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INDIANAPOLIS — Hoosier lawmakers may consider prohibiting new charter schools from opening in Gary as part of a plan — using a state-appointed emergency manager — to right the finances of the debt-ridden Gary Community School Corp.

Currently, Senate Bill 567 is silent on a possible new-charter ban for Gary, which has the largest proportion of students attending charter schools of any city in Indiana.

But state Sen. Eddie Melton, D-Merrillville, among others, believes a charter moratorium is needed to stabilize funding by halting the flow of students out of the city's traditional public schools.

Declining enrollment

Melton explained last week to the Senate Appropriations Committee that Gary has lost about half its student population, or 5,300 pupils, to charter schools since 2009, dropping enrollment in the city's public schools to just 5,500 children.

He said nearly 700 additional Gary students are attending private schools using a state voucher, and still more children are attending classes in adjacent school corporations under Indiana's open-enrollment law.

"As you can see, we have a plethora of avenues and lanes where we are losing our student population," Melton said.

According to the current Indiana budget, each lost child costs the school corporation about $8,000 a year in state tuition support. Five thousand fewer students equals $40 million in reduced annual revenue for the school corporation.

Gary schools already were financially struggling prior to the city's charter boom, due to significant state-mandated reductions in the value of its industrial property for tax purposes, as well as a less-than-50 percent property tax collection rate in a city that's lost more than half its population over the past half-century.

Altogether that's resulted in the school corporation running an $8.5 million operating deficit in the current budget year, a $6.7 million projected deficit for the next school year, and the accumulation of $101 million in debt.

"The district is struggling on a day-to-day basis to ensure that payroll is met, and critical vendors, such as health insurance and bus services, are paid," Melton said.

A Catch-22

Gary School Trustee Nellie Moore told lawmakers the school corporation's financial instability, caused by students leaving for charter schools, is producing, in turn, more instability, as parents see public schools forced to close due to declining state tuition support, then enroll their children in nearby charter schools.

"We're caught in a Catch-22 situation," Moore said. "We're trying to stabilize ourselves financially by cutting and closing ... but as we cut and as we close, we lose the confidence of the parents in the community in our ability to maintain a viable educational system."

Moore said Gary charter schools — which are state-funded though exempt from many state regulations — are not statistically outperforming the city's public schools in student achievement, but nevertheless appeal to parents because of their perceived stability.

She said the school corporation expects to close three more schools at the end of this academic year, leaving just nine public schools in a city where Moore once was forced to teach Gary students in a church basement because its 40 school buildings were overcapacity.

Gary Mayor Karen Freeman-Wilson said the city is trying to help stem the outflow of students by investing in road paving, sidewalk repairs and other infrastructure projects near the city's remaining schools to make them more attractive.

Charter moratorium?

State Sen. Luke Kenley, R-Noblesville, chairman of the Senate Appropriations Committee, said he left a Gary charter school moratorium out of his and Melton's legislation for a state takeover of the school corporation's finances, to try to attract the broadest possible support in a Republican-controlled Senate filled largely with charter-school supporters.

"It's sort of a freestanding, separate issue that people are going to want to weigh in on one way or another, and I didn't want to derail the effort we're making here," Kenley said.

At the same time, Kenley observed that Gary already has a significant number of existing charter schools, and true "school choice" requires a viable public school system be part of the mix.

He said that could mean Melton's proposals might still be inserted in the legislation as it moves through the process: possibly either to prohibit new charter schools in Gary until the school corporation has paid off its $30 million in loans from the state; or to give the mayor final approval authority for new charters.

Melton said he's committed to working with anyone willing to help address the short- and long-term needs of Gary's schools.

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Statehouse Bureau Chief

Dan is Statehouse Bureau Chief for The Times. Since 2009, he's reported on Indiana government and politics — and how both impact the Region — from the state capital in Indianapolis. He originally is from Orland Park, Ill.