Indiana

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State Considers Emergency Funding For Gary Schools

Gary Community Schools are struggling to meet payroll and other financial obligations, and is looking to the state for help.

Gary Community Schools is struggling to meet payroll and other financial obligations, and it’s looking to the state for help. (photo credit: Rachel Morello/Indiana Public Broadcasting)

The Indiana Distressed Unit Appeals Board recommends the state grant Gary Community Schools a loan to cover teacher paychecks and other costs until the end of March.

The board unanimously approved the recommendation last week, and the NWI Times reports the school district’s debt includes an $8.6 million operating deficit.

The DUAB board approved a $3.75 million loan if the district cannot find other revenue streams to continue operating. The NWI Times reports on the conditions surrounding this potential loan:

However, DUAB Chairman Micah Vincent insisted that distribution of the borrowed state funds be subject to numerous conditions, including a requirement that the school corporation first try to obtain loans from banks, or other private funding sources, if spending outpaces revenue.

Earlier this month, the district was forced to take out a short-term loan from First Internet Bank to meet its $1.5 million biweekly payroll.

“I think the state’s money should be the last money in,” said Vincent, director of the Indiana Office of Management and Budget.

In addition, to receive state assistance the school corporation must present DUAB within the next two weeks a plan to pay off its state unemployment insurance debt, which is preventing it from receiving some state grant funds; its outstanding federal food program obligations; a review of busing costs; and its 2017-18 staffing plan.

The district’s financial consultant said this loan would only help the district meet payroll for one pay period.

This recommendation now goes before the State Board of Finance, which meets March 21, and it will make the final decision on the loan.

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