GARY — There appears to be light at the end of the financial tunnel for the Gary Community School Corp. some four years into an unprecedented state takeover of the district.
The Indiana Distressed Unit Appeals Board (DUAB), which oversees Gary schools in place of locally elected trustees, learned Thursday the deficit reduction program crafted by the district's state-appointed management firm is on the verge of succeeding, and the costs of operating Gary schools should be fully covered by ongoing revenues as soon as the end of this calendar year.
As recently as Dec. 31, 2020, the school corporation recorded an annual deficit of $1.7 million. Ongoing efforts by the management firm to cut costs and increase revenue by attracting more students to Gary public schools have succeeded in closing that gap.
The district still has $73.5 million in debt on its books, primarily long-term obligations at low interest rates owed to the state's Common School Fund.
But that's down from a debt of $104 million in June 2017 that included at the time numerous vendors who hadn't been paid for their services in months, or sometimes years, and a variety of short-term loans used to cover payroll and other expenses after the elected Gary school board repeatedly ignored a state financial adviser's cost-cutting recommendations.
The district's current financial officials confirmed to DUAB the Gary schools' debt burden is adequately supported by its property tax levy.
Indeed, debt repayments to the Common School Fund are on hold thanks to a 2020 Indiana statute permitting those funds to temporarily be repurposed, without penalty or extra costs, for school building repair and demolition.
State Sen. Eddie Melton, D-Gary, an advisory DUAB member, said he believes it's time for the General Assembly to begin considering how to unwind the state takeover of the Gary school district and return it to local control, since the primary financial goal of eliminating the deficit is at hand.
Melton hinted he's likely to file such a proposal when the Legislature convenes its 10-week session in January. He did not specify how long the unwinding process might take or what kind of oversight may be needed to keep the district on solid financial ground after it is returned to local control.
He suggested the state could truly aid Gary schools by forgiving the district's Common School Fund loans as the General Assembly previously did for all of the eligible charter schools in Gary and across the state.
State Rep. Vernon Smith, D-Gary, was emphatic that state loan forgiveness must accompany the return of Gary schools to local control, and he said local control should mean genuine local control with an elected school board choosing a superintendent and other school leaders without dictates from the state.
"Because if you're really concerned about giving us a new start then take the monkey off our back, take all the burden off our back, so we get a new start," Smith said. "And if we fail after this new start, then maybe we should be out of business. But you shouldn't have to start over again with a burden on your back."
The district's overall burden has been somewhat lightened after successfully winning voter approval in 2020 on a $71 million property tax referendum.
Gary schools also are set to receive some $67 million in federal COVID-19 assistance payments.
Smith urged DUAB to keep careful track of every penny of that money and ensure it goes toward short- and long-term investments in school people and property that bolster educational outcomes and the educational experience in Gary.
"We've got to make some efforts in improving the academics at the schools," Smith said.
Smith's call for greater local control of Gary schools, continued fiscal responsibility, and improved academic outcomes were echoed by many of the more than 100 Gary residents who attended the first DUAB meeting held in the Steel City since the start of the COVID-19 pandemic more than 19 months ago.
Some speakers attending the meeting at the Gary Area Career Center took a more aggressive stance than Smith and outright demanded DUAB give up control of Gary schools immediately — which it cannot actually do under Indiana law — and suggested ongoing state control of Gary schools is emblematic of systemic racism in Indiana.
Still others urged DUAB to act on typical school board concerns, such as bolstering school safety, improving communication with parents and the community, funding new band uniforms, barring the display of Roosevelt High School memorabilia inside West Side Leadership Academy, and starting each school day with organized prayer.