Indiana Board of Finance OKs $3.1M loan for Gary schools

The State Board of Finance has agreed to loan the financially struggling Gary schools $3.1 million.

The board unanimously agreed Tuesday to approve the Common School Fund loan for the Gary Community School Corp. to cover payroll through late October, to cover current and some overdue employee health insurance premiums and to meet other short-term expenses, according to The Times of Northwest Indiana.

The Indiana Distressed Unit Appeals Board recommended approving the loan last week.

State-appointed emergency manager MGT Consulting Group began operating the school district six weeks ago after elected trustees failed to pass balanced budgets and ran up more than $100 million in debt.

Peggy Hinckley of MGT Consulting Group said the school district's financial structure was in "total disarray," The Times reported.

MGT Executive Vice President Eric Parish said additional loans likely will be needed until the company can get a balanced budget in place.

The district has lost 500 students in the past year but state law prevents it from shedding unneeded teachers until the spring semester. Fewer than 6,000 students attend the system, down from more than 15,000 a decade ago.

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