INDIANAPOLIS — The Indiana Distressed Unit Appeals Board is recommending the state loan $3.75 million to the Gary Community School Corp. to cover May and June employee payroll.
If approved, as expected, by the State Board of Finance Tuesday, this will be the second loan of that amount provided this year to the cash-strapped school district that's being run by a state-appointed emergency management firm in lieu of its locally elected trustees.
The district borrowed a total of $16 million from Indiana's Common School Fund in 2017, according to state records.
Leonard Moody, the district's chief financial officer, told DUAB Thursday that "as much as we hate to be coming before you and asking for additional loans," he said state support will continue to be needed likely until late 2019 or early 2020 to cover operating costs that exceed revenue.
"Without this support we would have insufficient cash resources to meet those payrolls," Moody said.
He explained one reason why the district is cash short going into May is because it diligently has been paying off debts to a variety of vendors, including the IRS, Illinois Central Bus Company, Indiana Department of Education, utilities providers and others.
Since August, when Gary Schools Recovery, LLC took over the school district, it has paid or settled $12.3 million in overdue bills racked up by the local school trustees.
Just $4.2 million in accounts payable remain outstanding, and some of that is disputed. The district's long-term debt, however, still hovers around $100 million, according to state records.
With little debate, DUAB unanimously recommended the latest loan request be advanced to the state finance board to be repaid over 10 years, beginning July 1, 2019.