Indiana shorts high-poverty schools via ‘complexity’ funding

It’s been a trend in Indiana K-12 education finance since 2015: While overall state funding for schools has increased modestly, funding targeted to high-poverty schools has gone down. By a lot.

Education advocates are trying to reverse that trend as the Indiana General Assembly gets to work on a new two-year state budget. They are calling on lawmakers to put more money into the “complexity index,” the part of the funding formula that directs more dollars to schools with more needy students.

Mug shot of IUSA director David Marcotte
David Marcotte

“There’s an equity issue here,” said David Marcotte, executive director of the Indiana Urban Schools Association. “The most complex students are getting short-changed.”

Complexity index funding is 39% lower than it was 2015, according to a study by Indianapolis-based Policy Analytics for the association. In 2015, total complexity index funding was $1.15 billion. Today, it’s $700 million. Schools are getting $450 million less than they used to via the index.

In effect, that means the legislature has shifted education funding away from high-poverty urban and rural schools and toward low-poverty schools, including those in affluent suburban districts. Since 2015, the Policy Analytics study says, overall state funding for the lowest-poverty quartile of districts has increased by over 5% compared to less than 3.6% for the highest-poverty quartile.

The idea behind the complexity index is that it costs more money to effectively teach students from low-income families. Research has consistently tied child poverty to behavioral, social and health challenges and to lower test scores and graduation rates.

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Has the time come for free textbooks?

It seemed that, finally, after years of debate, the stars had aligned. Indiana parents would no longer have to pay annual rental fees for their children’s school textbooks.

The governor was on board, and so was the leadership of the House of Representatives. “The time has come,” a key member of the Ways and Means Committee said. “We talk about free education and everything else, but the textbook fees have climbed to an astronomical amount.”

Mug shot of Gov. Eric Holcomb
Gov. Eric Holcomb

The year was 1997. Frank O’Bannon, a Democrat, had just taken office as governor, and Democrats controlled the House. But Republicans controlled the Senate, and they weren’t keen on having the state pay for textbooks and required instructional materials.

Neither was Suellen Reed, the Republican superintendent of public instruction. “It would be like a tax break for parents, but it does nothing to further education,” she said.

And so it went. Year after year, Democrats introduced legislation to have the state pay for textbooks. Year after year, Republicans blocked the idea. Eventually, it seemed that Democrats gave up.

In 1997, Indiana was one of 10 states where families had to pay for textbooks. Now it’s one of seven.

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Charter schools and property taxes

The state of Indiana provides more generous funding to charter schools than to the traditional public schools that 88% of Hoosier students attend. But charter schools, unlike school districts, don’t get local property tax revenue. Expect their supporters to lobby the state legislature to change that.

A recent Indianapolis Business Journal column lays out the argument. Its authors are Bart Peterson, a former Indianapolis mayor who now heads Christel House schools, and Teresa Lubbers, a former higher education commissioner and state senator who wrote Indiana’s charter school law in 2001.

“Families that pay local property taxes to support local schools deserve fair funding for their children, no matter what local public school they choose,” they write. “We hope the Legislature will correct this imbalance in the upcoming legislative session.”

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