






                                                                         35



            1            for the period.  My question is, is the payment

            2            there--  Do you need to talk to your counsel?

            3     A.     Yes.

            4                    (Discussion held off the record with the

            5            deponent and his attorney Mr. Wheeler.)

            6     BY MR. PRICE:

            7     Q.     Dr. McGuire has told the Court that $300,000 would

            8            be saved in one year and $688,000 in two years,

            9            give or take $53?

           10     A.     I read that slightly different.  I read it that

           11            he's saying $300,000 will be saved in one year and

           12            $688,000 would be saved in the second year, so in

           13            year one $300,000 and in year two, assuming that

           14            these positions have been eliminated, there would

           15            be $600,000.  So in two years we're looking at an

           16            additive of $988,000.

           17     Q.     Could you look at his affidavit?

           18     A.     Uh-huh.

           19     Q.     Turn to page 3 at the end of paragraph 4.  He

           20            says, "The remaining savings of $388,000 will take

           21            place in the second year," not $688,000?

           22     A.     I understand that.

           23     Q.     The two of you appear to be at variance there, and

           24            I'm trying to understand how that could be because

           25            that's a substantial amount of money.






                                                                         36



            1     A.     I understand that.

            2     Q.     I don't.

            3     A.     I understand what you're saying.  I can also see

            4            in reading that how you could interpret that both

            5            ways.

            6     Q.     I will admit to you that I don't have an

            7            accountant degree.  I don't think you do either,

            8            do you?

            9     A.     No, I do not.

           10     Q.     But when the superintendent of the school system

           11            says, "We'll save $300,000 in one time period and

           12            the remaining savings of $388,000 in the

           13            subsequent year," I'm having trouble to see how it

           14            balloons to $688,000.

           15     A.     It may be terminology or may be the way he phrased

           16            it.  I don't know what was in his mind at the

           17            time, but I do know that the statement had been

           18            made in all of the board meetings that we

           19            estimated that we would save $300,000.  When this

           20            document was presented to the board, it was

           21            stated, "You're saying $688,000."  "No.  We're

           22            saying approximately $300,000 the first year."

           23            This is my understanding, and then in subsequent

           24            years as these positions are eliminated in total,

           25            that the potential savings would then be the






                                                                         37



            1            $688,000.

            2     Q.     Mr. Thorpe--

            3     A.     That's how I would read that.

            4     Q.     Mr. Thorpe, let me just talk about your statements

            5            then instead of Dr. McGuire's since we're not

            6            going to make much headway there.  You said two

            7            different things it seems to me.  The four

            8            librarians, administration, principal secretary

            9            and custodian categories you first said would be

           10            eliminated through attrition and then a moment ago

           11            you said they would be eliminated by the positions

           12            being eliminated.

           13     A.     I don't see the different there.  Let's talk

           14            specifically.  The administration is already

           15            stating these positions will be eliminated as of

           16            this next school year.

           17     Q.     All of them at Atwood, Claypool and Silver Lake?

           18     A.     That's correct.  I believe that was stated at the

           19            board meetings.  The other positions have been

           20            given at least the first year of certainty they

           21            will be in there--they will have a job, but as

           22            times goes on and we have retirements--  In fact,

           23            I think we've already had some changes in some

           24            positions already.  As time goes on, we anticipate

           25            that those people will filter into positions that






                                                                         38



            1            are vacated by people who either quit, retire or

            2            whatnot.

            3     Q.     Let me ask you this then:  You testified that it

            4            will be by attrition and then you testified that

            5            as the positions are eliminated, the only

            6            positions that would be eliminated in the first

            7            year are under administration; is that correct?

            8     A.     That's correct.  And attrition, maybe I have a

            9            different meeting of attrition.

           10     Q.     Retirement, death.

           11     A.     I see attrition as somebody who retires, leaves,

           12            quits, dies and somebody else moves into their

           13            job.

           14     Q.     Okay.  The people that you're discussing here--

           15     A.     Uh-huh.

           16     Q.     --the three individuals, are those the principals

           17            at Atwood, Claypool and Silver Lake under

           18            administration?

           19     A.     That's correct.

           20     Q.     Are all three of them retiring?

           21     A.     No.  But I believe they're taking vacancies that

           22            have existed--that will exist of other retirements

           23            at the end of this year.

           24     Q.     They will continue to draw the same pay?

           25     A.     I'm not sure of their pay.  They will take other






                                                                         39



            1            positions if they're not retiring.  I don't--  I

            2            think one of them has said they were going to

            3            retire and maybe isn't going to retire.  I'm not

            4            real sure what they're doing.

            5     Q.     That's the principal at Atwood?

            6     A.     I believe that's correct.

            7     Q.     Let's look under the second column for just a

            8            moment, and I know you've heard about this before,

            9            but can you tell me how you can save $10,400 on

           10            water if you have the same number of students who

           11            still need to wash their hands and flush the

           12            toilet?

           13     A.     Sure.  Yeah, that's been mentioned several times.

           14            For one thing Claypool and Silver Lake, if my

           15            recollection is accurate, I think they're on a

           16            more expensive system than the other schools.

           17            However, water--  A lot of water as such in a

           18            school is base water in a sense it is used to fill

           19            the pipes and toilets and things of that sort, and

           20            it doesn't necessarily mean that because you add

           21            additional students, that your water use

           22            necessarily is going to go up the same amount.

           23            However, it was part of the reason why the

           24            discussion was made of half of the $688,000 being

           25            used as a projection of the savings.  Certainly






                                                                         40



            1            some of these things were going to have expenses

            2            in the new buildings.  Of course, it doesn't take

            3            more money to heat a building because of more

            4            students.  In fact, in some cases it may take less

            5            because of body heat.  The same thing with lights.

            6            We could have the lights on in a room, and if we

            7            had more people in this room, we would not

            8            necessarily need more light, so that's why the

            9            $300,000 was used an estimate.

