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.”
They make it sound simple, but school finance is complex, and equating charter and traditional public schools is mixing apples and oranges. They have different funding sources, different governance structures, and different forms of accountability. Charter schools are exempt from some state laws.
Peterson and Lubbers write that charter schools “are public schools in every way.” But they are not — not in every way. It’s true that they don’t charge tuition, admit all students when there’s room, and are supposed to be transparent in how they operate. But nearly all charter schools in Indiana are run by private entities. Unlike most school districts, they aren’t governed by elected boards.
In Indiana, the state provides charter schools and districts with the same basic funding for operating costs, including teacher and staff salaries: roughly $8,000 per pupil on average. Charter schools get an extra $1,250 per pupil via the state’s charter and innovation network school grant program.
School districts levy local property taxes to pay for facilities and transportation, however, and charter schools don’t have that option. (The $1,250-per-pupil grant is supposed to help make up for that). Districts can also ask voters to approve property-tax increases to provide more money for operating costs. A few have approved these referendums, but most have not.
Peterson and Lubbers say property taxes create an average funding gap of $4,000 per pupil between charter schools and districts, but they don’t cite a source for the claim.
A 2020 study by the charter-friendly Center for Reinventing Public Education calculated the difference to be $3,339 per pupil. The study urged lawmakers to provide more funding for charter schools, and they did: They increased the charter and innovation network school grant from $750 to $1,250 per pupil.
Still, the Peterson-Lubbers column says the funding gap remains and is “much worse” in Indianapolis. That matters, because roughly half of the state’s 120 charter schools are in Indy. Leaders of those schools have become very vocal about wanting some of Indianapolis Public Schools’ referendum money.
Facilities and transportation spending
School districts rely on property taxes is to pay for transportation, usually via a fleet of buses and drivers; and to pay the costs of building and upgrading facilities.
Charter schools aren’t required to provide transportation; some do, and some don’t. The CRPE study says charter schools spent $238 per pupil, on average, for transportation in 2019.
Charter schools do, of course, require facilities. A controversial Indiana law lets them buy unused public school buildings for $1, but only a few have used that option. Typically, they pay rent or loan payments.
According to CRPE, charter schools spent $1,285 per pupil, on average, on facilities in 2019.
So, to recap, according to CRPE, average charter school spending for transportation and facilities adds up to $1,523 per pupil. That’s not much more than the $1,250 charter and innovation school grant that the state gives charter schools to compensate for their lack of property tax funding.
Peterson and Lubbers focus on the gap in state and local funding, not spending; but that may not tell the whole story. Charter schools can also qualify for a variety of grants and low-interest loans, including federally funded “quality counts” grants that provide up to $900,000 for charter schools to open, expand or replicate. Near the start of COVID-19, some charter schools notoriously got federal emergency support through both programs for public schools and for small businesses and nonprofits.
Private support
Gauging philanthropic support for charter schools is difficult, but some billionaires – Bill Gates, the Walton and DeVos families, John Arnold, Michael Bloomberg and more – are heavily invested in the charter sector and school choice more broadly.
Paramount Schools of Excellence, which operates charter schools in Indianapolis and is opening schools in Lafayette and South Bend, recently received a surprise $3 million gift from MaKenzie Scott, who has donated nearly $2 billion, much of it to charter schools, since her divorce from Amazon founder Jeff Bezos. (Scott has also given to public school districts, including Chicago, Detroit and Louisville). The head of another Indiana-based charter network recently posted on Twitter that he had received an unsolicited $1 million gift but didn’t name the donor.
Probably the oddest example was an Indianapolis charter school that effectively sold two seats on its board of directors and naming rights for its main campus building for $2 million, then went to court to collect when the donor died before fulfilling his pledge.
Most charter schools can’t count on seven-figure gifts, but many benefit from smaller grants. The Indianapolis-based Mind Trust, which says it has helped launch 45 charter or innovation network schools, says in its IRS filings that it gave nearly $7 million to about 20 Indy charter schools in 2019-21.
There’s also political advocacy. Peterson’s group, Hoosiers for Great Public Schools, funnels campaign contributions from California and Texas billionaires to curry favor with the already charter-friendly Republican supermajority in the Indiana General Assembly.
It’s likely that legislators will try to find a way to get more money to charter schools, but we don’t know what it will look like. They could require school districts to share revenue from referendums with local charter schools. They could create a new mechanism for charter schools to get property-tax support. Or they could boost the $1,250-per-pupil charter school grant.
The legislative session starts next week, and proposed legislation should be posted online any day.
School Matters 
What is the range in funding across Indiana school districts in the most recent data?
State funding (not including charter grants) ranges from about $6,900 to $9,300 per pupil. As for total funding (including property taxes), I don’t know where that data exists. It would probably range from about $10,000 to about $18,000, I could probably calculate it from separate spreadsheets of budgets and enrollment, but it would take a while.
Thank you. It has been some time since being in Dr. Neil Theobald’s School Finance course in the doctoral program at IU. As part of that course we studied the disparities in funding across districts in the state. I particularly recall the funding contrasts of districts bordering each other geographically. Mishawaka and Penn come to mind from that course. I did a search and it looks like state funding is around 45 percent, local funding 47 percent, and federal 8 percent. If the state funding range is $6,900 to $9,300 per pupil then total funding range would be something like $17, 595 to $23,715. Where would you say per pupil charter school funding resides in that range?
I think state funding is closer to two-thirds. It used to be less, but Indiana took on local school operating costs as part of “property tax reform” just over a decade ago. I did a post in 2019 https://inschoolmatters.wordpress.com/2019/11/08/no-clear-pattern-to-high-and-low-spending-school-districts/that cited Census data that total funding for public school districts ranged from about $8,000 to $15,000. That was 2017 data, so it’s gone up some, but probably not all that much. See the link near the bottom (to “Annual Survey of School Finances”) which should take us to updated information. As to where charter schools fall in that range, I think it’s hard to say. The CRPE report that I write about shows charge school funding ranging from $8,800 to $10,700 (in 2018-19). I pulled audits for a few charter schools, divided expenditures by enrollment and saw a range from $10,000 to $18,000, for what that’s worth.
I downloaded and sorted the Census school finance tables for 2020 (latest available). State and local revenue per pupil for Indiana school districts ranged from about $8,500 to $15,000 with just a few outliers (e.g., Indianapolis Public Schools, $16,300).
Thank you. Yes, I looked at that as well on the IDOE website. That is quite a range, $8,500 to $15,000. Then, it looks like the charter school range is around 20 percent higher than non-charter. Interesting.
It’s all beyond my comprehension but if charters are successful in wrestling away a share of local property taxes, they will drive a wedge between representative local government and local taxation. This helps make the argument to phase out property-taxes as a source of education funding and reduce local control over education to that of setting (limited) education policies and practices, hiring people and fulfilling supplies. Given the disparity in funding from property-taxes between wealthy and mostly white suburban districts and their economically-challenged and less white urban counterparts, this might not be a bad idea. But if it goes this way, Repubs can forget about eliminating the state income tax.
Thanks! I appreciate your research and reporting.
Marilyn Shank
317-694-5035