>> CHICAGO A PUBLIC SCHOOLS ARE

NOT ALONE IN FACE A FINANCIAL

CRISIS N GARY, INDIANA THE DEBT

IS FORECAST TO EXCEED $100

MILLION BY THE SUMMER.

AND AS IT SHUTTERS SCHOOLS WITH

DWINDLING ENROLLMENT, THE

INDIANA LEGISLATURE IS POISED TO

APPROVE A MEASURE THAT WOULD

ALLOW A STATE TAKEOVER OF THE

SCHOOLS.

AND JOINING US WITH MORE IS

REPORTER MICHAEL WHO HAS BEEN

FOLLOWING THE STORY.

AND HOW DIRE IS THE SITUATION IN

GARY?

>> IT'S PRETTY DIRE.

RIGHT NOW THE STATE IS LOOKING

AT TAKING A FINANCIAL TAKEOVER

OF THE GARY SCHOOLS.

THERE IS A STATE BILL THAT IS

BEING PROPOSED DOWN --

DEBATED RIGHT NOW AT THE INDIANA

LEGISLATURE.

RIGHT NOW IF IT IS APPROVED,

GARY THE SCHOOL BOARD WILL LOSE

ALL FINANCIAL CONTROL OF THE

SCHOOL SYSTEM FOR UP TO FIVE

YEARS UNTIL THE ELECTED SCHOOL

BOARD WOULD HAVE LITTLE SAY IN

HOW THINGS ARE PAID OUT AND

OTHER NEW CONTRACTS.

BUT THIS IS HOW DIRE THE

SITUATION IS IN GARY WITH

MASSIVE DEBT AND LITTLE SOURCES

OF REVENUE.

AND FEELING THE FINANCIAL

CONSTRAINTS OF THAT.

>> TELL US MORE ABOUT THAT

SENATE BILL 567 IF IT IS A

PROVED AND SIGNED BY THE

GOVERNOR WHAT WOULD IT PROVIDE

TO THE SCHOOL DISTRICT?

>> WELL, IT WOULD HAVE AN

OVERSEER OF THE FINANCIAL BILLS

COMING INTO THE GARY SCHOOL

CORPORATION.

THEY WILL BE NEGOTIATING WITH

VENDORS WHO HAVE NOT BEEN PAID

IN MONTHS.

AND YOU WILL HAVE THERE'S GOING

TO BE A LOAN FORGIVENESS.

GARY IS HOPING FOR LOANS AND

THERE IS GIVE AND TAKE IN TERMS

OF THE FINANCIAL RESOURCES AND

CONTROL OF THE SCHOOL SYSTEM.

THE BIG THING WILL BE THE

FINANCIAL ASPECT OF WHO CONTROLS

THE GARY SCHOOL SYSTEM FOLKS

FROM INDIANAPOLIS WHO WILL BE

CONTROLLING HOW THE BUDGET IS

SPENT IN THE GARY COMMUNITY

SCHOOL CORPORATION.

>> WELL, THE GARY SCHOOL SYSTEM

WAS ONCE A MODEL FOR THE

COUNTRY.

TELL US HOW IT GOT TO THIS

POINT?

>> WELL, BASICALLY, GARY OVER

THE LAST 50 YEARS HAS BEEN

LOSING POPULATION.

EVERYTHING FROM AT LEAST 100,000

PEOPLE SINCE 1970.

WE'VE HEARD ABOUT GARY'S ISSUES.

DWINDLING ECONOMIC BASE.

INDUSTRY.

GARY WAS BIG ON STEEL.

THERE IS A HUGE STEEL MILL BUT

THEY EMPLOY LESS PEOPLE.

A LOT LESS TAXES TO DRAW FROM AS

FAR AS OTHER INDUSTRY THERE.

SO THEN YOU HAVE DEPOPULATION

AND PEOPLE LEAVING BECAUSE OF

CRIME HAS SET IN.

AND SCHOOLS IS THE NUMBER ONE

CATALYST FOR BRINGING PEOPLE IN.

AND THAT HAS DRIVEN PEOPLE OUT

FOR GREENER PASTURES IN THE

SUBURBS AROUND GARY.

IT'S BEEN THIS SORT OF

EARTHQUAKE TORNADO OF ISSUES

FACING THE GARY SCHOOL SYSTEM.

>> AND AS YOU SAID REVENUE IS

NOT COMING IN AND VOTERS TURNED

DOWN A PROPERTY TAX INCREASE.

