On Nov. 8, 2016, voters rejected the Gary Community School Corp.’s bid to raise property taxes to avoid a financial collapse.
A few days later, teachers and staff received a letter saying they wouldn’t get their paychecks on time.
It set off a flare signaling this urban district of 6,480 students was in deep trouble as its debts surpassed $100 million.
Republican lawmakers were clamoring for action when it appeared voters didn’t want skin in the game.
“I think they need to have a whole different management structure there,” said Senate Appropriations Chairman Sen. Luke Kenley, a Noblesville Republican who authored the law that placed Gary under state control.
Gary found itself veering down a rocky path en route to becoming the first state-run district in Indiana.
The state entrusted decision-making to Florida-based MGT Consulting, an education management company. The state stripped the school board and superintendent of authority.
It’s been a bumpy seven years, but after painful cutbacks and handwringing, Gary schools are back in the black.
State control ends Monday.
The district’s appointed school board and new Superintendent Yvonne Stokes are set to begin leading the district with promises to listen to parents and restore faith in the school system.
The bottom line
By 2016, Gary schools racked up an astounding $104 million in long-term debt. Its annual operating budget was $23 million in the hole.
The district owed the Internal Revenue Service $8.4 million because it failed to withhold payroll taxes. It fell in arrears with utility companies, including the Gary Sanitary District and the Northern Indiana Public Service Co.
Vendors wouldn’t take their calls because they didn’t get paid. It meant school fire extinguishers weren’t serviced, roofs didn’t get repaired and faulty toilets remained broken.
Supporters acknowledged some lax management but put a big share of blame on state policies that flooded Gary with charter schools.
A separate law capping property taxes meant Gary couldn’t raise money without taxpayer approval. Another law allowed big industry like U.S. Steel to assess its own property.
In 2014, the elected school board tried to stem the bleeding with hasty decisions to close schools, including Lew Wallace High School. The cuts came too late.
By then, the IRS had liens on the schools because the district failed to withhold payroll taxes, owing the IRS $6.4 million. With interest, it swelled to $8.4 million in two years.
Finger-pointing erupted from all sides and left confused parents searching for answers. Some found them in the city’s 10 charter schools that promised newer buildings and less uncertainty.
In 2017, the state’s solution called for the dissolution of the school district and the scattering of students to neighboring districts.
Eddie Melton, who’s now mayor of Gary, was in his freshman term as a state senator and became a key player in derailing that plan.
“That would have been catastrophic,” Melton said of the dissolution. “Each legislator up here went to bat to show why it wasn’t feasible,” Melton said in 2017.
Their pleas worked. That year, the General Assembly tossed Gary a lifeline that left the district intact but in complete state control.
The takeover begins
A state law left the Black school district under the watchful eye of the Distressed Unit Appeal Board, a state agency that monitors the financial health of public entities.
On July 31, 2017, the DUAB hired MGT Consulting, of Tallahassee, Fla., giving it full autonomy over the district in a three-year contract. The move left MGT with 17 days to prepare for the first day of school. MGT’s contract would be extended for the entire takeover.
Finances were critical, but most parents fretted over the district’s academic decline.
MGT named retired River Forest and LaPorte superintendent Peggy Hinckley as Gary’s first emergency manager. Hinckley had previously won state superintendent of the year and outstanding educator honors.
Her memories of what she found still resonate even though she served just one year.
“There were black trash bags over commodes, the fire extinguishers were out of date, roofs were leaking everywhere. We had mold in bathrooms.”
Hinckley shared her initial findings with a curious Gov. Eric Holcomb. She told him she didn’t know how the Board of Health allowed schools to remain open because they seemed to be held together with “chicken wire and duct tape.”
She recalled hourly employees signing their name in a binder to show their attendance. “Our payroll system was frozen in 1980,” Hinckley said.
While investigating the cause of huge water bills at Wirt-Emerson School of Visual and Performing Arts, workers found a leak near a loading dock that solved the problem.
They also found a deer carcass in the flooded dock.
Deep cuts and layoffs became the only way out of state control.
After meeting with residents and citing low enrollment numbers, Hinckley closed Wirt-Emerson and sent students to the West Side Leadership Academy, which became Gary’s lone high school.
“There were too many people, and too many buildings. That’s the harder part,” she said.
“Not secondary to all of that was the fact achievement was very poor…. There was no plan for anything,” she said.
“We did the best we could.”
Hinckley ushered in a new “eight-step” curriculum, and bought new textbooks and supplies. For the first time, teachers no longer had to supplement restrooms with toilet paper.
Gary Teachers Union president GlenEva Dunham said each of the four emergency managers brought their own flavor to the job.
“They had a mandate from the state, but still had free will from the state,” she said.
“It’s been a long time and I’m glad it’s over. I’m very optimistic about the future. I think most of our members are,” Dunham said.
There were highs and lows with each emergency manager, Dunham said. “But I never thought MGT was the boogeyman.”
Not surprisingly, cost cuts and school closings made Hinckley a villain.
Unlike parents who took their children to charter schools, parents Nina and LeBarron Burton pulled their kids out of a charter and came back to the district.
“We could send our kids to private or charter schools but that would end up being part of the problem that left us in the situation in the first place,” said Nina Burton, whose five kids attended the Gary schools.
“It wasn’t just the mismanagement of funds. It was the loss of enrollment, charter schools and a lack of support from the state level. I think we need to look at how we fund education and what we’re offering,” she said.
The Burtons said losing Wirt-Emerson crushed the dreams of her three oldest children who were learning Mandarin and playing in the orchestra, which was dismantled. They looked forward to a trip to China that was canceled.
