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Muncie Schools Fight State Takeover With Deficit Reduction Plan

A community coalition rallies outside of Muncie school board meeting in March.

Lawmakers this session passed Senate Bill 567, allowing the state to appoint a financial advisor to help Gary Schools stay solvent. That district is struggling with declining enrollment and other financial setbacks.

Later in the session, state lawmakers received a report from the State Board of Accounts, and lawmakers added Muncie Community Schools to the financial intervention bill.

“Muncie rose to that level because they were over $10 million in operating deficit,” says House Ways and Means Chair Tim Brown.

“There have been a lot of schools…that have made the necessary cuts…So what do you say to them when you have these other corporations who aren’t making the necessary changes.”

Brown says the state is intervening now because Muncie hasn’t made tough financial choices to help its situation.

“There have been a lot of schools, and some that I know personally in my district, [that] have made the necessary cuts, have closed buildings, have looked at even small amounts of spending that was out of alignment,” Brown says. “So what do you say to them when you have these other corporations who aren’t making the necessary changes?”

When lawmakers’ were aware of Muncie’s high level of debt, and Brown and other Republicans added Muncie to the financial intervention bill. District representatives objected. Brown says he realizes why they pushed back.

“I understand personally, at a personal level, that somebody is saying something you don’t want to hear right now,” he says. “And so I understand that the people and the citizens of the community are reacting in a way that is very personal so that is important.”

But lawmakers continued forward.

Muncie Community Quickly Adopts Debt Reduction Plan

Community members, parents, school staff and many board members in Muncie are against state intervention. They held a special board meeting in the last week of the legislative session to formulate a plan to save money, in hopes of convincing the legislature to back off.

“What I don’t want to send out is that we’re doing this out of desperation.”

Not that the community doesn’t recognize there are problems. Many at the meeting said, while they don’t want state intervention, they DO want the district to make dramatic changes. And at the end of that meeting, the board voted to close three elementary schools.

It did not consolidate middle schools, though data shows all middle school students in the district can fit in one building.

Board member Bev Kelley voted against the plan saying sudden changes aren’t the real progress the legislature is asking for.

“What I don’t want to send out is that we’re doing this out of desperation,” Kelley says. “Because I think if the state representatives in the Senate think that we’re doing this in desperation, they’re still going to take us over, because nobody can do a desperate plan and make it work and do it right without given time.”

And that’s what legislators say this financial advisor will help with: creating a long term plan to help the district get out of debt.

What’s Next For Muncie Schools?

Under the final version of the bill, Muncie is essentially put on probation, designated as a “fiscally impaired school corporation.” An interim emergency manager will be appointed to make financial decisions until December.

This gives the district time to enact the deficit reduction plan it passed last week. And the bill says that emergency manager could actually be MCS Superintendent Steve Baule.

In December, the Distressed Unit Appeals Board, known to lawmakers as the “DUAB board” will review MCS’s progress. If enough has been made, district officials get back control.

If not, Muncie will be designated a “distressed unit” and a full state takeover begins. Like Gary Community School Corporation, MCS would only emerge from state control when it shows two years of “positive cash flow.”

Indiana Public Broadcasting’s Stephanie Weichmann contributed to this report.

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