[r72] A Clere view of the Statehouse: The United States is at war. It's too easy to forget. (8/30/2010)

Monday, August 30, 2010

Start Date: 8/30/2010 All Day
End Date: 8/30/2010

School is out for the summer, but that doesn't mean there should be a break in the conversation about education. In fact, now - far away from the pressure and politics of a legislative session - is a good time to continue talking about challenges and opportunities in K-12 education.

This is the first of three columns on education. In today's column, I'll provide some facts and figures on the history and status of K-12 education funding in Indiana. Next week, I'll explain the funding formula that determines how state education dollars are distributed. I'll conclude with a discussion of current issues and ideas for improving education.

We have to get away from the false premise that money is the solution for every problem in education. If it were, we'd be in great shape.

Since 1978 - the first year for which I have data - state funding for K-12 education has increased every single year. Most years, the increase has far exceeded the rate of inflation.

According to the inflation calculator on the U.S. Department of Labor Web site, $1 in 1978 had the same buying power as $3.30 in 2008. During the same period, state spending on K-12 education increased 514 percent; in other words, for every dollar the state spent on education in 1978, it spent $5.14 in 2008.

Today, Indiana is spending $9.25 for every dollar it spent in 1978. Why the sudden jump?

In 2008, as part of an effort to provide property tax relief, the state assumed total responsibility for funding school operations, which includes items such as teacher salaries, utilities and insurance. In the past, schools received both state and local funding for operations. The local funding came from property taxes.

Schools still receive the lion's share of property tax revenue. This will come as a surprise to folks who have been led to believe that schools no longer receive property tax support. I'll return to this point in a moment.

In 2008, prior to the restructuring, the New Albany-Floyd County Consolidated School Corporation received 66 percent of all property tax revenue in Floyd County - $56.5 million of $85.6 million.

The 2008 restructuring reduced Floyd County property owners' total property tax burden from $85.6 million in 2008 to $51.6 million last year - a savings of $34 million. The majority of the savings came from shifting the local share of school operations funding to the state. Schools didn't receive less; they just received part of their funding from a different source - the state - instead of from property taxes.

Prior to the 2008 restructuring, schools already received most of their operating funds from the state. In fact, local school operations consumed about one-third of the state budget. Now it's almost half. The additional state money came from an increase in the sales tax from 6 percent to 7 percent. It's a common misconception that school operations were funded entirely - or even primarily - by property taxes. For decades, the state took on an increasingly larger share of paying for school operations, until eventually it made sense to assume responsibility for the relatively small remaining share that was coming from property taxes.

That doesn't mean schools stopped receiving revenue from property taxes; they simply stopped receiving the portion that was going to operations. Last year, when Floyd County collected $51.6 million in property taxes, local public schools still received 57 percent - $29.4 million - of that total. The money funds school construction and maintenance, debt payments, transportation, school bus replacement and other items - just not operations.

In comparison, the only other recipients of more than $1 million were the city of New Albany, which received $10.6 million, Floyd County government ($6.6 million) and the New Albany-Floyd County Public Library ($1.4 million). To add additional perspective, the town of Georgetown received $248,394 in property tax revenue, and the town of Greenville got $12,450.

It should be noted that Community Montessori School and Rock Creek Community Academy - the only charter schools in Floyd and Clark counties, respectively - receive no property tax revenue. As public schools, they receive state funding for operations just like traditional public schools, but they don't get a penny from property taxes. No charter school in Indiana receives any property tax revenue. Their state support is calculated using the same formula that determines state funding for all public schools - the formula that will be the subject of next week's column. Charters survive on state support and fundraising - with no property tax support for buildings, buses or anything else.

The last day of school is a sad day at five area schools - four in Floyd County and one in Clarksville - that are closing for good. The closings were blamed on a recent cut in K-12 funding by Gov. Mitch Daniels, who has the unenviable task of balancing the state's books during a deep recession. The governor's cut may have been the proverbial straw that broke the camel's back, but much of what happens in education - and in government in general - is the result of many decisions over many years, and the five school closings were no exception.

That's why it's so important for all of us to understand how government works - in this case, how education funding works. In no way am I suggesting that K-12 education is receiving too much funding. In fact, some reforms and initiatives may require additional funding. Others won't. In any case, the conversation continues.