INDIANAPOLIS — Financially troubled Muncie schools will be governed by Ball State University and the Gary school board will lose much of its authority under legislation passed Monday during a special one-day session of the Indiana General Assembly.

"Over the next 10 to 15 years, both Lake County and Delaware County are expected to lose 10 percent more of their population, so there has to be a different system," said Rep. Tim Brown, R-Crawfordsville, author of the legislation.

"To say we're going to do it the same way is just banging our head against the wall," Brown added, alluding to the state's past attempts to help the troubled school districts.

In Muncie, Ball State President Jeffrey Mearns and at least three school board members support the plan. But Senate Minority Leader Tim Lanane, D-Anderson, criticized Republicans for replacing an elected school board with an appointed board.

"There can be three non-residents on the appointed board," he said of the legislation's impact on Muncie schools. "Those three and one other could increase taxes. That seems like taxation without representation."

House Bill 1315, which includes the Muncie school legislation, passed the House 63-30.

Muncie schools will receive a $12 million loan to cover a bond that was used for operating expenses.

"There are questions I get quite a bit from teachers in the community. If this bill goes through, are they on status quo contracts? Will they all have to re-interview? Will they be offered the same pay scale?" Rep Melanie Wright, D-Yorktown, asked.

Contracts would be at the new Muncie board's discretion, Brown said.

In Gary, state-appointed emergency manager Peggy Hinckley will lead an effort to reduce the district's $100 million debt. The bill changes the school board's role to advisory, authorizing the emergency manager to terminate employee contracts as a reduction in force.


Another bill that passed Monday provides $5 million to schools in loans for safety measures; that's on top of $45 million the legislature has provided so far to the effort. In order to repay the loans, schools can raise a property tax levy.

The bill will also require schools to post information on cyberbullying and human trafficking on their websites.

In a separate bill, all Indiana schools will be allowed to obtain a loan of up to $500,000 for safety measures. Overall, the state will offer $35 million for loans to districts over the next two years, repayable at interest rates ranging from 1 to 4 percent.

Also, the legislature changed access to College Choice 529 Investment plans, formed so Hoosiers could contribute to their child's future college expenses. The new law allows the contributions to be used for tuition at private or charter schools from kindergarten through 12th grade. As an incentive to invest in the plan, families will eventually be able to take a tax credit of up to $1,000.

Rep. Terri Austin, D-Anderson, said the Republican majority is favoring private schools over public.

"At some point, can we please consider giving the 98 percent of children and families who attend our public schools some level of either a tax credit or tax deduction?" she asked. "They get no support for band instruments or extracurricular technology they have to buy."