EAST CHICAGO | Although they were having trouble paying debts and employees, school officials in East Chicago agreed to buy out the contract of Food Services Director Gus Kouros for $163,000 late last year, district records show.

Kouros' buy out was approved in October -- less than a year after the district agreed to extend the 81-year-old former East Chicago city councilman's contract by another two years, records show.

Most of the $163,000 is coming through monthly payments of $3,000 that will be paid to him or his estate until June 2011, his general release contract with the district states.

But about $37,000 of it came from two lump-sum payments in December and January, within weeks of the district's announcement that it was delaying the last paychecks of 2007 for all of the district's teachers because of an acute cash shortfall, internal financial records show.

Part of the lump-sum payment in January was $23,027 for 19 years of unused sick time, district financial records provided by the treasurer show.

East Chicago schools Treasurer Frank Ramirez acknowledged he was frustrated at having to buy out a contract the district extended 11 months earlier -- at a time when money was tight.

But the recent move saved the district money, Ramirez said, because he was able to persuade Kouros to accept $3,000 a month until 2011 -- about half of what the district would have paid for Kouros' $73,972 annual salary.

The buy out was part of the overall district strategy to cut costs by reducing payroll and outsourcing services, Ramirez said.

"It saved the school system money, and it is consistent with other separation agreements with the school city," Ramirez said.

Kouros did not return telephone messages left on his cell phone and at his home in Schererville on Friday.

On Nov. 10, 2006, Kouros resigned the City Council seat he had held for 40 years.

Eighteen days after the resignation, the school district extended the end date on his contract as food service director from 2009 to 2011, district records show.

On Oct. 30, the School Board voted unanimously to buy out the contract.

What changed between 2006 and 2007 was a decision to try to persuade the district's outside food service contractor, Sodexho, to take on the personnel duties that Kouros was performing, Ramirez said. The company agreed to the change in February 2007, he said.