           10     Q.     Did you write the phrase, "projected potential

           11            maximum cost savings" at the top of Exhibit H?

           12            Is that your phrase?

           13     A.     I think so.

           14     Q.     A moment ago you carefully, I think, stated that

           15            these projections were the maximum, and as I

           16            understood your tone of voice, you were

           17            emphasizing the word "maximum."  I assume by that

           18            you mean the cost savings of closing the three

           19            schools could be less than the maximum?

           20     A.     It could be less than $688,000, yes, I would agree

           21            with that.

           22     Q.     Has any professional study been done for cost

           23            savings of closing the three schools?

           24     A.     Yes.

           25     Q.     Who was that by?






                                                                         41



            1     A.     I did it.

            2     Q.     Any outside professional study done for cost

            3            savings?

            4     A.     We've not had any external person conduct a cost

            5            savings.  There are people who potentially could

            6            do that who are retired school business

            7            officials.

            8     Q.     But it hasn't been done at this point?

            9     A.     Not to my knowledge, no.

           10     Q.     What are the projected potential maximum costs--

           11            notice I didn't say savings--costs of transporting

           12            students from Claypool, Atwood and Silver Lake to

           13            the other elementary schools?

           14     A.     Additional costs?

           15     Q.     Correct.

           16                    MR. WHEELER:  For purpose of

           17            clarification, you're using the word

           18            "transporting."  Are you intending to limit it to

           19            transportation or--

           20                    MR. PRICE:  Actually if you want to break

           21            it down, I'm talking about bus cost, driver cost

           22            and fuel cost.

           23     A.     Well, our transportation director had projected--

           24            had done a projection on that and looked at the

           25            routes, which she does every year, and her






                                                                         42



            1            estimate based on the reconstructing of the routes

            2            are that we will not need to add any buses.  We

            3            will not need to add any drivers.  There's not any

            4            projection of any additional increase to the

            5            transportation budget as a result of closing these

            6            schools.

            7     Q.     So it's your testimony based on what you've been

            8            told that 437 children could be moved for no

            9            additional charge?

           10     A.     That's correct.

           11     Q.     What are the projected potential maximum costs for

           12            closing each school, and let me give you some

           13            categories to include in here, and you can tell me

           14            if you want to add to this:  the physical closing

           15            of the school, covering windows, locking doors

           16            draining water, cost of moving equipment, cost of

           17            moving books, cost of removing kitchen equipment,

           18            sports equipment?  What are the projected

           19            potential maximum costs for the physical act of

           20            literally closing up and moving the contents of

           21            these three schools?

           22     A.     I don't have those numbers in front of me.  There

           23            have been calculations done internally on some of

           24            these things.  As far as the physical closing of

           25            the facilities, I believe intent was based on the






                                                                         43



            1            discussions of the board is that the buildings

            2            would be offered to, I believe, the townships or

            3            another legal entity, and if all else fails, they

            4            would be put up for sale.  We did not anticipate

            5            that we would be going through the process of

            6            incurring expenses to close them.

            7                 As far as the other costs, the cost of moving

            8            and cost of relocation, we do know there will be

            9            some one-time expenses involved with our own staff

           10            doing that. However, our own staff are on salary

           11            anyway.  We're talking maintenance staff, so they

           12            will not be able to do something else at least for

           13            a short term because of moving the items, but we

           14            don't anticipate any significant cost, expenses

           15            from relocating the buildings.

           16     Q.     So you're going to be able to close three school

           17            buildings and move the contents of those buildings

           18            at no cost to the school corporation?

           19     A.     We don't anticipate any significant cost.

           20     Q.     How do you define significant?

           21     A.     Something that's going to require us to incur

           22            additional outside expense.

           23     Q.     If the three townships that you referred to

           24            decline for whatever reason, financial or

           25            otherwise, to accept the ownership or stewardship






                                                                         44



            1            over these three buildings--

            2     A.     Uh-huh.

            3     Q.     --would it continue to be true that the school

            4            corporation would have no out-of-pocket cost for

            5            closing up and securing the buildings and

            6            maintaining them?

            7     A.     If we didn't sell them.

            8     Q.     Right.  Has there been a professional outside

            9            study done to show what that would cost?

           10     A.     What would cost?

           11     Q.     The securing and maintenance of buildings that

           12            nobody wants?

           13     A.     I don't believe there's been an external study on

           14            that, no.

           15     Q.     Okay.  On 9-15-03 when Dr. McGuire was speaking

           16            with the board and he projected targeted savings

           17            of about $300,000, his statement was, "The closing

           18            will reduce operating costs by approximately

           19            $300,000."  Do you agree that the operating costs

           20            will be decreased by $300,000?

           21     A.     It depends on how you define operation.

           22     Q.     Okay.  How do you define it?

           23     A.     If you define it in a global sense of operation,

           24            being the operation including staff members, yes,

           25            I do.






                                                                         45



            1                              (Plaintiffs' Exhibit J was

            2                               introduced into evidence.)

            3     BY MR. PRICE:

            4     Q.     I'm going to show you Plaintiffs' Exhibit J, which

            5            is an article in the Times-Union in which

            6            Mr. Boyd, Robert Boyd of Indiana State University

            7            who helped lead the 50-member committee to study

            8            some of the issues in the school corporation under

            9            the community based planning project--

           10                    MR. WHEELER:  Let me.  I'm sorry to

           11            interrupt.  Are we out of order or am I missing I?

           12                    MR. PRICE:  You're missing I.

           13                    MR. WHEELER:  We haven't done I?

           14                    MR. PRICE:  That's correct.  That's a

           15            better way to put it.

