Session could have been worse for education

The 2022 session of the Indiana General Assembly produced plenty of bad news, but at least there’s this: When it comes to education, it could have been worse. Much worse.

Republican legislators failed in their all-out effort to ban the teaching of what they misleadingly call “critical race theory” in schools. They also fell short in their efforts to politicize school board elections, encourage book-banning, and make public schools share funding with charter schools.

Indiana Statehouse
Indiana Statehouse

Their one truly harmful action regarding schools was the approval of House Bill 1041, which prohibits transgender girls from playing girls’ sports. This cruel legislation was designed for one purpose only: to toss a bone to the GOP’s right wing. Maybe – hopefully — Gov. Eric Holcomb will veto it.

Other than that, Republicans wasted people’s time and energy with lots of sound and fury about education, but it ultimately signified almost nothing.

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‘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.

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Indiana falls short on school funding effort

Indiana just doesn’t try hard enough. That’s a key message from an annual report on school funding from the Albert Shanker Institute and the Rutgers Graduate School of Education.

When it comes to “fiscal effort,” one of the report’s measures of K-12 funding, Indiana lags behind most other states. We spend just 3.06% of our gross state product on K-12 education, compared to a national average of 3.45%. Indiana ranks 36th among the states for fiscal effort.

It wasn’t always that way. In 2007, Indiana spent a respectable 3.73% of its economy on K-12 schools, the report says. Then came the Great Recession. Under Gov. Mitch Daniels, the state slashed funding for schools. Superintendent of Public Instruction Tony Bennett declared this was a “new normal,” and schools should just get used to it. Indiana fell far behind its peers for teacher pay.

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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.

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No more excuses to not fund schools

Indiana legislators will have to work hard to find excuses to underfund K-12 schools now that a state revenue forecast showed they will have a lot more money to spend.

The forecast, which dropped Thursday, says the state will take in about $2 billion more than anticipated in the two-year budget cycle that starts in July. That’s enough to make significant investments in education while doing a better job of meeting other state spending needs.

Lawmakers may argue otherwise, but the evidence is overwhelming that Indiana schools are poorly funded – and that the lack of money means Indiana teachers are underpaid compared to their peers.

  • Ball State economist Michael Hicks has pointed out that Indiana’s per-pupil school spending has declined by 7% since 2010 in real terms. If we had just kept pace with inflation, he wrote, we would have spent an extra $1.3 billion on education last year.
  • A recent school-funding analysis by the Shanker Institute and the Rutgers Graduate School of Education found that Indiana ranks near the bottom of the states for “fiscal effort,” the percentage of its economic capacity that it spends on schools.
  • A teacher pay commission appointed by Gov. Eric Holcomb found that Indiana needs to find $600 million a year in revenue or savings to raise teacher salaries to the same level as surrounding states.
  • A 2019 study commissioned by the Indiana State Teachers Association was even more pessimistic, concluding Indiana needs to spend $1.5 billion more per year to catch up.

Prior to Thursday’s revenue forecast, the Indiana House and Senate had approved separate versions of the budget that included only minimal increases in K-12 spending. The House budget would direct nearly 40% of the increase to an expansion of Indiana’s private school voucher program. The Senate version dialed back the voucher expansion but still committed significant funding to private schools.

The voucher expansion seems certain to happen, despite massive opposition from supporters of public schools. The only questions are how big it will be and how much it will cost.

But overall funding for K-12 education is now an open question. Advocates say the surprise jump in revenue should make this a no-brainer. The Indiana State Teachers Association is calling on budget writers to “go big on K-12 funding and do what’s best for our schools.” Assistant Democratic Senate Leader Eddie Melton said, “We are now within reach of implementing Gov. Holcomb’s teacher pay commission recommendation to put $600 million a year in the school funding formula.”

Republicans, who dominate the legislature, were already starting to drag their feet. They will claim the positive revenue forecast results from their own “fiscal discipline,” but it’s also due to the $1,400 stimulus checks and the additional child tax credits provided by the feds via the American Rescue Plan. And they won’t expect that to last.

Senate President Rod Bray said legislators must “be wary of the day when the economy begins to turn, because we dare not expect this economy to last forever.”

It’s the same old song from Indiana’s Republican politicians: When times are bad, we can’t spend money on schools, because we don’t have it. When times are good, we can’t spend money, because good times won’t last. You would almost think that education isn’t a priority.

Funding cap would hurt high-poverty schools

The state budget being considered this week by the Indiana House would shift millions of dollars away from high-poverty schools and school districts.

That’s because it includes a cap on the complexity index, the calculation that Indiana uses to direct additional funding to schools that serve many low-income families. Lawmakers would impose the cap at a time when many Hoosier communities are struggling financially because of the COVID-19 pandemic.

The budget legislation, approved by the Ways and Means Committee and now before the full House, puts a limit on how much a district or school’s complexity index can increase. For the most part, the cap would not affect low-poverty schools and districts, but it could have a big impact on those that enroll large numbers of poor students.

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Budget would increase charter school funding

Charter schools would get a boost in funding under a budget bill that’s headed for approval by the Indiana House. There may be an argument for that, but don’t expect the legislature to debate it.

Under a budget amendment adopted Thursday by the House Ways and Means Committee, the state’s “charter and innovation network school grant” would increase from $750 per pupil to $1,000 in 2021-22 and $1,250 in 2022-23. The increase would cost the state nearly $40 million over two years.

The grant program is intended to compensate for the fact that charter schools can’t levy local property taxes, while public school districts use property taxes to pay for student transportation and facilities expenses. The result is that districts spend about $3,300 more, per pupil, than charter schools, according to a report by the Center for Reinventing Public Education.

Charter schools aren’t required to provide student transportation; reportedly some do, and some don’t. They do have costs for facilities and may have to pay most of those from their state operating funds. According to the CRPE report, charter schools spend $1,285 per pupil on facilities.

Charter school advocates have long objected to the unequal funding and have lobbied to change it. In the 2020 elections, one of the biggest contributors to the House Republican Campaign Committee was a new political action committee called Hoosiers for Great Public Schools. Chaired by former Democratic Indianapolis Mayor Bart Peterson, the group gave $150,000 to the House GOP committee and another $50,000 to the campaign of Republican House Speaker Todd Huston.

The PAC raised $900,000 in 2020, none of it from Hoosiers: it all came from Netflix CEO Reed Hastings and former energy trader and hedge-fund manager John Arnold. (It also spent heavily on Indianapolis Public Schools board elections).

Peterson told me last fall that his primary concern was the “funding gap” between charter schools and traditional public schools. Just what constitutes fair funding for charter schools is a debate worth having, but that’s not what’s happening. Instead, House leaders have dealt with the issue in the budget, effectively bypassing any discussion of charter-school funding policy.

When it comes to advocacy, money talks; and those with the most money get heard.

Lost enrollment costs schools

Indiana school districts stand to lose over $100 million in state funding this year because of reduced enrollment attributable to the COVID-19 pandemic.

Fall 2020 enrollment in traditional public schools declined by 17,300 students, according to data released last week by the Indiana Department of Education. Each of those students translates to over $6,200 in lost funding from the state.

It’s not yet clear what happened or where the students went. Some families may have opted to homeschool their children rather than send them to school during the pandemic. Some may have switched to private or charter schools.

A significant factor could be families with young children choosing to delay or skip kindergarten. Indiana does not require kindergarten attendance, and children are not required to start school until the academic year when they turn 7.

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