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>> CHICAGO A PUBLIC SCHOOLS ARE

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NOT ALONE IN FACE A FINANCIAL

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CRISIS N GARY, INDIANA THE DEBT

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IS FORECAST TO EXCEED $100

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MILLION BY THE SUMMER.

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AND AS IT SHUTTERS SCHOOLS WITH

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DWINDLING ENROLLMENT, THE

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INDIANA LEGISLATURE IS POISED TO

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APPROVE A MEASURE THAT WOULD

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ALLOW A STATE TAKEOVER OF THE

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SCHOOLS.

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AND JOINING US WITH MORE IS

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REPORTER MICHAEL WHO HAS BEEN

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FOLLOWING THE STORY.

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AND HOW DIRE IS THE SITUATION IN

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GARY?

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>> IT'S PRETTY DIRE.

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RIGHT NOW THE STATE IS LOOKING

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AT TAKING A FINANCIAL TAKEOVER

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OF THE GARY SCHOOLS.

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THERE IS A STATE BILL THAT IS

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BEING PROPOSED DOWN --

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DEBATED RIGHT NOW AT THE INDIANA

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LEGISLATURE.

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RIGHT NOW IF IT IS APPROVED,

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GARY THE SCHOOL BOARD WILL LOSE

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ALL FINANCIAL CONTROL OF THE

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SCHOOL SYSTEM FOR UP TO FIVE

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YEARS UNTIL THE ELECTED SCHOOL

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BOARD WOULD HAVE LITTLE SAY IN

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HOW THINGS ARE PAID OUT AND

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OTHER NEW CONTRACTS.

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BUT THIS IS HOW DIRE THE

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SITUATION IS IN GARY WITH

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MASSIVE DEBT AND LITTLE SOURCES

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OF REVENUE.

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AND FEELING THE FINANCIAL

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CONSTRAINTS OF THAT.

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>> TELL US MORE ABOUT THAT

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SENATE BILL 567 IF IT IS A

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PROVED AND SIGNED BY THE

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GOVERNOR WHAT WOULD IT PROVIDE

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TO THE SCHOOL DISTRICT?

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>> WELL, IT WOULD HAVE AN

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OVERSEER OF THE FINANCIAL BILLS

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COMING INTO THE GARY SCHOOL

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CORPORATION.

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THEY WILL BE NEGOTIATING WITH

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VENDORS WHO HAVE NOT BEEN PAID

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IN MONTHS.

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AND YOU WILL HAVE THERE'S GOING

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TO BE A LOAN FORGIVENESS.

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GARY IS HOPING FOR LOANS AND

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THERE IS GIVE AND TAKE IN TERMS

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OF THE FINANCIAL RESOURCES AND

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CONTROL OF THE SCHOOL SYSTEM.

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THE BIG THING WILL BE THE

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FINANCIAL ASPECT OF WHO CONTROLS

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THE GARY SCHOOL SYSTEM FOLKS

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FROM INDIANAPOLIS WHO WILL BE

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CONTROLLING HOW THE BUDGET IS

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SPENT IN THE GARY COMMUNITY

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SCHOOL CORPORATION.

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>> WELL, THE GARY SCHOOL SYSTEM

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WAS ONCE A MODEL FOR THE

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COUNTRY.

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TELL US HOW IT GOT TO THIS

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POINT?

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>> WELL, BASICALLY, GARY OVER

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THE LAST 50 YEARS HAS BEEN

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LOSING POPULATION.

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EVERYTHING FROM AT LEAST 100,000

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PEOPLE SINCE 1970.

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WE'VE HEARD ABOUT GARY'S ISSUES.

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DWINDLING ECONOMIC BASE.

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INDUSTRY.

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GARY WAS BIG ON STEEL.

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THERE IS A HUGE STEEL MILL BUT

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THEY EMPLOY LESS PEOPLE.

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A LOT LESS TAXES TO DRAW FROM AS

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FAR AS OTHER INDUSTRY THERE.

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SO THEN YOU HAVE DEPOPULATION

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AND PEOPLE LEAVING BECAUSE OF

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CRIME HAS SET IN.

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AND SCHOOLS IS THE NUMBER ONE

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CATALYST FOR BRINGING PEOPLE IN.

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AND THAT HAS DRIVEN PEOPLE OUT

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FOR GREENER PASTURES IN THE

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SUBURBS AROUND GARY.

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IT'S BEEN THIS SORT OF

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EARTHQUAKE TORNADO OF ISSUES

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FACING THE GARY SCHOOL SYSTEM.

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>> AND AS YOU SAID REVENUE IS

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NOT COMING IN AND VOTERS TURNED

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DOWN A PROPERTY TAX INCREASE.

