State officials should act now on school funding

Two days after a high-level commission said Indiana needs to find $600 million a year to boost teacher salaries, legislative leaders sounded a different note. Schools, they said, should be grateful if their funding isn’t cut.

“The way today is playing out, a flatline is a win, even in K-12, when other states are making drastic cuts,” said Sen. Ryan Mishler, who chairs the Senate Appropriations Committee, responding to a state revenue forecast.

Merriam-Webster’s first definition of flatline is: “to register on an electronic monitor as having no brain waves or heartbeat.” In other words, to die. The senator’s word choice seemed a bit ominous.

On Thursday, Gov. Eric Holcomb released his “next level” agenda for the 2021 legislative session, and it sounded a bit more hopeful. Holcomb said he wants to give schools all the funding they were promised for the current school year. And he wants to increase funding for teacher salaries.

“Gov. Holcomb will continue to prioritize finding long-term sustainable solutions to improve teacher compensation,” the governor’s office said in a news release. “He will review and consider recommendations of the Next Level Teacher Compensation Report.”

That’s a fairly mild pledge. The teacher compensation report made clear that Indiana is in a deep hole when it comes to funding schools and paying educators. Hoosier teachers are paid considerably less than teachers in surrounding states, and less than the national average.

It’s understandable that lawmakers won’t push for an across-the-board tax increase to fund education when the state’s economy is still suffering the effects of the COVID-19 pandemic. But the teacher compensation commission laid out options that don’t require taxing the general public.

One of the most intriguing is to means-test Indiana’s 529 plan college-savings tax credit – “the most generous in the nation” – and reduce the tax break for households that make over $100,000 a year, which account for over 80% of what the 529 plan tax credits cost to the state.

“Indiana’s 529 plan tax credit, now eligible to be used for both K-12 or higher education costs, has substantial loopholes,” the report says. “An individual can contribute $5,000 to a 529 plan, withdraw the same $5,000 shortly thereafter, and then pay $5,000 in tuition expenses for a K-12 private school. Anyone who does this in Indiana will receive a $1,000 payment from the state as part of their next tax return.”

That sounds like a scam designed to benefit private schools and wealthy taxpayers, doesn’t it? Rolling back the tax break, the commission said, would save $50 million, which could be redirected to teacher salaries.

Holcomb and the legislature may be tempted to wait another year to work on increasing K-12 school funding. They shouldn’t. The 2022 legislative session will be a short session, with little time for major policy initiatives. The time to act is now, and the governor needs to lead.

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