The Gary School Board will ask the state for a $15 million interest-free loan to pay off some of its debts.
The board voted Tuesday to seek approval for the loan from the Distressed Unit Appeals Board, which is overseeing the district's finances under state legislation approved earlier this year.
"This will help us in paying immediate bills," said board president Antuwan Clemons.
The district has been struggling financially in recent years because of an enrollment decline, state property tax, dwindling tax collections and a changing school funding formula.
State Sen. Ryan Mishler, R-Bremen, one of the architects of the funding formula, met with school officials Tuesday and received a tour of schools and the city. Mishler is also a new member of the DUAB.
"I came to learn more about your schools," he said. "At the end of the day, I just want to be fair."
Gary's state-appointed financial specialist, Jack Martin, will make a presentation to the DUAB board in Indianapolis when it considers the loan. No date has been set for the meeting.
The school district, which has closed dozens of schools in recent years, is trying to dig its way out of massive debt. It owes the Internal Revenue Service nearly $7 million in unpaid payroll taxes and it has debts with the Gary Sanitary District and the Northern Indiana Public Service Co. among several vendors. Last month, the sanitary district refiled liens of more than $107,000 in the Lake County Recorder's office when the school district voided a previous agreement by failing to keep up with its monthly sewage bills. The GSD had agreed to forgive $400,000 in past debt.
Superintendent Cheryl Pruitt said the state Common School Fund loan would go toward debts. She has said in the past that the district has lost about $100 million in funding since 2009.
"We're trying to stay stable," she said.
Pruitt said Martin is completing the district's 2015 and 2016 budgets and they should be posted this week.