The Gary Community School Corporation (GCSC) is currently experiencing an unprecedented financial crisis unlike any school corporation has ever experienced in the State of Indiana. The GCSC projects an operating deficit of $8.5 million in Fiscal Year (FY) 2017 and $6.7 million in FY 2018. As of July 1, 2017, the corporation will have an outstanding debt balance (principal and interest) of $101 million. Currently, the district is struggling on a day-to-day basis to ensure that payroll is met and critical vendors, such as health insurance and bus services, are paid.
Few cities in Indiana have experienced rapid and dramatic population loss like Gary. Between 1970 and 2014, Gary lost 97,506 residents, a 56-percent decline in population. State policies have had their fair share of effects on the school corporation as well. From 2009-2016, the school corporation experienced a loss of $84 million due to property tax caps. The impact of the property tax caps on GCSC is estimated to be $13.4 million in 2017 and $14.2 million in 2018. It is estimated that 30-40 percent of property tax revenues are simply never collected.
The proliferation of charter schools in the city makes Gary sixth in the nation with the most charters. According to the National Assessment of Educational Progress, approximately 40 percent of Gary students attend charter schools. According to the Indiana Department of Education, during the 2015-2016 school year, families of 688 Gary students exercised school choice vouchers to attend private schools. Additionally, neighboring school corporations actively recruit Gary students with billboards and other advertisements due to their open enrollment policies. These practices continue to drain the district of its student population.
On September 23, 2016, the state-appointed Financial Specialist informed the Distressed Unit Appeals Board (DUAB) that the district needed to place a referendum on the ballot to ask the public for an additional $8 million to help them remain an operating school corporation for the 2016-2017 school year. The referendum came within one percent of passing, leaving GCSC with little direction for the future.
I have been working with a host of local and state leaders, including the state Financial Specialist, to make a formal request of DUAB to fund the remainder of the current school year. These potential dollars would ensure teachers and critical vendors are paid so the schools can function properly for our children. Although this is a temporary solution to a complex issue, I am working with Senator Luke Kenley (R-Noblesville), Chairman of the Appropriations Committee, to develop long-term legislative solutions.
Currently, we both have two separate bills that mirror each other in many ways. However, there are some aspects from my bill that I hope will be considered as amendments to Sen. Kenley’s Senate Bill (SB) 567. I would like to thank Sen. Kenley for allowing me to co-author his bill. This provides an opportunity to remain engaged with both proposed bills as they move through the legislative process.
Sen. Kenley’s bill designates the corporation as a distressed political subdivision and requires an emergency manager have all authority over financial matters of the school corporation. My bill, SB 564, differs by providing the community more input in the process by developing a local fiscal management board that has the same authority. I believe this would allow the current school board and superintendent to focus on improving the overall quality of education in Gary. I am testifying on Sen. Kenley’s bill today in the Appropriations committee to provide background on the issue and offer a few proposed amendments to the proposal.
Although the district continues to face financial challenges, many students continue to excel academically because of the hard work of our dedicated teachers. With the help of the community, we have a unique opportunity to redefine the educational experience for GCSC students. Foremost, we must keep our children first in our decision-making process. We must strive to create a district that is financially solvent and fiscally responsible. We must continue to improve the overall quality of education for all students. Furthermore, we must work to restore community pride in the district.