GOP Plan Would Change How Schools Are Funded (IN)

March 30, 2011

A House Republican budget plan unveiled Thursday makes major changes to school funding — shifting millions of dollars from districts with declining enrollment, such as Indianapolis Public Schools, to growing districts, such as Hamilton Southeastern.

The proposal freezes overall education funding at current levels for the next two years.

That means K-12 education would receive no more money in 2013 — in the second year of this proposed budget — than it did in 2010: about $6.2 billion a year. With expenses going up, and the legislature expected to authorize more charter schools and private-school vouchers, that money will have to be spread among more schools.

The biggest changes laid out by House Ways and Means Chairman Jeff Espich, though, come in how individual schools are funded. Espich stripped away some extra funds upon which schools with declining enrollments traditionally have relied. Republicans long have pushed the state toward a funding formula more strongly connected to the actual numbers of children in each district.

For districts such as IPS, it means overall funding would be cut. For growin g districts such as Hamilton Southeastern Schools, overall funding would grow.

IPS, however, will continue to receive about $3,000 more per student than the Fishers district because districts that serve large numbers of poor students receive extra money.

Espich, R-Uniondale, said that despite the freeze, he’s proud that at a time when other states are cutting education by billions, the $27.7 billion two-year budget House Republicans are proposing devotes 52 percent of its funds to K-12 education.

And although some districts may feel some pain, Espich said he thinks it "truly is the simplest, purest and fairest formula in the history of the state of Indiana."

He said eliminating the traditional cushions that artificially boosted a district makes millions of dollars available to redistribute among all districts.

"Collectively those things were over $200 million a year that were going to these artificial mechanisms in the formula that made it complex, number one, and diverted money from the kids that really existed," Espich said. "I am actually proud that we made this formula simpler and fairer, if you will."

But Libby Cierzniak, lobbyist for IPS, said those funding elements were designed to ease the pain for districts that were shrinking. When combined with other bills to expand charter schools and institute publicly funded vouchers for private schools, the impact for IPS could be "catastrophic," she said.

"All these things, when you add them together, is death by a thousand cuts," she said.

Under the proposal, IPS would see its net state fund ing drop 5.7 percent in 2012, with an additional 5 percent in 2013.

IPS’ per-student funding also would drop. The district gets $8,284 in 2011 for each student, but that would drop to $8,126 in 2012 and to $8,044 in 2013.

By contrast, Hamilton Southeastern Schools, a growing district in Fishers, would get a 3.9 percent increase in funding in 2012 and a 3.8 percent increase in 2013.

But even as its overall funding increases, Hamilton Southeastern’s per-student funding would decline slightly as its enrollment continues to grow — from $5,379 in 2011 down to $5,352 by 2013.

The biggest reason for the disparity in per-student funding is that IPS has more students who are at-risk because of poverty and other factors, so it receives additional funds to cope with those issues.

Rep. Jerry Torr, R-Carmel, said it does not seem fair that students in the schools he represents get nearly $3,000 less for their education than those in districts such as IPS.

"Growing schools have been cheated in prior funding formulas," he said. But Torr added: "I do wish we had the money not to take it away from the schools with declining enrollments."

But Mike Reuter, HSE chief financial officer, said the proposed funding formula changes could resolve some issues that fast-growing suburban districts have complained about. HSE is among a group of districts suing the state, claiming inequities in the formula make it unconstitutional.

"This appears to have addressed a lot of those concerns," he said.

Still, Reuter said, it’s too early to say whether it could reso lve the dispute.

The figures released by Republican lawmakers represent an estimate, and if they are off the mark, it could mean a different reality for local school districts.

For example, Beech Grove schools are projected to receive an 11.5 percent increase in state aid next year, tops in the state.

"I can tell you that’s not going to happen," Superintendent Paul Kaiser said.

Kaiser, who teaches school finance at Indiana State University, said Beech Grove’s gain is based on a false assumption that its enrollment will continue growing at the same rate as this year — up by 168 students. But this was an unusual year in which the district benefitted from a flood of new open enrollment transfers.

Those new students brought about $450,000 in new state aid, but Kaiser had to hire seven teachers at a cost of $340,000, so the net gain was much smaller. Also, the enrollment gain means the district is near capacity. At most, it could absorb perhaps 50 more students. It will not accept as many transfers and won’t gain the 137 new students projected in the funding formula. Conversely, for districts such as IPS, if enrollment losses are heavier than they have been recently, its losses could be much greater.

Rep. Greg Porter, D-Indianapolis, whose districts include parts of IPS, Lawrence Township and Washington Township schools, said that combined with other proposals moving through the legislature that would pull students away from IPS, the district could take a big hit.

"I’m very concerned about where we are," Porter said. "They continue to take hits as a school corporation."

Still, Rep . Mary Ann Sullivan, a Democrat whose Indianapolis district includes IPS and Beech Grove, said she fully supports efforts to have funding more closely reflect enrollment.

"I am a big supporter of doing that," said Sullivan, who has been the lone House Democrat to support reforms such as expanding charter schools. "I really want to tie dollars to children in an explicit way."

The proposed budget — which also restores cuts to higher education and to optional Medicaid services such as dental services that had been made in Gov. Mitch Daniels’ earlier budget proposal — and the school funding formula in House Bill 1001 will be voted on today by the House Ways and Means Committee. It must be debated and voted upon next week by the full House before it goes to the Senate for likely changes.

Still, with Republicans in charge of both chambers, the changes, including to education funding, are likely to be small.