Sen. Eddie Melton, left, and Rep. Vernon Smith
House tightens strings on Gary schools' bill
Contributed By:The 411 News
Looked to state for support but only got a takeover, says Rep. Smith
The full contingent of Indiana legislators representing Gary met with school district officials Friday to explain what’s next for the legislation seeking financial aid from the state.
The proposed legislation, SB 567 sponsored by Sen. Eddie Melton (D-Merrillville) and Sen. Luke Kenley (R-Noblesville), gained unanimous support in the Senate. It asked that the Gary Community School Corporation be declared a distressed political subdivision, allowing the state’s Distressed Unit Appeals Board (DUAB) to manage its finances for the next 5 years to help the district return to solvency. It asked for interest free loans and restructuring of the school district’s debt.
With multi-million dollar operating deficits projected for the next two years, and loan debts and unpaid vendor payments adding up to $101 million, the Gary school district’s finances are unmanageable. The City of Gary came under DUAB control in 2009 when it couldn’t pay its bills. Even now the school district is receiving state aid to make staff payrolls.
When the bill passed the House last week, a lot had changed. The Muncie school district, also in financial distress, was added to the bill. “Muncie does not have the magnitude of debt like Gary. I don’t understand why they were added to this bill,” Sen. Melton said. “Furthermore, the Muncie school district didn’t ask to be included.”
The state treasurer would have the power to initiate a petition for a school district to become a distressed political unit when the treasurer has reason to believe the district cannot meet its debt obligations. Current law requires the political unit to initiate the petition.
In the House version, an emergency manager, a chief financial officer, and a chief academic officer would operate the district. The Senate bill asked for a financial manager and chief financial officer, leaving academic matters to current school superintendent Cheryl Pruitt. Rep. Vernon Smith said the House version lets the emergency manager determine the superintendent’s duties.
The Senate version left all financial decisions to the financial manager with the school board and Mayor of Gary serving as a fiscal management board to advise the financial manager. The House version takes away the school board’s responsibilities for academics and finances, and it prohibits the board from meeting more than once per month. “The legislators were concerned with the multitude of business and committee meetings, in terms of micro-management of the superintendent and their compensation for those meetings,” Sen. Melton said.
The House version keeps the fiscal management board as an advisor to the emergency manager, but changes its composition. Four members would be appointed, based on qualifications: One each by the current school board, the Gary mayor, state superintendent of public instruction, and the state department of education.
“With the state takeover, it was my desire and expectation that the state allocate additional dollars so the school district could function,” said Rep. Smith. “Instead, we have just a takeover while we lose control of the financial aspects of running the district as well as the academic ones.”
Audience of community members and school staff listens to legislators
An amendment offered by Rep. Smith to restore academic control to the superintendent and the local school board failed. Smith also offered an amendment requiring the DUAB and emergency manager to consult and work with the Indiana Department of Education on matters involving distressed schools, arguing that fiscal decisions also directly impact academic and instructional programs. That amendment also failed.
The House only accepted one amendment from the Gary delegation. Approval was given to Rep. Charlie Brown’s request for the emergency manager to give notice to the Mayor of Gary when school property is to be sold.
Sen. Lonnie Randolph (D-East Chicago) explained the House version does provide for local input on actions by the emergency manager. If residents of the school district believe the emergency manager’s actions are unfair or unreasonable, those residents can petition for a hearing before the fiscal management board.
The bill goes next to a conference committee for House and Senate members to work out differences and prepare a compromise acceptable to both sides.
Story Posted:04/11/2017
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