The state approved a $3.255 million loan Tuesday to the Gary Community School Corp. to carry it through December while its emergency manager promised future cuts that could include the closing of a high school.
"We're not simply placeholders," said Peggy Hinckley who serves as emergency manager for the state-appointed Gary Schools Recovery LLC firm that's running the district. "We have to bring significant reductions and we're working on one or two in the next few months."
The district maintains two high schools, the West Side Leadership Academy and the Wirt-Emerson School of Visual and Performing Arts. A third school, the Roosevelt College and Career Academy, is operated by a private company under a previous takeover agreement.
Tuesday's loan was approved by the Distressed Unit Appeal Board and the Indiana Board of Finance, in separate meetings.
Hinckley told the Distressed Unit Appeal Board a business plan focusing on reduced spending will be presented by the end of the year.
Tuesday's loan is the latest in a string of state loans that have kept the school district of about 4,700 students afloat. Officials anticipate the loan requests to diminish as spending cuts take hold.
The Distressed Unit Appeal Board also approved the contract negotiated with the Gary Teachers Union that addresses what Hinckley termed an "abuse" of sick leave.
"Not many, but enough to get my attention have been using sick days more frequently," Hinckley said.
The revision requires a physician statement for absences.
Eric Parrish, an accountant for Gary Schools Recovery, said the district is paying about $750,000 annually in substitute teacher pay.
"When teachers are absent, we're double paying. That's not sustainable," he said.
Hinckley said Gary teachers haven't received a pay raise in 10 years. She praised teacher union president Gleneva Dunham for her cooperation in the bargaining talks Hinckley said lacked acrimony.
Hinckley said there has been a small reduction in noncertified staff and clerical staff and custodians have been told more reductions will be put on the table. Those workers are represented by the Service Employees International Union.
Hinckley, a retired Indiana superintendent, said she was surprised to learn some of the noncertified staff members receive paid vacation days on a 12-month schedule, which generally isn't the case in school districts.
The Distressed Unit Appeal Board approved a contract with the Merrillville accounting firm of Laszlo & Associates to represent the district in talks with the Internal Revenue Service. The district owes the IRS about $8.4 million that includes $2.6 million in penalties and interest.
The contract calls for the accounting firm to receive 12 percent of what it recovers from the IRS in a settlement. The IRS has liens against all the district's schools and properties. It failed to pay payroll taxes in 2013 and 2014 and part of 2015.
It also was disclosed the IRS has placed liens on properties and accounts held by former interim chief financial officer Michael Washington, who was fired by the school board in 2015.
Hinckley said interviews are beginning this week in the search for a chief financial officer and a chief academic officer.
An extended day tutoring program at Marquette and Beveridge elementaries begins Wednesday.