Subscribe for 33¢ / day

INDIANAPOLIS — The State Board of Finance unanimously agreed Tuesday with the recommendation of the Indiana Distressed Unit Appeals Board to provide the cash-strapped Gary Community School Corp. a $3.75 million loan from the state's Common School Fund.

The money will be used by Emergency Manager Peggy Hinckley to cover March and April employee payroll as her Gary Schools Recovery team continues working to eliminate the district's ongoing $1.5 million monthly deficit.

This is the first loan obtained by the district in 2018. It last year borrowed $16 million amid a state takeover that gave Hinckley all the powers of the elected school board after it regularly overspent the district's revenue and racked up more than $100 million in debt.

In addition to the loan request, Hinckley presented the state finance board a deficit reduction plan that, among other things, calls for a referendum to boost local tax support for the school district.

Gary voters rejected a school funding referendum in 2016.

State Auditor Tera Klutz, who serves on the finance board with the governor and state treasurer, urged Hinckley not to rush to the ballot with another request.

"Though statistics may show that off year elections have the highest passage rate for school referendums, the real factor is whether the Gary community supports the changes made and the direction the school corporation is headed at the time of the referendum," Klutz said.


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.