“As a Black parent, we look at the fact so many kids are going for track and basketball, but we had the opportunity to have children classically trained in an instrument for a scholarship. That opportunity was taken from them,” said Nina Burton.
She said her son did win a band scholarship despite the loss of his program.
State Rep. Vernon Smith, a Gary Democrat and educator, criticized Hinckley’s brashness.
“I think she came in a military style and turned the community off,” he said.
“She didn’t work with the community at all. She was authoritarian. She never came in to find out what we did in the past and what worked.”
Michaela Spangenberg, who formed the Gary Education Coalition, moved to Gary from California at the onset of the takeover.
“They killed our enrollment,” she said of MGT’s cost cuts. “There was no meaningful accountability or transparency,” she said.
“They talked a lot about knowledge transfer, but ignored the people who lived here and worked here…”
Spangenberg hopes the district can gain back an elected school board so residents can have a bigger voice.
“I hope the healing process is something that causes us to be more focused on students and the future,” said Spangenberg.
Hinckley, who led the Warren Township schools and was interim superintendent at the Indianapolis Public Schools, was surprised at the resistance.
“Even though I was born in Gary, obviously I wasn’t representative of the people who live there. I think they saw me as the enemy because I was appointed by the state.
“This was the hardest job I ever had, there was no money and there was never any money and you were under state control.”
Moving on
In November of 2018, Hinckley called reporters together for a press conference and announced her departure after 16 months.
MGT named former Griffith superintendent Peter Morikis as her successor.
On Hinckley’s watch, debts began shrinking. The IRS was paid off, and liens were removed. Employees began signing in for work with a fingerprint in the new biometric system.
Hinckley also opened the Gary Middle School in Miller and made improvements at West Side and a police officer was assigned at each school.
“We had to make difficult decisions that we didn’t have time to build consensus around,” Hinckley said.
Morikis took over in late November 2018 and served until February 2020. He did not return a request for an interview.
During his watch, Morikis said he led a team in decreasing the district’s monthly deficit by 50%.
Under Morikis, the district sold seven vacant schools. It also opened Bailly STEM Academy Middle School and expanded an early childhood program.
The turning point
Paige McNulty, a former School City of East Chicago superintendent, arrived as emergency manager in February 2020, just one month before the worldwide COVID-19 pandemic sent schools into the unknown of remote learning.
McNulty’s three-year stint was the longest and most impactful.
She steered the district through the pandemic as it distributed 6,000 meals every Monday and prepared teachers to conduct classes on their laptops.
Most significantly, she convinced voters to back an eight-year $72.5 million property tax referendum, which stabilized the operating budget and afforded raises for teachers.
The referendum’s passage sent a message to lawmakers that Gary voters wanted their school district back and would support it with their checkbooks.
“We had a great team and worked really hard going door-to-door in the middle of the pandemic while trying to educate the community,” McNulty said.
Baptist ministers, teachers, the Urban League of Northwest Indiana and Rep. Vernon Smith lent support to the grassroots effort.
McNulty wasn’t surprised the measure passed with 60% of the vote.
It would get the district closer to escaping its deficit and allow for enhancements like a new track and football field at West Side.
Officials also credited McNulty with increasing enrollment in preschool, lengthening the school day by an hour for students and increasing the graduation rate to 82%.
When school resumed after nearly a year of remote classes, Gary and other districts across the country faced a bus driver shortage.
McNulty turned to the same Baptist ministers who backed the referendum for help. They drove students back and forth to school in their church vans and buses.
McNulty’s time drew praise from Nina Burton.
“She seemed to genuinely care what parents and the kids felt,” she said.
McNulty stepped away about a year ago as the district headed into the home stretch of state control.
The final lap
MGT brought in Michael Raisor, a senior vice president and number cruncher, to begin the seventh and final year of state oversight.
His job was to ensure long-term financial stability.
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“At its heart, this was a financial turnaround project,” said Raisor who credited debt reduction, the referendum’s passage and $71 million in COVID-19 relief funding.
Raisor said the relief money meant Gary could be operating again like other districts without the fear of constant belt-tightening.
“It was triage when we first arrived and now it’s a wellness plan,” Raisor said.
Over the seven-year takeover, Gary lost nearly 1,800 students.
Surprisingly though, enrollment did increase in the spring semester to about 4,100. In 2016, the district had nearly 6,500 students.
Raisor is hoping for a rebound once state control ends.
“The students are there and they’re in Gary. They’re just attending other schools,” he said.
By 2019, data showed of the 12,000 school-age kids in Gary, just 35% attended district schools. About 48% attended charters and 10% opted for other districts. The rest chose private schools that took state vouchers.
Raisor wants those numbers to change.
“As we lose the black cloud of state control, it will put the district in a better position,” Raisor said. “Like any wellness plan, we have to keep improving.”
He said the district just received Early College High School accreditation from the state, allowing students to earn dual credits in certain classes. Teachers are being trained to teach college level courses and they’ll receive a stipend for their work.
“We are doubling down on STEM. We have by far best STEM facilities in Gary for families… We can have a kid walking out the door to make a good living.”
Raisor has told the school board an extension of its referendum will be required by 2029 to maintain solvency. This time, however, a new state law requires the district to share the money with the city’s eight charters. Raisor estimated the district would get about 40% of the funding.
Raisor said MGT is leaving the district in sound financial shape with a cash reserve of about 47% while maintaining two years of solvency with budget surpluses.
Now, the torch is passed to Stokes and the school board.
On June 7, Gary NAACP leader Bruce Curry, said it’s now time for faith.
“When it comes down to a decision, everybody in this room has to have some trust in the board. Gary has to be positive now. That stuff in the past, you got to let it go.”
Carole Carlson is a freelance reporter for the Post-Tribune.
