Vote could forecast district’s future
Contentious Gary school funding referendum leaves path unclear
The $71.2 million referendum to increase revenue for the Gary Community School Corp. will test the resolve of taxpayers and possibly determine the future of the struggling district, now kept afloat by the state.
The referendum, along with the presidential race between Donald Trump and Joe Biden, are ramping up interest in the Nov. 3 general election where turnout may not be dulled by the ongoing coronavirus pandemic.
Mayor Jerome Prince is staying out of the fray. He issued a rare pocket veto of the city council’s resolution endorsing the referendum on Sept. 15.
The city council overrode the veto Oct. 6, maintaining its ceremonial backing.
Two political action committees have formed. One, by the school district called Taxpayers for the Gary Community School Corp., and the second by citizens opposed to it, called Cap All Property Taxes.
The school district, with support from local lawmakers and ministers, is holding virtual forums and some in-person events to boost support.
Some supporters are framing the referendum as a chance to save the district. State Rep. Vernon Smith, D-Gary, said state funding could be jeopardized if Gary taxpayers don’t have “skin in the game.”
State Sen. Eddie Melton, DGary, tied the success of the referendum to the health of the community.
“To have a thriving community, you have to have a public school system,” Melton said in a forum last month.
After two failed referendums, Melton said state GOP lawmakers, who hold supermajorities in the
General Assembly, were ready to let the district dissolve in 2017 because of its $100 million debt load and more than $20 million annual operating budget deficit.
“My first day, they told me the strategy was to let the district dissolve,” said Melton. “Everyone knew we were in bad fiscal financial shape, but I don’t think we knew the state was going to put its hands up and let it go.”
Instead, Democratic lawmakers convinced their fellow Republicans to give the district a second chance. What resulted was a state takeover that’s left a state-hired Florida-based management team in charge. The takeover law took authority away from the elected school board, now relegated to an advisory board, and the superintendent who later resigned.
Today, MGT Consulting, the state’s chosen manager, is leading the referendum drive. It would mean a 52-cent tax increase per $100 assessed valuation for residential homeowners.
School officials say the average home, with a $60,000 value, would absorb about a $73 annual tax increase. Tax calculators are available on the district’s website, garycsc.k12.us.
“This is quickest path to getting the district back to local control,” said Paige McNulty, MGT’s lead manager.
Since 2017, MGT has made a
dent in the annual deficit, reducing it from $22 million to about $6 million.
If the referendum passes, the district will receive $8.9 million each year for eight years, putting it on stronger financial footing, McNulty said.
She said the first order of spending, if the measure passes, is to give teachers a raise. It’s been a dozen years since their last raise.
The promise fostered support from teachers. The American Federation of Teachers gave the district’s PAC a $5,000 check Wednesday.
McNulty also promises to enhance academic programs, hire more social workers, create three more STEM academies and boost fine arts and athletic programs.
Meanwhile, opponents say the district has enough money to operate without asking taxpayers for more.
George Rogge, president of the Miller Citizens Corp. which opposes the referendum, said the referendum money will trigger additional spending and won’t address the deficit. Rogge formed the PAC last month.
“There is not one proposal that would close the $6 million deficit gap,” he said.
Rogge said a state law is already deferring $470,000 a month in state loan payments into a building fund for repairs and demolition.
He said the district has also received a tax advance of $4 million from U.S. Steel and it’s received $4 million in federal coronavirus relief funding.
School officials counter those claims saying the $25 million from the state deferred loans is going toward a new roof at the West Side Leadership Academy, new boilers at several schools and for other improvements and the possible demolition of Lew Wallace High School. It can’t be used for operating expenses.
The state loans that are deferred need to be paid back, officials said.
The U.S. Steel payment was a one-time upfront payment on future property taxes over 20 years. Spending the money would have a short-term positive impact on balancing the budget, but would not help the long-term situation, Mc
Nulty said.
The CARES money can only be used on coronavirus-related spending and not typical everyday school activities or to balance the budget. It’s primarily used for technology and to ensure teacher, student and staff safety needs.
Two city council members — Clorius Lay, D-At large, and Cozey Weatherspoon, D-2nd — also oppose the referendum.
Weatherspoon said it doesn’t make sense at this time when the pandemic is raging and jobs are scarce. “Gary has the highest unemployment rate in the state,” he said.
“The economic climate doesn’t bode well for an increase in property taxes. I know they say it will be minimal on seniors, but you have to consider the fact we are looking at rising property values.”
In response to the skeptics, the district created a Referendum Spending Oversight Committee, a volunteer group of Gary residents who would track collection and spending during the eight-year period.
The committee would offer monthly reports to the community.
Members of the state Distressed Unit Appeal Board, who control the district, supported the referendum to help the district escape state control.
“It balances the budget and gets us over the finish line and puts us in a position to end distressed unit status,” MGT vice president Eric Parish told the DUAB
last month. “Every dollar will be accounted for.”