MICHIGAN CITY | A public hearing is scheduled Dec. 17 over $6 million the Michigan City Area Schools board intends to borrow to cover a $6 million operating deficit in the current fiscal year budget.
This comes after a November referendum to raise property taxes to cover future projected budget deficits failed.
School Board President Don Dulaney said the bond issue was taken out during the summer by a separate building corporation that previously bought Joy Elementary School and now leases the school back to the district.
He said the school is being used as collateral to leverage money.
"It's just using more of the equity out of the school," said Dulaney, who noted the School Board still must give final approval.
Board member Beryle Burgwald said he just recently found out that a bond issue was in the making prior to the referendum and, if approved, would add to the already existing $91 million deficit.
Instead of adding to the crushing debt, Burgwald said he's looking to see if there's any fat left to cut besides the millions of dollars that have already been trimmed to ease the deep cuts in teaching positions that might be unavoidable.
"We'll never be alive before we pay it off," said Burgwald.
Closing schools is also being given serious consideration, something the board seems to be split on, said Dulaney.
Dulaney said no decisions have been made yet by the board on how to narrow next year's budget deficit, which has been estimated at about $3 million.
Suggestions should be received soon from the administration.
He cautioned the financial situation could get worse due to already diminished state revenues for schools.
If enrollment declines continue, state funding will shrink even more.
As a result, Dulaney said the board in the coming months will try to make about "four years worth of cuts."
The public hearing will occur during a School Board meeting, which begins at 6 p.m. at the school administration building at 408 S. Carroll Ave.