A Lake County school district that lost a vote last week to continue a property tax levy said it could be in danger of a state takeover.
School City of Hammond Superintendent Scott Miller said the district must cut $15 million from its yearly expenses before the end of 2024. He’s working with the state's Distressed Unit Appeals Board, or DUAB, to set a sustainable budget before that deadline.
“We will be the ones making the cuts, and they will not approve a plan that does not get our spending in line. They absolutely will be involved,” Miller said.
The district is under financial stress as it faces a decline in enrollment. Hammond has been able to stay out of distressed status by closing schools and increasing local funding with a successful operating referendum in 2017.
If Hammond cannot reconcile its budget by the time that referendum runs out, school officials will have to work with DUAB to create a corrective action plan. If they do not follow that plan, the school could reach distressed status and be taken over by the state.
“Typically, what triggers distressed status is when a when a taxing unit is no longer able to pay their bills,” Miller said. “We're not just there yet, but with the loss of the $15 million, they are going to want to make sure that our spending is in line with what our new revenue is going to be.”
Two school districts in Indiana have been taken over by the state after being labelled financially distressed. One of those districts, Gary Community School Corporation, has been controlled by the state since 2017.
The school takeover has been a point of contention in Gary. Gary only recently regained some local representation this year after a new five-member school board was appointed. One member was appointed by Gary’s mayor, another member was appointed by the Gary Common Council, and the remaining three members were appointed by Katie Jenner, Indiana’s secretary of education.
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Miller said all options are on the table when it comes to keeping Hammond out of financial distress.
“If anybody thinks that we can just go about it without making these cuts, that will not happen,” he said. “That's how we end up in state takeover if we refuse to make the reductions that we have to make.”
Miller said it is possible that the district will ask voters to approve another referendum next year, but he’s not sure if it would pass. More than seven out of 10 voters said no to Hammond’s most recent operating referendum this November.
“We shouldn't expect to have this fixed by having more money coming in,” he said. “We will have to fix it by making cuts. And is it possible? I mean, it's going to have to be.”