Matt Field, The News Dispatch Staff Writer

MICHIGAN CITY — Between one and three Michigan City schools may close to make up for a $10.2 million budget shortfall caused by a local property tax dispute and decreasing state funding.

MCAS Interim Superintendent Carla Iacona nearly choked up with emotion by the end of Saturday’s PowerPoint presentation before a crowd that nearly packed Elston Middle School’s auditorium.

Iacona said cutting the supplies budget and reducing other expenses wouldn’t result in enough savings.

The four options she presented to save even more money all included closing at least one school. They would save between $1.3 and 2.6 million in salaries and other costs. Under each proposal, Niemann Elementary School would be closed. The most severe proposal involves also closing Edgewood and Eastport schools. Under that plan, 53 positions would be cut, and MCAS would save $2.6 million.

Instituting that proposal plus other cuts in areas like the supplies budget would still leave MCAS in need of another $5 million. Iacona discussed cutting art, music, gym and other programs to make up the rest of the gap.

Theo Boone, MCAS business manager and chief financial officer, said after an error was discovered, the state recently gave the school system $5.3 million that was withheld in error.

None of the proposals at this stage take into account that payment.

As such, some School Board members who listened to the administration’s presentation wanted a fifth proposal considered.

MCAS is trying to resolve the property tax dispute in court. Board member Beryle Burgwald proposed using the $5.3 million to save schools and waiting to see how the tax issue is resolved. He said he doesn’t want to close a school, only to find out later the move wasn’t necessary.

“To have to close schools at this time and then maybe by October get a favorable ruling would be very difficult,” he said.
The MCAS budget took a hit both from officials in Indianapolis and those in La Porte County. Gov. Mitch Daniels cut $300 million in school funding in 2010, which meant $2 million less for area schools.

In 2009, County Auditor Craig Hinchman refused to finalize the 2006-pay-2007 property tax bills and instead used the 2005-pay-2006 assessed values. According to Iacona’s presentation, that matter caused most of the $10.2 million shortfall the schools are facing. MCAS, Michigan City and other taxing units have filed suit against Hinchman. Earlier this month, a judge ordered that the parties enter mediation.