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Gary schools new chief financial officer Leonard Moody, center, with Atty. Clorius Lay and former State Sen. Earline Rogers

State building a plan to improve Gary schools

Contributed By:The 411 News

Chief Financial Officer Moody is now on board

‘Growth is the only way to right the sinking ship of the Gary school district’ was the takeaway from two meetings held Thursday morning in administration headquarters. How to get there – balancing the budget and paying down the debt – was presented by Emergency Manager Peggy Hinckley to the Fiscal Management Advisory Board followed by a meeting with elected officials and community members.

The objective of the meetings, Dr. Hinckley said, was to share plans with school district stakeholders and listen to their recommendations on returning the district to financial stability. She said a meeting with Gary Mayor Karen Freeman-Wilson is scheduled for the next day, Friday.

Thursday’s meetings presented the outlines of a plan the emergency manager will present to the state’s Distressed Units Appeals Board at the end of January 2018. Legislation that led to the state takeover of Gary schools and naming of an emergency manager to be the state’s partner required a report to the DUAB within 6 months of the takeover. Hinckley and MGT Consulting’s effective date as operators of the Gary school corporation was August 1.

The district runs an $18 million a year operating deficit and is $100 million in debt. Eric Parish, a financial analyst for MGT Consulting said, “Eighty million dollars of the debt is in loans from Indiana’s Common School Loan Fund and [municipal] bonds the district issued for borrowing.” The remaining $20 million is owed to school district vendors.

“Our plan does not layout one path. We have a menu of options,” Parish said will be presented to the DUAB, “that will over time reduce the school corporation’s annual deficit, restructure the debt, and increase revenues.” Their Viable Structural Deficit Reduction Program will include some 20-30 options with the calculation of each option’s fiscal impact.

The impact of suspending loan repayments would free up cash flow for other purposes, Parish said. The district is currently paying $5 million yearly on its debt. Just recently, a new health insurance contract was signed that is $1 million less than the previous year’s. Reversing the trend of declining enrollment will bring in more revenues.

Closing either Wirt-Emerson or West Side High School at the end of the current school year is already one of the options.

Facility assessments have been completed on each school and the findings will be shared in public meetings. On January 17 at Wirt, a tour of the school will be followed by a session to report the findings of what the costs will be to maintain the building. The same process will be repeated January 23 at West Side. “We will also discuss the facility assessments of all buildings in the corporation at these meetings as well as grade configurations,” Dr. Hinckley said, “and each meeting will allow for public input and comment.”

The first meeting was with the 4-member Fiscal Management Advisory Board, a panel created by the legislation to act as an advisor to the emergency manager. It consists of former State Senator Earline Rogers as chair, Purdue Northwest Chancellor Thomas Keon, Attorney Clorius Lay from Gary, and Indiana Dept. of Education’s Lee Ann Kwiatkowski. The advisory board meets 4 times a year.

Rogers asked the emergency manager “to shoot for the higher goal,” to seek forgiveness or elimination of some loan repayments, not just suspension. “If you shoot for suspension, legislators tend to look for the middle ground.”

Atty. Lay pressed for details on the Internal Revenue Service’s $8.5 million tax lien on the school district, the largest single source of debt after loans. Parish said the district’s tax attorney Laszlo & Associates submitted an “offer in compromise” to the IRS, but he couldn’t reveal it. “The agreement will be included in the final plan to the DUAB,” he said, “and the advisory board will be able to preview that plan before the emergency manager’s presentation to the DUAB on January 31.”

The school district has a new chief financial officer, Leonard Moody. The school takeover legislation required the emergency manager hire a full-time chief financial officer and chief academic officer. Moody has a 15-year history of fiscal and audit experience for the Chicago Public School system and more recently, with Chicago State University. “This is a dream situation to help support improvements in the system and do something meaningful for a community. I feel well positioned and qualified, and have an executive background that’s necessary to make it work,” was Moody’s response to questions from the fiscal board.

The interim chief academic officer is Dr. Lucille Washington, former Bailly school principal. There wasn’t a strong response to the request for the education officer as received for the financial officer, Dr. Hinckley said. Hiring efforts will continue in 2018.

The second meeting was attended by several Gary school board members and the teacher’s union president, touching issues from student enrollment to revenues. “If we don’t attract more students, the picture is very grim,” Parish said.

Recommendations were made for a more comprehensive registration and early enrollment process, and outreach to schools with programs ending with grade 8 whose students could attend a school district high school.

James Piggee, a member of the Gary Board of School Trustees, asked the emergency manager to sit down with state legislators and U.S. Steel to talk about increasing the steel company’s property taxes to help the school district pay its bills.

School board trustee Robert Buggs questioned the emergency manager on increasing enrollment. “What’s going to motivate them to come here if you don’t have new things to show them, when neighboring cities have passed referendums to make improvements to schools.”

Gary Teachers Union president GlenEva Dunham asked the emergency manager to pursue grants instead of loans. Since the state takeover, Dr. Hinckley has requested two loans from the state to help pay some of the district’s monthly operating expenses.

“We’re building credibility and I want to show progress in getting to fiscal solvency before asking for grants,” Parish responded. “Grants will be in the mix with loans.”

Fiscal Management Advisory Board, l-r, Clorius Lay, Lee Ann Kwiatkowski, Earline Rogers, and Thomas Keon

Gary schools new chief financial officer Leonard Moody, center, with Atty. Clorius Lay and former State Sen. Earline Rogers

Story Posted:12/23/2017

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