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Two bills address financial distress in troubled school districts

January 8, 2018

Two Indiana lawmakers are sponsoring bills that would create an early warning system for school districts headed toward financial distress in an attempt to avoid a state takeover.

To date, Indiana has taken over the financially troubled school districts in Gary and Muncie. Gary has more than $100 million of debt and officials say Muncie has a negative cash balance of $18 million.

Some lawmakers warn that more school districts will face budgetary distress in the coming years.

Republican Rep. Tim Brown told the Star Press that his legislation would create a financial-condition indicator dashboard summarizing data on each school. The dashboard could offer "objective trend lines," including cash balances in a school district's main funds over several years.

"The thought is to give some assistance and make people aware we are evaluating their status a little sooner — before they ... become distressed," said Brown, who serves as chairman of the House Ways and Means Committee.

Brown plans to file the bill Monday.

Sen. Eddie Melton, of Merrillville, has filed a bill that would coordinate the effort to identify a school district's financial condition. Melton's legislation would create technical assistance teams with representatives from state agencies to conduct district reviews and make recommendations.

Teams would be comprised of officials from the state's Department of Education, Board of Accounts, Department of Local Government Finance and the Distressed Unit Appeal Board to extend technical assistance to school districts.

"The bill is just trying to get those (struggling) districts identified without being punitive in nature," Melton said. "How can we (at the state level) be supportive in helping to turn around the situation?"

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