The emergency manager for the Gary Community School Corp. will receive a two-year contract of $6.25 million, plus the opportunity for performance-based incentives totaling $1.45 million.
If the General Assembly approves a third year, the emergency manager could earn an additional $2.75 million and performance incentives of $950,000.
The state Distressed Unit Appeal Board and Gary Schools Recovery LLC, a subsidiary of the MGT Consulting Group have signed the contract, but it still needs approval from the State Budget Agency, the Indiana Department of Administration and the Attorney General, according to Courtney Schaafsma, executive director of the DUAB.
The state selected MGT as the troubled school district's emergency manager on July 31. Led by retired Indiana school superintendent Peggy Hinckley, a team arrived in Gary Aug. 1 while contract talks began with the state.
The Distressed Unit Appeal Board approved the contract with the MGT Consulting Group Tuesday with little discussion at a meeting in Indianapolis.
Before it ratified the contract, Schaafsma said MGT had formed a subsidiary called Gary Schools Recovery LLC to serve as its legal entity during its operation of the school district. She said it was wholly owned by MGT, which is based in Tallahassee, Fla.
"As we went through contract talks with MGT… they felt it was necessary to establish a special business entity," Schaafsma said.
As an example of one of the incentives, the emergency manager could earn an additional $100,000 if student achievement grows 10 percent in grades 3-8. It could receive a bonus of $250,000 for completing a structural deficit plan within six months.
Schaafsma also told the DUAB that Gary's enrollment fell by 535 students, based on the official count on Sept. 15. That drop will cost the district about $4.1 million as it battles to reduce a monthly $1.8 million deficit and mounting debts of $108 million. About $80 million of the debt is in state and bank loans. Gary officials said its enrollment is now 4,690 students.