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Struggling Gary Schools Open Under New Leadership — The State

Thursday marks the first day of school for children in the Gary, Indiana, public school system — and the first time a school system in Indiana has opened under state control.

The state’s so-called Distressed Unit Appeals Board, or DUAB for short, took control of the district this year because the district’s finances have collapsed and because of its poor academic performance.

Gary, considered one of the top public school districts in the state decades ago, is the first in Indiana to be placed under emergency management. Here is a look at what happened and what could come next.

Why the state takeover? 

The Gary Community School Corporation is saddled with $110 million in long-term debt. It struggled to meet payroll last year, even after it shuttered schools to stay afloat. From 2009 to 2016, the district lost $84 million in revenue, according to the DUAB. 

This level of financial distress prompted the state takeover last spring, a move that gives an emergency manager broad leeway to try to reduce the school system’s expenses, restructure its debt, and attempt to return it to financial stability.

Gary’s decades-long decline is mainly due to population loss and declining property tax revenue. 

Gary lost 100,000 residents between 1970 and 2014, leaving it with a population today of about 68,000, U.S. Census figures show. 

Many families have left to seek better schools and safer communities in the nearby suburbs of Merrillville, Portage, Hammond, Lake Station and Crown Point. 

There’s also been increased competition from charter and private schools, many parents opting to send their children to religious-based schools in Gary and taking advantage of Indiana’s school voucher program. 

The state of Indiana also limits the amount of property taxes a city or school district can collect from homes and businesses. The tax cap system started 10 years ago, providing a big tax cut for homeowners but also less revenues for municipalities and school districts. 

The school district attempted to pass a referendum to collect more taxes, but residents rejected the appeal last November. 

That forced layoffs and the shuttering of at least one elementary school last spring.

Emergency manager 

The state takeover means the school district’s elected school board and appointed schools superintendent now have little say in the district’s operations.

That’s now in the hands of Peggy Hinckley, who the state appointed as emergency fiscal manager on July 31. 

“We’ve been working 15, 16, 17 hours of a day since,” Hinckley said. “We’ve been very attentive to getting the buildings ready. We’ve had a lot of plumbing problems, roofing problems. We also had staffing issues and trying to predict enrollment.”

Since taking over, Hinckley said the district has spent about $500,000 toward school repairs and to get school grounds ready. The money eventually will have to be paid back to the state. 

“The conditions here are extreme, that’s why they call it an emergency,” Hinckley said. 

Gary’s enrollment reached a low of about 5,700 students last year, down from about 12,000 in 2006, according to the school district. 

Hinckley expects a lower enrollment number initially since some parents may not realize school starts Thursday. 

“We’re going to take an aggressive marketing approach for families who have not returned because they may not think that we are open for business,” Hinckley said. Hinckley works for a firm called MGT Consulting, which was selected by the DUAB to manage Gary’s schools. The contract is for two years. 

Called to serve struggling hometown 

Hinckley, a 65-year-old former superintendent for three Indiana school districts, including Indianapolis, said she considers her work in Gary a “call to service.” 

“Sometimes you are called to serve,” said Hinckley, who grew up in Gary and neighboring Merrillville. “I have the skill sets to do this. I had to decide whether I wanted to standby and watch it [a collapse] happen or whether I could be part of the solution.” 

Future of district 

Even with a state-appointed emergency manager, the district’s financial woes likely won't go away. The district must set its budget by November. Hinckley says there will be some tough decision to make regarding facilities and the number of employees the district can support.

In the long term, the state will ultimately decide the school district’s fate — whether these emergency efforts can save the district or whether some more radical remedy is required. 

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