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The school district’s deficit reduction team: Leonard Moody, l-r, Eric Parish, and Sheleita Miller

Gary schools see $12 million dent in yearly deficit

Contributed By:The 411 News

Another referendum to increase property taxes considered for 2019

A $12 million reduction in the Gary school district’s $16 million annual operating deficit was on the agenda at the recent meeting of the Gary school district’s Fiscal Management Board. The panel was designated in SB567 – the 2017 legislation authorizing the state’s takeover of the Gary schools – to advise and monitor Gary Schools Recovery LLC, the consulting team representing the state in the district’s daily operations.

Dr. Peggy Hinckley and MGT Consulting, partners in Gary Recovery LLC, have the task of restoring the school district to academic and financial stability. Financial stability means a balanced budget with enough revenues to cover expenses, a status the district hasn’t satisfied in more than a decade.

Resolving the school system’s yearly deficit was the team’s first priority before it tackles the district’s long-term debt of $100-plus million. Leonard Moody, the district’s chief financial officer said outstanding balances owed for utilities, transportation, and insurance had to be settled to avoid disruption in essential services. “We’ve gone from $16 million in outstanding accounts payable to just under $4 million in the past eight months, since August 2017,” Moody said.

Earline Rogers, the fiscal board’s chairman was the only one of the 4-member panel in attendance at the April 26 meeting. “This is impressive. It’s something to show the people in Gary and the people downstate that we are making movements,” Rogers said. The other fiscal management board members are Purdue Northwest Chancellor Thomas Keon, Attorney Clorius Lay from Gary, and Indiana Dept. of Education’s Lee Ann Kwiatkowski.

The Internal Revenue Service reduced its $8.5 million tax lien to $320,000. CIGNA, the employee health care provider reduced the district’s bill by $1 million. Illinois Central reduced costs for next year’s student transportation by $1 million. NIPSCO is now current. (More details in sidebar)

Earlier this year, the consolidation of the district’s two high schools was finalized with the closing of Wirt-Emerson Visual & Performing Arts at the end of the 2017-18 school year, leaving West Side Leadership Academy as the district’s only high school for the 2018-19 school year.

Increasing revenues is among the next priorities. “We can’t cut our way out of this,” said Dr. Hinckley. Another referendum to voters to increase property tax rates is being considered for the May 2019 ballot.

Gary voters turned down the last 2 requests for a property tax increase. The public, even Gary’s media outlet WLTH Radio – owned by former school board trustee Marion Williams – had soured on the Gary school system, long before the state takeover.

Dr. Hinckley said the referendum has to appeal and show some benefit to voters. “If we can demonstrate we’re getting our fiscal house in order, that we’ve made cuts. It’s got to be real clear where that money is going.”

Rogers agreed, “I think once the public is given the correct information, the referendum will be successful.”

Eric Parish, the consulting team’s financial analyst said the district is still spending more each month than revenues it takes in, but that amount is on a steady decline. Parish compared the budgeted and actual amounts spent. In August 2017, the actual amount spent was $1.8 million over the budgeted amount. In March, it’s down to $1.3 million over the budgeted amount. Parish said the district plans to have a balanced budget in 2019.

The school district’s deficit reduction team Leonard Moody, Eric Parish, and Sheleita Miller

Story Posted:05/04/2018

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