           16     BY MR. PRICE:

           17     Q.     --in which Dr. Boyd said at the end--  He also

           18            said, "The recommendations for relocating the

           19            students weren't intended to save the school

           20            corporation money but to be more efficient."  I

           21            take it that you would disagree with Dr. Boyd's

           22            statement concerning the recommendations for

           23            relocating students?

           24     A.     Could I have a minute to read this?

           25     Q.     Sure.






                                                                         46



            1     A.     Okay.  I'm sorry.  What was your question?

            2     Q.     Do you agree or disagree with Dr. Boyd concerning

            3            the recommendations for relocating the students in

            4            which he said it was not intended to save the

            5            school corporation money?

            6     A.     I believe he said that the committee's

            7            recommendations for relocating students wasn't

            8            intended to save the school corporation money.  Is

            9            that the question?

           10     Q.     Either he or the committee.  It's quoted here as

           11            personnel, but let's go with either one.

           12     A.     That's why I asked to read the document.

           13     Q.     Let's go with either one of those.

           14     A.     It appears that in context he was stating, "The

           15            committee's recommendations for relocating

           16            students wasn't intended to save the corporation

           17            money but to be more efficient."  Again, this is

           18            secondhand information that the Times-Union

           19            reporter, I assume, provided based on what she

           20            perceived that the gentleman said.  Based on this

           21            document it appears that she was reporting that

           22            Mr. Boyd was stating that the committee was not

           23            looking at the recommendations or the intent to

           24            save money but to be more efficient.

           25     Q.     Have you read the community based planning






                                                                         47



            1            project, Mr. Thorpe?

            2     A.     Yes.

            3     Q.     Is there anyplace in there which the committee

            4            recommended closing the three elementary schools

            5            without at the same time building something else?

            6     A.     Frankly, we've studied this thing for so long, I

            7            don't remember all what the community-based

            8            planning committee's recommendations were.  There

            9            were many of them, and I'm not sure what it ended

           10            up.

           11     Q.     That's fine.  I want to know if you recall.  Let

           12            me go to the next subject.  What are the actual

           13            annual expenditures right now as we sit here today

           14            for each of these three schools:   Atwood,

           15            Claypool and Silver Lake?

           16     A.     I don't know that off the top of my head.

           17     Q.     Have you heard the phrase from Dr. Boyd that

           18            certain size smaller schools are not "financially

           19            viable"?

           20     A.     Have I heard that statement made?

           21     Q.     Yes.

           22     A.     By anyone?

           23     Q.     Or read, about Dr. Boyd actually.

           24     A.     I've heard that statement made before.  I don't

           25            recall necessarily who stated it, but yes, I






                                                                         48



            1            recall that statement.

            2     Q.     I'm kind of intrigued by this statement.  How do

            3            you know if an elementary school is financially

            4            viable?  I mean, I understand if I'm making

            5            bottled water and I can sell it for $1 and it

            6            costs me four cents to put it together and

            7            distribution costs me twelve cents, et cetera.  I

            8            can figure that out, but when you're educating

            9            children in a not-for-profit situation, what do

           10            you do as a CFO of the school corporation to

           11            decide the financial viability of a particular

           12            school?

           13     A.     In a previous budget--  In fact, I think in two

           14            previous budgets--  I don't remember what years

           15            they were.  It might have been '98 and '99--

           16            there was documentation--there was documentation

           17            provided to the board that outlined for them the

           18            approximate per student cost of educating our kids

           19            in the elementary schools.  At that time we had

           20            certain schools that were significantly higher on

           21            a per student cost, so the answer to your question

           22            as far as viability, when you have a certain

           23            building that is extremely more expensive than

           24            others, they are probably not as viable to operate

           25            as the more efficient schools.






                                                                         49



            1     Q.     Are the three buildings in question here--Atwood,

            2            Claypool and Silver Lake--extremely more expensive

            3            than the others since they've all been taken off.

            4     A.     The studies that we did at that time, I believe,

            5            yes, Atwood, Claypool and Silver Lake were the

            6            highest per student cost, and based on the fact

            7            that the state legislature told us we needed to

            8            tighten our belt, we were constantly looking for

            9            ways to bring our budget into balance--or bring

           10            our general fund into balance since it was

           11            declining as far as the revenue and cash balance.

           12            So I think that answers your question.

           13     Q.     Is it your testimony, sir, that the costs for

           14            running, maintaining and providing an education in

           15            the building for those three buildings is higher

           16            than the other elementary schools in the school

           17            corporation?

           18     A.     On a per student basis.

           19     Q.     A moment ago I asked you about the costs of

           20            closing.

           21     A.     Uh-huh.

           22     Q.     Let's talk about maintenance if the three

           23            townships refuse to take over the buildings.

           24     A.     Uh-huh.

           25     Q.     You've told me there's not been any outside study






                                                                         50



            1            that told you what it would cost to maintain the

            2            three buildings if you continue to own them.  Have

            3            you internally, not outside, but have you

            4            certainly internally projected what the

            5            maintenance and closing costs will be for the

            6            three school buildings if they're not taken over

            7            by the three townships?

            8     A.     We discussed that.  When I say "we," internally,

            9            yes, that's been discussed.  So, yeah, we've

           10            looked at it.

           11     Q.     The reason I'm asking, and I think as a CFO you

           12            can appreciate this, if you come to me and you

           13            say, "I'm going to save you $300,000 on this

           14            transaction that we're going to do"--

           15     A.     Uh-huh.

           16     Q.     --but there's a little asterisk on here--

           17     A.     Uh-huh.

           18     Q.     --and the asterisk on here is if the three

           19            townships don't take the buildings, then we have

           20            two categories of spending that we're going to

           21            have to look at."

           22     A.     Uh-huh.

           23     Q.     The first one is the physical cost of sealing up,

           24            locking up and preserve the building, and the

           25            second is the maintenance costs going forward.






                                                                         51



            1            What are the ballpark figures that you've

            2            discussed in the general discussions that you told

            3            me about for those three categories?

