HAMMOND | Eighty-seven school crossing guards who were stripped of their employee status and put on a contract basis in next year's city budget will be reinstated as employees, Mayor Thomas McDermott Jr. said during his Mayor's Night Out on Thursday in the 5th District.

"I take responsibility for the mistake in this decision," McDermott said. "We're going to make everybody whole again."

Fifth District Councilman Dan Repay joined the mayor in an apology on behalf of the council.

Both officials cited their overriding interest in reducing property taxes and the city's self-insurance deficit as contributing to the decision.

"We were trying every which way to contain taxes," McDermott said.

It was a case of where something looked better on paper than in practice, he said.

Repay cited the city's strong need to address the recurring $7 million shortfall in its self-insurance plan.

The city initially considered it was spending $50,000 in unemployment insurance for workers who worked two to six hours a day and claimed unemployment benefits when school was not in session, City Attorney Kris Kantar said.

"Everybody wants more police on the streets, and that would have paid for an officer," she said.

But while the city would have saved some money by not paying payroll taxes when the crossing guards ceased to be employees, only three of the 87 were actually covered by the city's insurance plan. The three were grandfathered in the plan when the city discontinued covering crossing guards some years ago.

Yet those three exceptions proved expensive when the husband of one of the three maxed out his benefits to the tune of $1 million, Kantar said.

Of the three crossing guards, Kantar said one is now retiring and a second also may retire, possibly leaving only one the city will cover.

Kevin Smith, legal adviser to the mayor, said the decision to reinstate the crossing guards was made Thursday.

"We didn't realize the impact on these people," he said, crediting the city for quickly rectifying its mistake.

The council will take the necessary steps to conclude the reinstatement at its Dec. 10 meeting.