Drowning in debt, Gary schools seek $51.8 million on May 5 primary ballot

An amended resolution, approved by the School Board on Friday by a 6-1 vote, states the school district "cannot carry out its public educational duty unless it imposes a referendum tax levy..."

The board originally approved the referendum on Jan. 27, but bond counsel Jimmy Shanahan said the Indiana Department of Local Government and Finance ordered two changes in the wording. The amended version restated the purpose of the referendum for "funding teaching positions, staff positions, and educational programming."

Shanahan said the resolution will be forwarded back to the DLGF and he could receive approval by Monday. From there, it goes to the Lake County Council and the Lake Circuit Court. Finally, it moves to the Board of Elections. Shanahan said Feb. 20 is the final deadline for the referendum to be placed on the ballot for the May 5 primary. The money would supplement the district's general fund over a seven-year period.

A campaign period of sorts is expected to begin and Shanahan warned the board that it's prohibited from spending district money to advocate for the referendum. If it uses a district building for a forum, opponents of the referendum must be allotted the same option. Teachers and others employees can't advocate for the referendum during their work day.

The school district has struggled with debt since property tax caps took hold and enrollment declined to about 7,000 students. The city has six charter schools that have siphoned off nearly half of its enrollment base. Recently, the district had to change its employee health insurance provider from Anthem to Cigna because of the premium cost.

Retired teacher Carlos Tolliver said he had mixed feelings about the referendum and still needed to be convinced.

"We have the highest tax rate in state," he said. "First of all, there must be a clear explanation and picture of what the $51 million will be used for."

Tolliver said he's concerned the people managing the day-to-day spending of the money are non-residents of the community. "We can't have double speak. We have to have clear facts."

Interim chief executive financial officer Michael Washington painted a sobering picture of the mountain of debt facing the district. He pegged its debt load, including the $2 million judgment bond also approved Friday, at $81 million. Shanahan said $1.7 million of the judgment will go to the Illinois Central Bus Co. for transportation.

Washington said the district's most recent property tax collection rate was about 50 percent. The property taxes finance three funds — debt service, capital projects and transportation. Each fund has a different collection rate with the debt service rate at 77 percent, he said.

School officials met with state lawmakers Thursday in Indianapolis, Washington said, in an effort to seek relief. He said state Sen. Earline Rogers, D-Gary, was attempting to amend the rules to allow the district to borrow $25 to $30 million in a state Common School Fund loan.

Board member Marion Williams, who said he didn't even see the referendum resolution prior to the meeting, voted against it.

"I don't know how the $51 million will be spent," he said.

"Our district does need to have some sort of revenue," said board member Nellie Moore. "We, along with other public school districts in the our state, have been placed in this position by inadequate funding by the state."

Meanwhile, Mayor Karen Freeman-Wilson said it's premature for her to voice an opinion on the referendum. She said she welcomed sitting down with the district to talk about it.

"I certainly understand the impetus for the referendum.We all know the devastating impact tax caps have had on the ability of government to function. While all units of government have been driven to efficiency, most astute observers understand that having insufficient dollars to educate or provide services is never optimal."