            4     A.     As far as sealing up, closing up drain pipes, and

            5            et cetera, we have staff members, again, who are

            6            already on salary who could do that.  That would

            7            mean they would maybe move from some other

            8            responsibility but they could do the work.

            9     Q.     On their regular time, no overtime?

           10     A.     On their regular time, that's correct.  As far as

           11            any other costs, the discussions that we had, the

           12            research that we did, is that those costs would

           13            not be statistically significant in relation to

           14            the savings we would reap.  Again, that's part of

           15            another reason we didn't use the $688,000 of the

           16            projected cost savings.  That's why we used the

           17            $300,000.

           18     Q.     When you say "we," you mean you?

           19     A.     I'm referring to "we," the administration.

           20     Q.     I see.  How much has the school corporation spent

           21            to prepare--

           22                    MR. PRICE:  Actually I was going to take a

           23            little break here since we've been at this an

           24            hour, if you would like, otherwise we can just

           25            keep rolling.






                                                                         52



            1                    MR. WHEELER:  I'm all for going.

            2                    MR. PRICE:  You know me, I do too.

            3                    MR. WHEELER:  I know you and I both want

            4            to get out of here.

            5                    MR. PRICE:  I almost always stop after an

            6            hour if people prefer it.  If you don't, I'm fine.

            7                    MR. WHEELER:  Let's wait.

            8     BY MR. PRICE:

            9     Q.     What has the school corporation spent to prepare

           10            the six elementary relocation schools--

           11     A.     Uh-huh.

           12     Q.     --for the influx of the new students?  And let me

           13            give you the context of this question.  In Dr.

           14            McGuire's affidavit on paragraph 5, he says, "With

           15            the reconfiguration of the classroom space, the

           16            conversion of multi-purpose rooms and the

           17            rededication of some classroom size rooms

           18            currently used for storage and so forth"--

           19     A.     Uh-huh.

           20     Q.     --my question is, "Can you tell me at this point

           21            in time to reconfigure and to convert the six

           22            elementary schools where these 437 students are

           23            going to go, how much has the school corporation

           24            spent?

           25     A.     Right now I don't think we've spent anything yet.






                                                                         53



            1     Q.     Can you help me a little bit with that?

            2     A.     We haven't spent any money.

            3     Q.     I understood that you meant money when you said,

            4            "We didn't spend anything."

            5     A.     I'm sorry.  I didn't know what you meant.

            6     Q.     That's fine.  That's what I wanted you to do.  Can

            7            you tell me how the school corporation can

            8            reconfigure and convert classroom space without

            9            the spending of any money at all?

           10     A.     Well, right now I think the intent was to try to

           11            move people to different areas in the building and

           12            maybe use a classroom differently than it was

           13            before.  As far as expenditures, we don't need to

           14            build any new space, so I don't think there is any

           15            additional expenditure that I can think of.

           16     Q.     Well, the representation has been made here, and

           17            verbally in Court, that these schools have been

           18            prepared for the influx of the students--

           19     A.     Right.

           20     Q.     --and that was all done with no dollars being

           21            spent.

           22     A.     I think that's correct at this point in time.  I'm

           23            trying to recollect any dollars that we've spent

           24            to revamp buildings.

           25     Q.     Let's do it a different way.






                                                                         54



            1     A.     Okay.

            2     Q.     The representation that's been made here is

            3            reconfiguration, conversion and rededication.

            4     A.     Uh-huh.

            5     Q.     What was done in the six schools?  And if you need

            6            to go school by school, that's fine.   What was

            7            done, if anything was done?

            8     A.     Honestly, that's not something that I handle.

            9     Q.     Something you do handle, Mr. Thorpe, is budgeting;

           10            correct?

           11     A.     Yes.

           12     Q.     How much has the budget for the next school year

           13            increased for the six elementary schools which

           14            will have 437 students arriving?

           15     A.     We've not prepared the 2005 budget yet.  The

           16            budget runs calendar year.

           17     Q.     What are you projecting?

           18     A.     What am I projecting for what?

           19     Q.     For the new budgets when it comes.

           20     A.     2005?  I'm sorry.  I don't understand your

           21            question.

           22     Q.     Sure.  That's no problem.  Right now you have six

           23            elementary schools that have a certain number of

           24            students--

           25     A.     Right.






                                                                         55



            1     Q.     --number of staff, certain amount of water.

            2     A.     Right.

            3     Q.     You're not going to tell me, I don't think, that

            4            you can put 437 new students into those six

            5            existing schools and not spend another penny?

            6     A.     We've not prepared the 2005 budget yet.  We're

            7            doing that at this point in time.

            8     Q.     But that assumes you've had some opportunity to

            9            look at that?

           10     A.     Yes.

           11     Q.     What do you think the budget is going to do or say

           12            or include for those six schools?

           13     A.     Sure.  I anticipate--  The total budget is what I

           14            look at.  I anticipate the total budget is going

           15            to be less.  As far as taking ten schools to seven

           16            schools, if I remember correctly, the dollar

           17            expenditure won't be anymore than it is currently

           18            and it should substantially be less.  We don't

           19            budget by building.  We budget by total budget.

           20     Q.     But you do budget by elementary schools; right?

           21     A.     No.  We actually have a total budget.  We don't

           22            do, "School No. 1, this is your budget.  School

           23            No. 2, this is your budget.  School No. 3, this

           24            isyour budget."  We budget by total dollars in the

           25            general fund.






                                                                         56



            1     Q.     The state doesn't allow you to--  The state

            2            doesn't any longer fund transportation costs

            3            either?

            4     A.     Not to us, no.

            5     Q.     Did you see the article this morning what the

            6            governor is recommending for the schools that are

            7            strapped for transportation?

            8     A.     I didn't see the article, but I know they're

            9            proposing alternatives for schools, yes.

