Muncie schools included in bill that passes Indiana House panel
Indiana lawmakers are considering a proposal that would allow the state to take over financially troubled school districts in Gary and Muncie.
Republicans who control the legislature say the state ought to intervene and appoint emergency managers after both failed to fix their problems.
They say school districts that face similarly dire finances ought to downsize or consider consolidating with neighboring districts.
This year, the Gary district is running an estimated $8.5 million operating deficit.
Its estimated long-term debt liabilities have grown to $103 million, state-mandated financial adviser Jack Martin told the Distressed Unit Appeals Board last month.
It also continues to face declining enrollment, the rise of charter schools, less revenue under state-mandated property tax caps, changes in the school funding formula and low property tax collections in Gary that have contributed to its precarious financial state.
In an exclusive interview Friday with the Post-Tribune, state Superintendent of Public Instruction Jennifer McCormick said she did not think Gary's financial situation or a proposed solution at that time would be applicable to another financially struggling district, such as Muncie.
According to its website, the Muncie Community Schools serve 6,000 students in pre-K through 12th grade.
Schools include one high school, Muncie Central, the Muncie Area Career Center, two middle schools and nine elementary schools, the website said.
A U.S. Census Bureau estimate said the city's 2015 population was 70,087.
A spokesman for the Indiana Department of Education was not available to comment on Monday's development.
Some Democratic critics say the matter was caused by Republican-championed property tax caps and changes in education funding over the last decade. They expect many more school districts to have financial troubles in the coming years.
The measure was advanced Monday by the House Ways and Means Committee on a 19-3 vote. It now goes to the full House for a vote.
If passed, the bill would have to be reconciled in a conference committee with the Senate version before it goes to the governor's desk.
A perfect storm of declining enrollments, decreased property values, voter-approved property tax caps and legislative changes to school funding has cut into many districts' ability to stay afloat.
In some cases, voters have rejected referendums to increase property taxes or the measures haven't raised enough money.
In others, a history of fiscal mismanagement has turned a bad situation worse.
“I have concerns about a whole lot of other schools corporations,” said House Ways and Means committee Chairman Tim Brown, R-Crawfordsville.
Under the measure, an emergency manager would have the power to control and reduce spending, sell assets and property, renegotiate contracts, lay off staff and privatize services.
But the bill also would help underwater districts secure no-interest loans and other state assistance.
In a statement, state Sen. Eddie Melton, D-Merrillville, criticized the proposal to give academic control and other wide-ranging authority, such as the ability to sell land to an emergency manager.
“I think it was pre-emptive to include Muncie in this bill as they are facing a much less drastic financial crisis than Gary,” he said. “I am hopeful that once this proposal reaches the House floor, there will be second reading amendments that will address the concerns that I have at providing more local input and transparency.”
Gary Mayor Karen Freeman-Wilson said Monday she's hoping the bill can be improved in a House-Senate conference committee that would include state Rep. Charlie Brown, D-Gary, state Rep. Tim Brown, Melton and Sen. Luke Kenley, R-Noblesville.
“I'm still encouraged even if they vote it out as is,” Charlie Brown said.
The House version downgrades the elected school board, Brown said. “The superintendent and school board basically have no role.”
Charlie Brown said he's also concerned that no money has been set aside to aid the district in trimming its debt load.
House and Senate versions give the Gary mayor an appointment on an advisory fiscal board that would oversee the district along with the emergency manager who would have final say.
The House version expands the fiscal board from three to four members, including one appointed by the state superintendent of public instruction and one by the State Board of Education.
Besides the Gary mayor, the Gary School Board would have an appointment to the board.
Freeman-Wilson acknowledged there's a level of skepticism among House Republicans when it comes to the beleaguered Gary school district.
“There's more thinking that has to go into this process to get a final version,” she said. “If I were in the school board's shoes, I'd be very concerned.”
Charlie Brown said he expects to put forth an amendment when the bill reaches the House floor on Wednesday that will stipulate the emergency manager lives in Gary or in Lake County.
“I would certainly like to see someone who is vested in community,” Freeman-Wilson said. “Someone who has the requisite financial expertise and someone who has enough stake in the success of our community that we can count on them to make good decisions.”
Gary School Board Member Nellie Moore, who initially supported the bill if it could help the district tackle some of its debt, said she was troubled by the change and also hoped it would be removed in conference committee.
Moore said the move was “essentially undoing the public's right to select its representatives.”
“I think it is basically disowning the fact that the community has the right for governance. I think that is not something that should be allowed by the state, even establishing the number of meetings that we have,” Moore said. “The electorate has the right to select school board members, that should be the same for every school district in the state, not just the ones that are prosperous.”
When reached by telephone, acting Gary Superintendent Cordia Moore said she could not comment, because she was in the middle of a meeting with a principal.
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