Consultant has dire vision for Gary schools if seven-year referendum fails

Gary’s financial consultant, Jack Martin, said if the referendum doesn’t pass and there is no additional money from the state, the school district will be out of money.

Martin said the school district’s total debt is in the neighborhood of $100 million. However, he said the most critical is $25 million, which is paid from the operating budget. The district is current with debt-service payments, including utility payments to NIPSCO and to the IRS, he said.

Martin, who was hired at the direction of the state’s Distressed Unit Appeals Board, presented a deficit elimination plan to the board Sept. 23. He said he has saved a little more than $3 million since August, including managing grants better, restructuring employees and renegotiating contracts.

He said about 180 people resigned or retired. Of that number, there were 32 RIFs, or Reduction in Force of staff.

“The big issue right now is that we need to eliminate another 95 people to get a savings of $6.3 million,” he said. “That has not happened. The board was initially in agreement but when it came down to vote, it was not approved.”

According to the schedule Martin presented to DUAB, 95 more people were to be eliminated in July. More facilities should be closed in 2017 and 2018, surplus property must be sold and the property tax referendum needs to pass in November.

“If the referendum is successful, that will allow the school corporation to borrow $6 million against this future revenue stream,” he said.

Martin said he also has recommended the board outsource maintenance and janitorial services.

“I am still working with the board to try and get these reductions implemented. Passing the referendum is the biggest hurdle, but the proposed cuts also will have to take place if there is to be light at the end of the tunnel,” he said.

Retired Gary Sen. Earline Rogers attended the Indianapolis meeting last month, and has been supporting the referendum efforts.

“If the district is not able to get the referendum and if it is not able to make critical vendor payments and reduce liabilities, there is a question as to whether the corporation would be a going concern,” Rogers said.

“I had some further conversations with members of DUAB, and they said they would use the passage of the referendum as a gauge for community interest in the school corporation.”

Gary school officials, the mayor and other community leaders have held meetings in four of the six council districts so far to make the public aware of the school district’s financial position.

The next meeting is 5:30 p.m. Thursday in the 6th District at the Kennedy Branch Library, 3953 Broadway, Gary.

The Gary City Council and Gary Mayor Karen Freeman-Wilson also support the tax increase. In a letter Freeman-Wilson wrote to members of the community Oct. 4, she said the property tax caps introduced a few years ago had a devastating impact on the city and the school district.

“Recently, a state-appointed fiscal manager suggested the Gary schools would have to merge with another corporation or be dissolved,” she wrote. “I reject dissolution, because it would undermine our efforts to rebuild our community.”

Gary schools Superintendent Cheryl Pruitt said the referendum is necessary and emphasized a referendum is not a loan or a bond. It is an increase in taxes that will affect the average family less than $100 per year.

She said the referendum will allow the school district to pay its staff and creditors, save jobs for Gary residents and prove that residents care about children and improving their learning environment.