           10     Q.     How many buses right now does the school

           11            corporation operate?

           12     A.     Approximately 64.

           13     Q.     I believe your prior testimony is you will not

           14            need to buy a single additional bus; is that

           15            correct?

           16     A.     That's correct.  Over and above our total number,

           17            that's right.  We've not requested additional

           18            buses from--approval to buy additional buses,

           19            not increase the size of our fleet.  We will

           20            always be buying buses but not increase our

           21            fleet.

           22     Q.     Did I understand your testimony to be from your

           23            transportation director that even though you're

           24            now going to have to do several round trips for

           25            students from the area where they live at near






                                                                         57



            1            Atwood, Claypool and Silver Lake to another

            2            school, that the fuel costs aren't going to go up?

            3     A.     We didn't state that specifically, no.  You asked

            4            me if I thought the costs would go up.  What

            5            happens is the way our district is--  Looking at

            6            the map, the way our district works you have some

            7            students right now who will be going to one

            8            school.  She's not going to necessarily do the

            9            routes the same way for that school district.  She

           10            will re-route everything, so whereas one student

           11            may actually be further away from their school,

           12            another student may actually be closer to the

           13            school they're going to, so with the re-routing of

           14            that, she believes it looks pretty good, frankly,

           15            she can do that without any additional costs.  The

           16            problem with calculating school transportation

           17            costs is every single year that changes because we

           18            have different students living in certain areas.

           19            We don't have the same students.  One year a

           20            student may be on a certain road and we have to go

           21            on that road, and the next year there may not be

           22            any students there, so every year that's looked at

           23            individually.

           24     Q.     Would it be accurate to say, correct me if I'm

           25            wrong, the large majority of the 437 students who






                                                                         58



            1            are to be relocated do not ride school buses?

            2     A.     I don't believe that's correct.  I think most of

            3            them do ride school buses now.

            4     Q.     Do you have a projected percentage?

            5     A.     I think there were 50 students in Silver Lake, if

            6            I remember correctly, that Mrs. Swain had

            7            calculated that did walk to school.

            8     Q.     What about the other two?

            9     A.     The other school--  Atwood, I think there's five

           10            kids, maybe four, very few students that live in

           11            walking distance.  Claypool, I think, there's not

           12            that many either.  Most of those students are

           13            bussed in.

           14     Q.     Mr. Thorpe, has the school corporation produced a

           15            study outside--a professional study on the impact

           16            on students' families arising from bussing, and

           17            let me break that down into three categories, and

           18            I'll give you a chance to answer each one of them.

           19            First of all, increased cost on the family to

           20            participate in after school activities, has

           21            anybody looked at that?

           22     A.     Not that I'm aware of.

           23     Q.     Secondly, has anybody looked at increased costs to

           24            pick up from Kindergarten or additional day care

           25            costs?






                                                                         59



            1     A.     Is that the end of the sentence?

            2     Q.     End of the sentence.

            3     A.     Not that I'm aware of.

            4     Q.     Thirdly, has anybody looked at the sociological

            5            impact on parent's involvement in PTO activities,

            6            which may be at a school that's considerable more

            7            distant from their home?

            8     A.     That's way out of my realm, but not that I'm aware

            9            of.

           10     Q.     Okay.  Do you know in the last three years how

           11            much has been spent by the school corporation to

           12            improve the physical facilities at Atwood,

           13            Claypool, and Silver lake?

           14     A.     Off the top of my head, no.  I don't know.

           15     Q.     Has any money been spent to improve the physical

           16            facilities there?

           17     A.     Sure.  We try to maintain all of our buildings as

           18            long as they're open as best we can.

           19     Q.     My question really wasn't maintenance.  Of course,

           20            I know you do that.

           21     A.     Sure.

           22     Q.     My question was physical improvement, new carpet,

           23            new tile--

           24     A.     Sure.  We try to maintain.  We consider that a

           25            maintenance item.  Carpet in a sense is a






                                                                         60



            1            maintenance item.

            2                              (Plaintiffs' Exhibit K was

            3                               introduced into evidence.)

            4     BY MR. PRICE:

            5     Q.     I'm going to hand you what's been marked as

            6            Exhibit K.  Identify this document for me, if you

            7            would please?

            8     A.     Well, it looks like it's a page from a document

            9            that was discussed with the board in March 2003.

           10     Q.     Is this a document that you prepared?

           11     A.     Yes.

           12     Q.     Or a portion of the document that you prepared?

           13     A.     Yes, a portion of it.

           14     Q.     Under the category of potential cuts, above that

           15            we see the sentence, "Warsaw Community Schools has

           16            made significant and substantial cuts in the

           17            general fund budget over the past decade.

           18            However, given the lack of adequate resources,

           19            more cuts must be made."  Is the column that's

           20            below that under potential cuts, what you were

           21            proposing to the board at that time?

           22     A.     Those were some cuts that were listed, yes.

           23            Obviously in this document these were suggestions,

           24            uh-huh.

           25     Q.     Can you tell me what you meant when you divided






                                                                         61



            1            them up to three tears at tier 1, tier 2 and tier

            2            3?

            3     A.     I can't see the three tiers.  I don't know.

            4     Q.     You don't recall what was in there?  I thought you

            5            might be able to help me.  I see industrial tech,

            6            elementary class size, art, music.

            7     A.     I don't know what tier 3 says and I don't recall.

            8     Q.     That's what you were doing at the time, proposing

            9            three different tiers for--

           10     A.     Actually what this was, if I remember correctly,

           11            was prior to that--  This is a little bit of

           12            recollection here.  When Dr. Harman was the

           13            superintendent, at that time we had probably in

           14            2000-2001 provided to the board pretty much a

           15            grocery list of cuts, of projections, of things

           16            that we thought needed to be done, and I think

           17            that when this document came out, we were right at

           18            the point of making--or making recommendations of

           19            things that needed to be done and could be done

           20            realistically, quickly and right away.