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CAN YOU TELL US A LITTLE BIT

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ABOUT THAT AND HOW CHARTER

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SCHOOLS ARE FACTORING INTO THIS

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AS WELL?

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>> WELL, HERE IS THE SITUATI

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THAT WAS CUT MORE THAN HALF IN

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GARY.

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THAN WITH THE RESIDENTS.

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AND ANOTHER SITUATION IN GARY IS

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NOT EVERYBODY PAYS THEIR TAXES

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IN GARY.

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THEY ONLY ARE COLLECTING MAYBE

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50% AROUND 60-50 TO 60% OF

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PEOPLE PAY THEIR TAXES.

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SO THAT IS CAUSING A HUGE BURDEN

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ON THOSE WHO ARE PAYING TAXES

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AND LAST FALL THERE WAS A SECOND

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ATTEMPT TO PASS A REFERENDUM SO

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GARY TAXPAYERS WOULD PAY A

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LITTLE BIT MORE ON TAX BILL TO

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FUND THE SCHOOLS.

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I THINK IT WOULD HAVE GENERATED

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$8 MILLION A YEAR BUT IT FAILED

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AND A LOT OF WHAT IS HAPPENING

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NOW DOWN IN INDIANAPOLIS IS

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BECAUSE THEY ARE NOT GOING TO

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GET SOME OF THAT MONEY THAT IF

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TAXPAYERS WERE GOING TO APPROVE

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THAT, THEY WOULD HAVE HAD BUT

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THEY DID NOT APPROVE IT SO IT'S

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CAUSING TURMOIL NOW.

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>> AND MICHAEL QUICKLY AGAIN HOW

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ARE CHARTER SCHOOLS FACTORING

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INTO THIS?

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THERE ARE MORE CHARTER SCHOOLS

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ZAPPING THE POPULATION?

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>> THAT IS RIGHT.

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THERE ARE SEVEN OR EIGHT CHARTER

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SCHOOLS IN THE CITY OF GARY.

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WHEN A STUDENT LEAVES AND GOES

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TO I ACHARTER SCHOOL THEY TAKE

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THOSE TAX DOLLARS PER PUPIL SO

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IT'S CREATING COMPETITION WITH

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THE SCHOOLS.

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AND CHARTER SCHOOLS WERE

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SUPPOSED TO BE AN ALTERNATIVE

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NOT TO SIPHON AWAY THAT MANY

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STUDENTS.

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RIGHT NOW YOU GOT THE PUBLIC

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SCHOOLS AROUND UNDER 6,000

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STUDENTS.

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WHERE THE CHARTER SCHOOLS ALMOST

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MATCH THAT AT 5500 STUDENTS.

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SO RIGHT NOW CHARTER SCHOOLS ARE

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PUTTING UNDO BURDEN WHEN IT

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SHOULD BE THERE AS AN

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ALTERNATIVE NOT REALLY BEING THE

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WAY IT IS RIGHT NOW IN THE GARY

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SCHOOL SYSTEM.

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>> DO YOU HAVE THE SENSE THAT

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ANYBODY ON THIS SIDE OF THE

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STATE BOARDER IS KEEPING AN EYE

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WHAT IS HAPPENING IN

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INDIANAPOLIS AND HOW IT MIGHT

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WORK HERE IN CHICAGO?

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>> I'M SURE THEY ARE BUT I THINK

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IT'S BEEN FLOATED AROUND THAT

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THEY WOULD LIKE THE STATE TO

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TAKEOVER THE CHICAGO PUBLIC

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SCHOOL SYSTEM.

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THE DIFFERENCE IS THE PROPERTY

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TAX BASE.

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THE ECONOMY HERE IS SO DIVERSE

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COMPARED TO INDIANA AND PEOPLE

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IN CHICAGO ARE PAYING TAXES.

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YES, THE CHICAGO SCHOOL SYSTEM

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HAS LESS STUDENTS TO DRAW UPON

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AND THEY ARE FEELING THE

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COMPETITIVENESS FROM CHARTER

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SCHOOLS.

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BUT GIVEN THE TAX BASE AND

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THERE'S NOT THAT SORT OF

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POPULATION LOSS NOT YET IN

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CHICAGO AS GARY IS FACING BUT

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THE SITUATIONS ARE SIMILAR BUT

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THE WAY THINGS ARE SETUP

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STRUCTURALLY, POLITICALLY IN

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INDIANA TO CHICAGO, AND

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ILLINOIS, THERE ARE SIMILARITIES

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BUT WAYS THAT THE CHICAGO PUBLIC

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SCHOOLS CAN WORK THEIR WAY OUT

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OF THE DEBT THAT THEY ARE FACING