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Gary schools set to borrow $3.3 million from the state to cover payroll expenses

Eric Parish, at podium, representing the Gary Community School Corp. emergency manager, asks the Indiana Distressed Unit Appeals Board Thursday to recommend approval of a $3.3 million Common School Fund loan to cover district payroll for October and November. The State Board of Finance will decide Tuesday whether to award the DUAB-recommended 10-year, zero interest loan.

INDIANAPOLIS — The Gary Community School Corp. won preliminary approval Thursday to borrow $3.3 million from the state to cover employee payroll expenses for October and November.

The State Board of Finance now will decide Tuesday whether to finalize the 10-year, zero interest Common School Fund loan unanimously recommended by the Indiana Distressed Unit Appeals Board, which oversees the state-appointed emergency manager that's operated Gary schools for the past 13 months.

The loan request is the first since April for the cash-strapped district that, prior to the emergency manager replacing the elected school trustees, was borrowing from the state nearly every month to meet its outsized expenses in the face of declining student enrollment and property tax revenue.

Eric Parish, executive vice president at MGT Consulting Group, the parent company of emergency management firm Gary Schools Recovery, LLC, said if this borrowing is approved, he expects the district won't need another state loan until Spring 2019.

He said the latest request is $450,000 less than previously approved loans, as the emergency manager has worked to sharply reduce expenses, including employee headcount, through school consolidation and other means, in accordance with the DUAB-approved deficit reduction plan.

Altogether, Parish noted the district has more than $40 million in outstanding Common School Fund loans, but this year it has paid back $4.6 million to the state.

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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.