Message for legislators: School funding hasn’t kept pace

Indiana schools still haven’t recovered from the financial hit they took from the recession of 2007-09. And schools that serve poor children have fallen furthest behind where they once were.

Those are key findings from an analysis of school funding from the Center for Evaluation and Education Policy at Indiana University. The report, “Equity Analysis of the 2015-17 Indiana School Funding Formula,” was written by CEEP researcher Thomas Sugimoto for the State Board of Education.

Indiana Statehouse

Indiana Statehouse

The findings should be front and center for legislators as they put together a state budget for the next two years, including a funding formula that will allocate about $7 billion a year to schools.

Sugimoto said lawmakers shouldn’t see the report in isolation but should consider it in light of their efforts to create a fair and effective system for funding education. And the report should improve their understanding of the challenges facing schools where funding has declined, he said.

Indiana schools have been digging out of the hole left by the recession, the report shows, but they’ve not reached daylight. Adjusting for inflation, they operate on less money today than eight years ago. State leaders will say there’s only enough money to give schools a modest increase. But the state has $2 billion in reserves, some of which could be tapped. And tax cuts approved in recent years reduced state revenue by $650 million, according to Purdue agricultural economist Larry DeBoer. Investing that money in education would have put schools on much more solid ground.

One reason school funding has been cut is that enrollment has declined; in public school districts, it fell by 4.1 percent from 2009 to the present. But there’s more to the story. Per-pupil funding also remains well below what it was prior 2009, when then Gov. Mitch Daniels cut school support by $300 million. Per-pupil funding has risen since it bottomed out in 2011, but not back to pre-2009 levels.

Meanwhile, challenges facing schools have increased, as they now enroll more students who qualify for free school lunches and more students learning to speak English. And schools that serve more students from poor families have seen their pre-pupil funding decline furthest, thanks to changes the legislature made two years ago in funding for the Complexity Index, the factor that allocates more state money to school districts facing greater socioeconomic challenges.

Adjusting for inflation, per-pupil funding has declined by 10 percent in school districts where more than 60 percent of students qualify for free or reduced-price school lunch, according to the report. Per-pupil funding for lower-poverty districts decreased, on average, by half that much.

As for declining enrollment, it’s an old story that urban public schools have been shedding students. But in Indiana, the analysis shows, there have been steep enrollment declines outside the cities. Schools classified as town schools saw their enrollment drop by 7.5 percent from 2009 to 2017, while enrollment in rural schools went down by 7 percent – twice as much as urban schools. Suburban schools grew.

Thanks to the Complexity Index, high-poverty school districts get more money, per pupil, than low-poverty districts. But the report doesn’t judge whether they get the money they need.

“I think most of us would agree having no adjustment for low income students would be bad,” Sugimoto said. “But what that should be, and who qualifies, is hard to argue.”

Note: The report covers state funding provided to schools for operating expenses, not for transportation and construction. Voters in some school districts have approved referendums to increase local property taxes to fund school operations. Those revenues aren’t included in the report.

4 thoughts on “Message for legislators: School funding hasn’t kept pace

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