STATE OF INDIANA

DEPARTMENT OF LOCAL GOVERNMENT FINANCE INDIANA GOVERNMENT CENTER NORTH 100 NORTH SENATE AVENUE N1058(B) INDIANAPOLIS, IN 46204 PHONE (317) 232-3777 FAX (317) 232-8779

Distressed Unit Appeals Board Meeting Minutes January 6, 2010

Call to Order: The meeting of the Distressed Unit Appeals Board [DUAB] was held on Monday, January 6, 2010 from 10:03 AM – 3:52 PM. The meeting was held at One North Capital, 9th Floor Conference Room; Indianapolis, IN 46204. Board members in attendance were Kyle Babcock, Phil Bane, Dan Clark, Mark GiaQuinta, Bruce Hartman, Ryan Kitchell, Chris Ruhl, Tim Rushenberg, and Paul Wyman.

Discussion: Mr. Kitchell began the fourth meeting of the Distressed Unit Appeal Board [DUAB] noting compliance with the Indiana Open Door Law. He than introduced the new DUAB member, Mr. Phil Bane, a Montgomery County Commissioner. Mr. Kitchell also noted that Mr. Mark GiaQuinta would arrive shortly.

Minutes: Mr. Kitchell submitted the minutes from the May 20, 2009 hearing of the Distressed Unit Appeals Board for approval. He asked for comments.

Motion: Mr. Babcock moved to approve the minutes as submitted. Mr. Wyman seconded the motion. The motion carried by a vote of 8-0. Mr. GiaQuinta had not yet joined the proceedings.

Further Discussion: Mr. Kitchell stated that December 8, 2009 was the deadline for DUAB petitions for 2010. He said that one petition was received from the units in the City of Gary and that statutorily that meeting was to take place no more than 30 days from the petition deadline. Mr. Kitchell acknowledged that the January 6, 2010 meeting fell within the 30 days.

Mr. Kitchell: Gary hired a fiscal monitor, who we also worked with to do a deeper dive into their financials and provide some recommendations for Gary. And, so, they have provided that in written form that all of our Board members have seen. And, so, we have asked them to briefly cover that and leave a lot of time for question-answers. After we hear from them, we will hear from the petitioning units about their petitions for 2010. And, so with that, welcome Public Financial Management, Dean, Gordon, and a name I can‟t pronounce.

Mr. Kaplan: Jelani.

Mr. Kitchell: Jelani, from PFM.

[Background conversation continues briefly.]

PFM Group, Inc. City of Gary Fiscal Monitors

Present for hearing: Dean Kaplan, Managing Director; Gordon Mann, Senior Managing Consultant; Jelani Newton, Consultant.

Discussion: Mr. Kaplan: Thank you Mr. Chairman, members of the Board. Thanks for having us today. I am Dean Kaplan from Public Financial Management, the fiscal monitor for Gary. I am a partner in the firm and leader in our consulting practice and I am accompanied today by my co-project manager, Gordon Mann, who‟s handing out the presentations and by Jelani Newton, who helped us to develop the financial model. He‟ll be working on the presentation. The presentation was a summary of their work. We‟ll be able to make it – release it later working with the OMB [Office of Management and Budget] office.

What I would like to do briefly is just to give you a little bit of an overview as to who we are and how we came to be doing this work; just to give you some background as to where we come from. And, then, we‟ll talk a bit about the situation we found in Gary and our proposed recommendations for addressing it.

Public Financial Management is the nation‟s largest independent financial advisor to state and local governments. Our consulting group works with municipalities around the country, and both in these sorts of situations and others. You‟ll see on page five of our presentation some of our expertise working with other distressed municipalities. Right now we are the State-appointed coordinator for three cities in Pennsylvania‟s distressed program and we‟re also working with the State-appointed manager for the Detroit Public Schools, not too far from here. We‟ve worked on a number of turnarounds nationally using