Gary and Muncie schools were taken over for financial problems last year, and lawmakers sought a solution to prevent similar situations from unfolding elsewhere.

Legislation passed this year by state lawmakers directed Indiana's Distressed Unit Appeals Board to form a committee to determine which financial conditions should trigger a state review of school district finances.

Lawmakers passed a controversial school financial management bill earlier this year, and part of it requires a committee to create a list of risk factors for the state to watch, in order to protect more schools from fiscal distress.

The state-appointed manager of the Gary Community School Corporation told state officials Monday the district faces less of a deficit than it did a year ago.

A Brookston, Indiana-based company was chosen to take over the finances of Muncie Community Schools.