           21     Q.     What was the Lake View alternative?  What were you

           22            proposing?

           23     A.     At that time?

           24     Q.     This was last year.

           25     A.     Sure, but there's been a lot of water under the






                                                                         62



            1            bridge since last year.  The Lake View

            2            alternatives, at that time we had an A Plus

            3            Program that was partially being funded--  My

            4            recollection it was partially funded by or mostly

            5            funded by the general fund, and I had questioned

            6            whether or not that was an efficient use of

            7            dollars.

            8     Q.     Was that about $58,000?

            9     A.     It rings a bell.  You must have--  There's more to

           10            this document, and I believe there's another

           11            attachment to it that had some of the information.

           12            I think that may be right.

           13     Q.     Also, I believe you included a High School Step 1,

           14            gifted and talented category of about $105,000?

           15     A.     Those are two different things.  High School Step

           16            1 and gifted and talented were two different

           17            things.

           18     Q.     Did they add up to about $105,000?

           19     A.     If you say they did and I had the other

           20            documentation--

           21     Q.     Let me ask you a generic--

           22     A.     Approximately.  I don't know.  That sounds

           23            reasonable.

           24     Q.     Let me just ask you a generic question.

           25     A.     Uh-huh.






                                                                         63



            1     Q.     When you proposed these potential cuts for cost

            2            savings--

            3     A.     Right.

            4     Q.     --what happened to them?

            5     A.     Block scheduling was recommended for cut.

            6            Elementary counseling was cut.  The alternative

            7            program, I know there was discussion on that.  My

            8            recollection on that is that there were reasons

            9            why that didn't work and wouldn't work.  Step 1--

           10            I do remember part of the reason.  Those first two

           11            programs we received--did receive some state

           12            alternative money, and if we had cut those

           13            programs, we would have lost that revenue, so it

           14            would not have generated the savings that we were

           15            hoping to, plus there would be a greater number of

           16            students that would be probably lost, which would

           17            reduce our ADM, which would be a reduction in our

           18            revenue, so it didn't make sense to cut it at that

           19            time.

           20     Q.     Can we talk about revenue for just a second?

           21     A.     Sure.

           22     Q.     Going back to Exhibit E--

           23     A.     Exhibit E.  Okay.

           24     Q.     --you previously testified that expenditures on a

           25            gross basis for the school corporation in the last






                                                                         64



            1            four years have gone from $54.8 million to $82.1

            2            million.  What was the source of the increase in

            3            the money to pay for those expenditures primarily?

            4     A.     Well, again, I need to sit here and analyze that

            5            in depth.

            6     Q.     Just generally.

            7     A.     I need to sit there and analyze it in depth,

            8            because I'm guessing that part of the reason was--

            9            I'm not going to sit here and do this.  Part of

           10            the reason for that increase, I know, is because

           11            of the increase in debt that was incurred,

           12            especially in the last year, as a result of us not

           13            receiving our local property tax or--and the delay

           14            of the state money.  We had to borrow a lot more

           15            money last year than we ever had to before.  Those

           16            expenditures show up, if I recall correctly, on

           17            the Form 9, so it increases your--  It shows as

           18            though it increases your expenditures

           19            significantly, when really all you're doing is

           20            paying back money you've borrowed because of cash

           21            flow purposes.  It's not really an additional

           22            money you've ever had.  It's just because of cash

           23            flow.

           24     Q.     Are you telling me that in the year 2000 when the

           25            school corporation spent $54.8 million, that it






                                                                         65



            1            wasn't actually spending that amount?

            2     A.     Well, if this--  My statement is if this includes

            3            the--  Epecially in 2003, if that's included--  If

            4            that's including temporary loans--  That's not

            5            it.

            6                    MR. WHEELER:  Why don't you take a minute

            7            and look through it.  In order to answer his

            8            question accurately, you need to look through

            9            those documents.  Why don't we take a ten-minute

           10            break and look through the documents.

           11                    MR. PRICE:  You know, what I'm looking

           12            for?

           13                    THE WITNESS:  I know what you're asking.

           14                    (Short recess.)

           15     BY MR. PRICE:

           16     Q.     Mr. Thorpe, I'm sure you know from your prior

           17            deposition experience that the oath that you took

           18            at the beginning applies even though we've taken a

           19            break?

           20     A.     Sure.

           21                    MR. WHEELER:  Just for the record, let's

           22            reflect that Mr. Price had a question on the

           23            table.  You asked for the opportunity to go

           24            through the budget documents to answer his

           25            question, and you've had an opportunity to review






                                                                         66



            1            the budget documents; is that correct?

            2                    THE WITNESS:  Yes.

            3                    MR. WHEELER:  Then can you read back the

            4            question, if that's how you want to handle it?

            5                    MR. PRICE:  That's great.

            6                    (Question was read back by the court

            7            reporter at this time.)

            8     BY MR. PRICE:

            9     Q.     Which document are you looking at for this?

           10     A.     I'm looking at your Exhibit E; is that correct?

           11     Q.     Is that the summary?

           12     A.     That's the summary of--  Yes.

           13                    MR. WHEELER:  You also have Exhibit D in

           14            front of you.

           15                    THE WITNESS:  I also have Exhibit D in

           16            front of me.

