The cash-strapped Gary Community School Corporation is expected to pay its employees Tuesday — four days after their scheduled payday.
District Supt. Cheryl Pruitt said the paychecks will be funded by the state’s monthly allocations to school districts throughout Indiana.
On Friday, the district was unable to pay its 700 teachers, staff and administrators.
“This is the first time that we have not been able to pay on the pay date,” said Pruitt, who claimed meeting payroll will continue to be difficult.
The inability to pay employees came just days after Gary voters again rejected a referendum to increase property taxes to fund the public school system. Had the referendum passed, it could have helped Gary collect an additional $8.7 million per year over the next seven years.
The failed referendum prompted Gary Mayor Karen Freeman-Wilson to meet Thursday with two state senators to discuss how to keep the district afloat.
Pruitt claimed the district has lost more than $100 million in revenue since 2011.
The loss of revenue is the result of several factors:
* In 1960, Gary’s population was nearly 180,000, making it the second largest city in Indiana after Indianapolis. Today, the population is less than 80,000, and it is now the second largest city in the county next to Hammond, according to the U.S. Census Bureau.
* In 2012, state lawmakers changed the property tax system, a move Pruitt claims cost the district about $13 million in revenue per year.
* Delinquent taxpayers, particularly owners of foreclosed homes, don’t pay their taxes. As a result, Gary schools only collect about 50 percent of the taxes it is supposed to get, Pruitt said.
* The district has also seen a drop in state funding because children have left Gary’s public schools for charter schools and the state offers a voucher program that allows parents to send their children to private schools.
Pruitt said the loss of revenue leaves the future of the district uncertain.
“Beginning in the next year, we will continue to have challenges,” Pruitt said. “We have made significant cuts.”
Gary schools are working with a financial consultant provided by the state.
If things don’t improve, one of the recommendations that the consultant has made is for the unprecedented move of the district to dissolve, Pruitt said.
“If we’re not able to find dollars for the students or children and no new revenue comes in and we are not able to cut enough, the recommendation is to dissolve the school district or collapse it with another school district close by,” Pruitt said.
Gary Teachers Union President GlenEva Dunham said all teachers are worried.
“It’s a huge concern” Dunham said. “Cash flow is very tight. We are working closely with the school board, but everything is up in the air.”
The Associated Press contributed to this story.
Michael Puente is WBEZ’s Northwest Indiana reporter. Follow him on Twitter @MikePuenteNews.