CAN YOU TELL US A LITTLE BIT

ABOUT THAT AND HOW CHARTER

SCHOOLS ARE FACTORING INTO THIS

AS WELL?

>> WELL, HERE IS THE SITUATI

THAT WAS CUT MORE THAN HALF IN

GARY.

THAN WITH THE RESIDENTS.

AND ANOTHER SITUATION IN GARY IS

NOT EVERYBODY PAYS THEIR TAXES

IN GARY.

THEY ONLY ARE COLLECTING MAYBE

50% AROUND 60-50 TO 60% OF

PEOPLE PAY THEIR TAXES.

SO THAT IS CAUSING A HUGE BURDEN

ON THOSE WHO ARE PAYING TAXES

AND LAST FALL THERE WAS A SECOND

ATTEMPT TO PASS A REFERENDUM SO

GARY TAXPAYERS WOULD PAY A

LITTLE BIT MORE ON TAX BILL TO

FUND THE SCHOOLS.

I THINK IT WOULD HAVE GENERATED

$8 MILLION A YEAR BUT IT FAILED

AND A LOT OF WHAT IS HAPPENING

NOW DOWN IN INDIANAPOLIS IS

BECAUSE THEY ARE NOT GOING TO

GET SOME OF THAT MONEY THAT IF

TAXPAYERS WERE GOING TO APPROVE

THAT, THEY WOULD HAVE HAD BUT

THEY DID NOT APPROVE IT SO IT'S

CAUSING TURMOIL NOW.

>> AND MICHAEL QUICKLY AGAIN HOW

ARE CHARTER SCHOOLS FACTORING

INTO THIS?

THERE ARE MORE CHARTER SCHOOLS

ZAPPING THE POPULATION?

>> THAT IS RIGHT.

THERE ARE SEVEN OR EIGHT CHARTER

SCHOOLS IN THE CITY OF GARY.

WHEN A STUDENT LEAVES AND GOES

TO I ACHARTER SCHOOL THEY TAKE

THOSE TAX DOLLARS PER PUPIL SO

IT'S CREATING COMPETITION WITH

THE SCHOOLS.

AND CHARTER SCHOOLS WERE

SUPPOSED TO BE AN ALTERNATIVE

NOT TO SIPHON AWAY THAT MANY

STUDENTS.

RIGHT NOW YOU GOT THE PUBLIC

SCHOOLS AROUND UNDER 6,000

STUDENTS.

WHERE THE CHARTER SCHOOLS ALMOST

MATCH THAT AT 5500 STUDENTS.

SO RIGHT NOW CHARTER SCHOOLS ARE

PUTTING UNDO BURDEN WHEN IT

SHOULD BE THERE AS AN

ALTERNATIVE NOT REALLY BEING THE

WAY IT IS RIGHT NOW IN THE GARY

SCHOOL SYSTEM.

>> DO YOU HAVE THE SENSE THAT

ANYBODY ON THIS SIDE OF THE

STATE BOARDER IS KEEPING AN EYE

WHAT IS HAPPENING IN

INDIANAPOLIS AND HOW IT MIGHT

WORK HERE IN CHICAGO?

>> I'M SURE THEY ARE BUT I THINK

IT'S BEEN FLOATED AROUND THAT

THEY WOULD LIKE THE STATE TO

TAKEOVER THE CHICAGO PUBLIC

SCHOOL SYSTEM.

THE DIFFERENCE IS THE PROPERTY

TAX BASE.

THE ECONOMY HERE IS SO DIVERSE

COMPARED TO INDIANA AND PEOPLE

IN CHICAGO ARE PAYING TAXES.

YES, THE CHICAGO SCHOOL SYSTEM

HAS LESS STUDENTS TO DRAW UPON

AND THEY ARE FEELING THE

COMPETITIVENESS FROM CHARTER

SCHOOLS.

BUT GIVEN THE TAX BASE AND

THERE'S NOT THAT SORT OF

POPULATION LOSS NOT YET IN

CHICAGO AS GARY IS FACING BUT

THE SITUATIONS ARE SIMILAR BUT

THE WAY THINGS ARE SETUP

STRUCTURALLY, POLITICALLY IN

INDIANA TO CHICAGO, AND

ILLINOIS, THERE ARE SIMILARITIES

BUT WAYS THAT THE CHICAGO PUBLIC

SCHOOLS CAN WORK THEIR WAY OUT

OF THE DEBT THAT THEY ARE FACING