           17     BY MR. PRICE:

           18     Q.     Which is the year 2003?

           19     A.     Right.

           20     Q.     Okay.

           21     A.     The difficulty that I've had in looking at these

           22            numbers is because this is not the information

           23            that typically we look at.  When you look at the

           24            documents you're taking these numbers from--  For

           25            example, this is called, like I said, the Form 9






                                                                         67



            1            is how we refer to it.  When you look at this

            2            document, you will see that the expenditures on

            3            what's referred to as page 3, which shows

            4            expenditures, and I'm looking at 2003, which would

            5            be the Exhibit D, the expenditures there for year

            6            2003, from January 1 to December 31 is

            7            $67,831,929.84.  However, on the financial data

            8            summary which you've provided as Exhibit 2, you

            9            list it as $82,143,942.  Well, why is that

           10            different?  The reason that's different is because

           11            the document that you've provided, what you're

           12            determining--

           13                    MR. WHEELER:  Which is referring to

           14            Exhibit E.

           15     A.     Which is referring to Exhibit E.  This document,

           16            whoever prepared it, is actually taking a total

           17            expenditure which includes--

           18                    MR. WHEELER:  Tell him the pages to look

           19            at.

           20     A.     I'll find that.  Which is including information

           21            which is considered-- I'm looking at Exhibit D,

           22            front page.  It says, "expenditures exceptions and

           23            minus adjustment."  And if you look at that column

           24            and take it out to the bottom, you will notice

           25            there's $14,312,012.29.  That includes temporary






                                                                         68



            1            loans, which is what I was referring to right as

            2            we left, that we had to borrow for cash flow

            3            purposes.  What it does is it inflates the

            4            expenditures and it also inflates the

            5            disbursements.  In fact, if you look at Exhibits--

            6            And this can be viewed on each of these

            7            documents.

            8                    MR. WHEELER:  Tell him what page you're

            9            working on.

           10     A.     Page 34 of Exhibit D, which is the page which you

           11            took--or someone took--the grand total of all

           12            expenditures of $82,143,942.13.  That includes the

           13            exceptions account, and if you notice on there, it

           14            says total receipt exceptions, total expenditures

           15            exceptions.  On that same page, page 34, if you

           16            will look, you will see that the $14,312,012.29 is

           17            listed in both places, so what it does is inflate

           18            your receipts.  It's also inflating your

           19            expenditures.  It's not really money that's spent.

           20            All that is doing is paying back a total, so

           21            really the increases in expenditures, if you go

           22            back to your very first document, which is

           23            document--

           24                    MR. WHEELER:  A.

           25     A.     --A, and you look at that, when you look at that






                                                                         69



            1            chart, you will see--

            2                    MR. WHEELER:  What page are you on?

            3     A.     Page 38.  --the total of expenditures is actually

            4            $50,965,092.28.  Following through with that same

            5            logic all the way through on Exhibit B and Exhibit

            6            C, and on Exhibit B, the expenditure accounts on

            7            page 36 is actually $52,542,533.08, not what is

            8            listed on the Exhibit E.

            9     BY MR. PRICE:

           10     Q.     Mr. Thorpe, I don't want to interrupt you, but I

           11            think you're going to do something here that I'm

           12            going to go back with you and do a little more

           13            specifically.

           14     A.     Sure.  I guess my point is in answer to your

           15            question which is asking did we spend $82,143,942

           16            in that calendar year, not in the way that you're

           17            referring to in expenditures.

           18     Q.     We'll come back that to that.  Let's do something

           19            that I think is a little more specific.  Let's go

           20            back to the year 2000, which would be Exhibit A.

           21     A.     Okay.  I'll give you B and C back.

           22                    MR. WHEELER:  I'll take them.

           23     BY MR. PRICE:

           24     Q.     Following the format that you told me a little bit

           25            ago, instead of looking at page 36, the gross






                                                                         70



            1            total expenditures--

            2     A.     Uh-huh.

            3                    MR. WHEELER:  He said instead of that.

            4     BY MR. PRICE:

            5     Q.     Let's use the same format you told us a little bit

            6            ago and look at page 3 under expenditures without

            7            the exception.

            8     A.     That's correct.

            9     Q.     And tell me for the year 2000, what was the amount

           10            in that category?

           11     A.     The expenditures amount was $59,965,092.28.

           12     Q.     Let's do the same thing for the year 2001, page 3.

           13     A.     $52,542,533.08.

           14     Q.     Okay.  Let's do the same thing for the year 2002.

           15     A.     $55,822,787.18.

           16     Q.     And then lastly Exhibit D.

           17     A.     Exhibit D is $67,831,929.84.

           18     Q.     Okay.  Now, can you tell me looking again at

           19            Exhibit D, the $14 million--

           20     A.     Yes.

           21     Q.     --which you've described as an expenditures

           22            exception--

           23     A.     Right.

           24     Q.     --tell me in this document, Exhibit D--

           25     A.     Uh-huh.






                                                                         71



            1     Q.     --where else that figure is listed or where it

            2            comes from.  What's the derivation?

            3     A.     Well, if you look at Exhibit D, page 34, that is

            4            listed as the receipt exceptions and the

            5            expenditures exceptions, in both places.

            6     Q.     Okay.  Go to the fourth page of Exhibit D, if you

            7            would please.

            8     A.     Fourth page of Exhibit D, okay.

            9     Q.     You see the category under Account 96001,

           10            temporary loans?

           11     A.     That's correct.

           12     Q.     $13.5 million?

           13     A.     Uh-huh.

           14     Q.     My understanding of your prior testimony is that

           15            the school corporation borrowed what you described

           16            and what's listed here as temporary loans--

           17     A.     That's correct.

           18     Q.     --in order to cover the period during which the

           19            state was--  How should we put this?

           20                    MR. WHEELER:  Delinquent.

           21     BY MR. PRICE:

           22     Q.     --slow in paying; is that accurate?

           23     A.     Well, actually much of this is state but it's also

           24            local property tax in 2003.

           25     Q.     So your local county officials were delinquent






                                                                         72



            1            also in making the payments?

            2     A.     They were unable to send out tax bills.

            3     Q.     Because of the reassessment?

            4     A.     Because of the reassessment; that's correct.

            5                    MR. WHEELER:  The state failed to

            6            re-certify?

