>> 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