Gary schools eye May funding referendum for $51.8 million to shore up budget deficit

The move, approved by the School Board Tuesday, came with little warning. School officials promised public meetings to update taxpayers on the need for the money.

The district’s financial troubles have been well documented. It owes several vendors and just settled a long-standing debt with the Gary Sanitary District that was reduced from $793,903 to $400,000. It also owes the U.S. Internal Revenue Service nearly $7 million in back payroll taxes.

Even though taxpayers are immune to levy hikes because of property tax caps, they would pay the additional referendum tax if it’s approved, said Chicago-based bond counsel attorney Jimmy Shanahan.

The referendum would cost taxpayers $7.4 million a year for seven years. The money would go into the district’s general fund that pays salaries and operating costs.

School board members had mixed emotions over the referendum. They said they are taxpayers, too, and would feel the impact.

“Our district is in very bad shape financially,” said board member Nellie Moore. “It is not due to mismanagement by this board, but by the way our public schools are being funded.”

Moore criticized Gov. Mike Pence for sitting on a $2 billion surplus while schools suffer.

“I don’t relish paying any more money, but I want the infrastructure of schools improved. The only way we can do that through the state is to ask for the community to support a referendum.”

Board member Rosie Washington urged citizens to come together and put pressure on state lawmakers to reform the funding system, which is being debated during the ongoing General Assembly session that ends in April.

“We just celebrated Dr. King’s birthday. It may be time to get on the bus again,” she said.

Board member Marion Williams, a retired educator and businessman, blamed charter schools for putting a stranglehold on Gary’s budget. Gary has six charters.

“The state of Indiana has created a situation where equity has not been afforded to this community,” said Williams who said he pays nearly $70,000 in property taxes on homes and land he owns throughout the city.

Meanwhile, the board moved forward on additional bonding. It approved a resolution calling for $5 million in tax anticipation warrants until its receives its June taxes and it increased the amount of an October, 2014, judgment bond from $1.2 million to $2 million.

Superintendent Cheryl Pruitt said the money was needed to settle a debt with the Illinois Central Bus. Co., which provides student transportation.

Williams abstained from the three financial votes. “We are going to bond this community to death,” he said.