[r59] School Funding Faces Tough Road Ahead (11/26/2009)

Thursday, November 26, 2009

Start Date: 11/26/2009 All Day
End Date: 11/26/2009

During the past legislative session, school funding was one of the most hotly debated issues. The disagreement between Republican and Democratic views on school spending slowed final passage of the new state budget and prompted the creation of a study committee on the school funding formula. I was appointed to that committee.

The committee has met several times, since the budget was passed, hearing public testimony and discussing issues related to school funding. Our last meeting was Oct. 19, which gives us until next summer to present the legislature with our committee's ideas for improving the school funding.

Indiana schools receive roughly $6.5 billion from the state - almost half of the state's annual general fund budget.

The Bartholomew Consolidated School Corp. received more than $66 million from the state for 2009 to pay for general operating expenditures such as teacher salaries and supplies. Projections show the school system will have a 0.1 percent increase in state funding in 2010 and another 0.2 percent increase in state funding in 2011.

Money received from property taxes funds other areas, such as transportation, debt service, bus replacement and capital projects. Starting in 2010, property taxes will be capped at a maximum of 1 percent for homeowners, 2 percent for apartments and agricultural land, or 3 percent for businesses. This is a double-edged sword because, on one hand, taxpayers will pay less in taxes, but on the other school funding will decrease. It is projected that the BCSC will lose 1.1 percent of their property tax funding in 2010. However these losses will affect only those areas funded by property taxes and not the general operating budget.

During the last session, my colleagues and I fought to have the money follow the student, which would allow school corporations with growing enrollments to receive more funding to support growth.

For schools with declining enrollments, we implemented a provision called a "reghoster". So, when a student leaves a school system, funding for that student is phased out over three years rather than stopping immediately. We understand there are fixed costs, such as utilities and teacher salaries, that cannot be cut off immediately when a student transfers. The "reghoster" gives school systems time to adjust their budgets.

During the Oct. 19 meeting, we heard testimony from the Hamilton Southeastern School Corp. as well as the Center for Evaluation and Education Policy. CEEP conducted a study outlining eight goals to improve the efficiency of the school funding formula. For example, the outline posed the question, "What does it take to educate a child?"

I asked CEEP members to define that question, but, unfortunately, they were unable to provide a clear explanation of what it takes to educate a child. I believe Hoosier students deserve a well-defined process that enhances the learning environment.

As the meeting progressed, another topic that came up was that school systems are forced to borrow money when their tax draws are delayed. For example, the Hamilton Southeastern School Corp. paid an additional $800,000 in interest on loans because of late property tax collections. This is something that happens around the state and costs taxpayers millions of dollars.

We can no longer allow counties to fall behind on their property tax billing process. If property assessments were completed on time, taxpayers would not see their hard-earned dollars wasted on interest costs.  This money could instead be used to improve education. I believe we should address this issue with legislation.

Unfortunately, there is no easy fix for the school funding formula.Therefore, I will continue to work hard to ensure school funding is responsibly distributed to Indiana schools, ensuring every Hoosier child receives a quality education.