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Preventing future school takeovers

Our Opinion
State Sens. Ryan Mishler and Eric Bassler, Guest Writers

House Bill 1315, the ‘School Dashboard Bill,’ has generated a lot of attention in recent months. Two questions we hear repeatedly are, ‘Why do lawmakers insist upon removing local control from the school boards?’ and ‘Will my school be next?’
Claiming that any school could be next for a state takeover under this bill is false. In fact, House Bill 1315 would do the exact opposite. It would prevent other schools from finding themselves in the same situation as Gary or Muncie do now. This bill is a forward-looking, balanced and thoughtful approach to providing school corporations the resources they need should they fall on hard times or make a few missteps, ultimately decreasing the likelihood that schools will be taken over. Hoosiers across the state should be supportive of that.
Under current law, school corporations have very few options or opportunities to remedy their financial situation on their own before being taken over by the state. With House Bill 1315, fiscal and qualitative indicators would be created that the Distressed Unit Appeals Board could use to privately alert school boards and superintendents when there are early warning signs a school corporation could be headed for financial trouble.
If the indicators show signs that a school is likely to be in fiscal distress, then DUAB will reach out to the school privately. The school then has 60 days to present a corrective action plan to the board. If approved, a corporation would need to follow the plan in order to remain off the public watch list. The private nature of the meeting ensures that a school taking the right steps to turn its financial situation around won’t be subject to the public scrutiny of being on the watch list, unless they refuse to take corrective action on their own.
State lawmakers do not want to be in the business of school takeovers because we believe in local community leaders’ ability to do what is in the best interest of our students, parents, teachers and schools. We also believe in protecting taxpayers and ensuring that our students and parents are receiving the best education for their hard-earned tax dollars.
As of last year, the Gary School Corp. was over $105 million in debt, running an operating budget deficit of approximately $1.5 million a month and had 28 closed schools. These buildings remain unmaintained and pose a barrier to economic development opportunities. Prior to state takeover, Gary was failing to pay its utility bills, employee insurance premiums and pension contributions. Gary had also racked up $8 million in delinquent taxes and interest penalties with the Internal Revenue Service.
The Muncie School Corp. holds $23 million in debt and misappropriated a $10 million bond for capital projects and a $500,000 endowment for college scholarships; neither fund was used for its intended purpose.
We don’t list these things to embarrass the school corporations or the people who work for them, but rather to help Hoosiers who don’t live in these communities understand the extent to which these school corporations have mismanaged their finances.
Members of the General Assembly understand that sometimes things happen that are out of the hands of school administrators; perhaps a bad decision was made by a person who is no longer with the school or a decision just didn’t pan out the way people thought it would.
However, these weren’t schools that hit a bump in the road or had to tighten the belt. These schools were subject to years of egregious mismanagement that resulted in financial disaster. In these circumstances, it was time for aggressive intervention from an outside party. That’s why the Gary and Muncie school corporations are seeing state intervention. These are the only two schools that have ever been subject to a state takeover.
This year, Rep. Tim Brown authored House Bill 1315 to address this issue. This bill is designed to help alert schools before they fall into a more strenuous financial situation, provide an opportunity for the corporation to correct course on their own terms and maintain local management of the school.
Editor’s note: State Sen. Ryan Mishler, R-Bremen, is chair of the Senate Committee on Appropriations, and State Sen. Eric Bassler, R-Washington, is chair of the Senate School Funding Subcommittee.