Charter schools made big gains in legislative session

Indiana’s private school voucher system was the big winner in the 2023 legislative session, but charter schools came in a close second. They secured sizeable increases in state funding to pay for facilities and transportation, along with – for the first time – a share of local property taxes.

As Amelia Pak-Harvey of Chalkbeat Indiana explains, the success followed an all-out lobbying and PR effort in which charter supporters teamed with voucher proponents. Advocates insist charter schools are public schools, and private schools certainly aren’t.  But the joint effort was effective.

The Republican supermajority in the General Assembly rewarded charter schools with:

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Referendum success rate was typical

Ten Indiana school districts had property-tax referendums on the ballot in last week’s elections, and seven of them passed. That’s a typical success rate.

In the past 10 years, voters have approved 132 school district funding referendums and rejected 51. That’s an approval rate of 72%. There was speculation that inflation and talk of rising property taxes could dampen voter support this year, but that didn’t seem to be the case.

Indiana has two primary types of school funding referendums. Districts must get voter approval to raise property taxes to pay for expensive construction and renovation projects. They can also ask voters to raise property taxes to help pay for school operations if they conclude state funding isn’t adequate.

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.”

Taxation without representation?

There’s a tradition in Indiana that, if we pay for a government service through property taxes, we can use our votes to influence how the money is spent. We elect city, county, town and township officials. We elect school boards. We elect the people who appoint library and fire district boards.

If we don’t like the way our taxes are being spent, we can vote for different officials. We can run for office, try to get elected, and change how the institutions are run.

But look for the Indiana General Assembly to scrap that idea in its 2023 session, which begins in January. Lawmakers may require that our property taxes help pay for privately operated charter schools.

‘Follow the money’

A political action committee that favors more funding for charter schools gave $50,000 in December 2021 to the Indiana House Republican Campaign Committee and one of its favored candidates.

Weeks later, House Republicans introduced and began supporting legislation to require public school districts to share funding from property-tax referendums with charter schools.

Is there a connection? Hoosier Republicans have long been ideologically predisposed to school choice in all its forms. They argue state education tax dollars should “follow the child,” whether parents send the child to a public, charter or private school or a for-profit tutoring service.

Referendums give districts an edge on teacher pay

The Indiana legislature is calling on school districts to spend at least 45% of their state funding distributions on teacher salaries. Some districts will find it easier to meet the goal than others. One reason: referendums that let districts supplement state funding with local property taxes.

According to a December 2020 report from Gov. Eric Holcomb’s Next Level Teacher Compensation Commission, teacher salary costs as a share of state funding vary widely. In 2020, they ranged from about 30% in some districts to over 60% in others.

The report found that 109 of Indiana’s nearly 300 school districts paid less than 45% of their state funding for teacher salaries in 2020. (The figures are in Appendix 15). Those districts will have to increase teacher salaries – in some cases, significantly – or cut other spending to meet the legislature’s target. Collectively, they fell $52.4 million short of paying enough for teacher salaries in 2020.

Good results for school referendums

Unemployment is at record levels in Indiana, with hundreds of thousands of Hoosiers out of work. A recession is coming, likely to be deeper than the last one. It seems like a bad time to call for a tax increase.

But voters in 12 school districts approved referendums Tuesday to raise money for school operating expenses and building projects. Yes, they said, raise our property taxes. Because we want to support our students.

Four of the districts passed both operating and building referendums. In all, 16 of the 18 referendums that were on the ballot won approval.

Referendums help school districts, but not all of them

Voters in 10 Indiana school districts will go to the polls Tuesday to decide whether to raise their own property taxes to help fund local public schools. It’s another sign that Indiana has become a referendum state, with districts turning to local taxpayers to do the job that legislators haven’t done.

But only some of them: 60% of Indiana school districts have never attempted a referendum.

That’s approximately 180 districts that haven’t turned to the voters for funding in the 10 years that Indiana has had school funding referendums. Maybe they haven’t needed the money; or maybe superintendents and school boards didn’t think the local voters were ready.

School referendums may be reaching limit

I’ve written a lot about winners and losers in Indiana school funding, usually focusing on budget decisions made by the state legislature. But there’s another important divide when it comes to funding schools: between districts that pass local property-tax referendums and those that don’t.

And judging by this month’s elections, the number of referendum winners may be nearing its limit. Only six of the 10 school referendums that were on the May 7 ballot were approved. That’s a far lower rate than the 88% that passed between 2016 and 2018, according to data from Purdue University.

Under Indiana’s system of funding schools, money to pay teachers, staff and administrators and to fund most day-to-day operations comes from the state, appropriated by the legislature in the two-year state budget. Money for buildings and transportation comes from local property taxes.

But if schools need more operating money than the state provides, they can turn to local voters in a referendum.

Bad bills may get better – or not

Two of the worst bills filed in this year’s Indiana legislative session are on the agenda Monday morning for a meeting of the House Education Committee. At least, they started out as two of the worst.

The authors of the bills have said they will offer amendments Monday to remove the most egregious provisions. But advocates for public schools and their students need to make sure they do that – and that the provisions don’t return somewhere later in the legislative process.

House Bill 1641, as introduced, would require public school districts to share the proceeds from property-tax referendums with local charter schools. It would also force public districts to sell unused building to private schools, most of which are religious schools, for half their value. Vic Smith of the Indiana Coalition for Public Education has a good explanation for why both are bad ideas.