            7                    THE WITNESS:  Right.

            8     BY MR. PRICE:

            9     Q.     Is it your testimony that on the State of Indiana

           10            Form 9, which you've referred to, stated that the

           11            grand total of all expenditures included

           12            expenditures exceptions of the $14.3 million--

           13     A.     Uh-huh.

           14     Q.     --those funds were not actually expended?

           15     A.     Is it my testimony they were not actually

           16            expended?

           17     Q.     Right.

           18     A.     Of course, they were expended.

           19     Q.     Okay.  Also, is it your testimony that from the

           20            beginning of 2000 until the end of 2003 that the

           21            expenditures, apart from the expenditure

           22            exceptions, increased or decreased?

           23     A.     I can't see the figures because I wasn't allowed

           24            to write them down but they increased.

           25     Q.     Okay.






                                                                         73



            1                    MR. WHEELER:  You're referring to the

            2            overall expenditures?

            3                    MR. PRICE:  I don't think that's the

            4            phrase he used.

            5                    THE WITNESS:  That's the phrase you used,

            6            if I remember correctly earlier.

            7     BY MR. PRICE:

            8     Q.     Well, what I--  Let me rephrase it.

            9     A.     Okay.

           10     Q.     Gross expenditures minus exception expenditures

           11            for each one of those four years, there was an

           12            increase?

           13     A.     For all total funds there was more money expended

           14            in 2003 than in 2000; that's correct.

           15     Q.     Would that be in the $17 million range,

           16            $16,866,000?

           17     A.     Looking over at your paper, I would say

           18            approximately $17 million is correct.

           19     Q.     Just a moment here.

           20     A.     Sure.

           21     Q.     Would that be an increase then for the moment

           22            taking out of the gross expenditures--

           23     A.     Uh-huh.

           24     Q.     --the exception expenditures--

           25     A.     Right.






                                                                         74



            1     Q.     --of approximately 33 percent, and I'll hand you a

            2            calculator if you want it.

            3     A.     Approximately.  I can do that in my head, yes.

            4     Q.     All right.

            5     A.     Of all total funds, that's correct.

            6     Q.     Okay.  This was during a period in which the

            7            population--student population grew by slightly

            8            over 200, and the inflation rate grew by

            9            approximately 9.72 percent; is that correct?

           10     A.     Yes.

           11     Q.     Has there ever been--

           12     A.     According to your information you had, that's

           13            correct.

           14     Q.     Has there ever been any study done, outside

           15            professional study, on cost per student, what it

           16            costs internally per student to educate?

           17     A.     I believe there was a study provided for, yes, by

           18            the Community Based Planning Committee, which was

           19            run by Bob Boyd, that's correct.

           20     Q.     Cost per student?

           21     A.     I believe that's correct.

           22     Q.     Was that particular part of the study not

           23            furnished to the public, do you know?

           24     A.     I don't know.

           25     Q.     Okay.  Let's go back to Exhibit H, I believe.






                                                                         75



            1     A.     Exhibit H.

            2     Q.     Your projected possibly potential maximum cost

            3            savings chart.

            4     A.     Uh-huh.  Okay.

            5     Q.     A couple of questions about this.  When you made

            6            the decision to include electric lights--or lights

            7            actually is what it says--

            8     A.     Uh-huh.

            9     Q.     --at a savings of about $41,000, did you take into

           10            account that if there were empty classrooms in the

           11            new schools, the new relocation schools to which

           12            the students were going to go, that those lights

           13            would have to come on?  Did you take that into

           14            account to deduct from--

           15     A.     I'm sorry.  What?  I don't understand your

           16            question.

           17     Q.     You have ten elementary schools?

           18     A.     Right.

           19     Q.     Three are going to close?

           20     A.     Uh-huh.

           21     Q.     You've told the community that they're going to

           22            save $41,000 in lights because those lights aren't

           23            going to be on?

           24     A.     Potential maximum cost savings, that's correct.

           25     Q.     In the schools to which the students are going,






                                                                         76



            1            Dr. McGuire told the Court that there had been

            2            reconfigurations and rededication of certain

            3            classrooms previously used for storage.

            4     A.     Uh-huh.

            5     Q.     Storage rooms wouldn't have lights on at all

            6            times but a classroom might.  Did you take into

            7            consideration the increase in light costs in the

            8            relocation schools?

            9     A.     I don't believe there would be any additional

           10            light costs in the relocated schools.

           11     Q.     The attrition that you referred to a moment ago,

           12            that attrition would have happened whether the

           13            schools were closed or not; isn't that true?

           14     A.     We would have reduced staff if the schools were

           15            closed, is that your question?

           16     Q.     That's not my question.  My question is, whether

           17            the three schools continue to stay open or whether

           18            they are closed, the attrition that you disclosed

           19            a moment ago based on people dying, resigning,

           20            moving, that process, attrition, happens on an

           21            ongoing basis anyway?

           22     A.     Sure.  People leave but normally those positions

           23            are refilled, that's correct.

           24     Q.     All right.  Let's go to the list again on Exhibit

           25            H, and here, I would like you to be specific if






                                                                         77



            1            you could please.  That librarian at Atwood, is

            2            that librarian continuing on the payroll?

            3                    MR. WHEELER:  That being for the 04-05

            4            school year?

            5                    MR. PRICE:  Yes.  All of these questions

            6            will be for the 04-05 school year.

            7     A.     I believe that's correct.

            8     BY MR. PRICE:

            9     Q.     The assumption being made that the three schools

           10            are closed this summer.

           11     A.     That's correct.

           12     Q.     Now, Mr. Thorpe, assuming that the three schools

           13            are closed--

           14     A.     Uh-huh.

           15     Q.     --and for the year 2004-2005, is the librarian at

           16            Atwood continuing as an employee of the school

           17            corporation and that will be my general question

           18            for each one.

           19     A.     If