Indiana education officials change school funding rules for virtual learning in the pandemic

The change aims to keep school funding steady through the pandemic and comes in response to a recent warning that schools could receive reduced state support if they don’t return to in-person learning. (Alan Petersime for Chalkbeat)

Exercising special power granted during the pandemic, Indiana education officials rewrote school funding rules Wednesday to prevent cuts for virtual learning due to the coronavirus.

The State Board of Education created a new rule to address funding for students who would normally be in classrooms but are learning online because of the pandemic — including students in hybrid or all-virtual options, and those at schools that haven’t reopened for in-person instruction. The state will fully fund those students this fall, as though they were attending in-person.

The change aims to keep school funding steady through the pandemic and comes in response to a recent warning that schools could receive reduced state support if they don’t return to in-person learning. 

Without the new rule, schools would see their per-student funding drop to 85% for online students — a loss that would equate, for example, to $28 million for Indianapolis Public Schools, which is staying all-virtual for at least two months.

The board unanimously approved the change, which only applies to the fall and leaves the virtual funding issue up in the air for the spring. Board member Pete Miller stressed that while they were creating an exception, he still believes students learn best in person.

“In effect, we’re doing a workaround to an existing statute — this incentivizes the virtual instruction,” Miller said. “My hope is that schools will continue to seek to provide in-person instruction wherever it’s possible. And obviously I say that fully aware of all the challenges with all of that.”

The state board’s move does not apply to students who were already enrolled in online programs before the pandemic, or to students who transferred to virtual charter schools.

But it would protect full funding for new students who switched from in-person learning last spring to district-run online schools this fall, such as at Evansville Vanderburgh School Corp.’s Virtual Academy, which has seen enrollment skyrocket to roughly 20 times its previous size.

State board members took a different tactic for addressing the issue than what Gov. Eric Holcomb called upon them to do last month. Holcomb had suggested delaying the September student count day used to determine funding in the fall, to buy time for lawmakers to act or for the virus to subside enough to allow students to return to classrooms.

But Holcomb’s proposal left much uncertainty and raised some logistical issues. Under that plan, schools could have still seen retroactive cuts if lawmakers failed to act. Districts and teachers unions would have had to bargain contracts in the fall without knowing how much school funding would come in that year. Teacher bonuses could have been delayed, since the funding pot is divided among districts based on enrollment. And schools that had significantly underestimated fall enrollment would have had to wait months for their funding to be corrected.

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The state board’s action avoids some of those complications and ensures full funding for the fall. But Denny Costerison, executive director of the Indiana Association of School Business Officials, stressed that it doesn’t solve everything, and lawmakers still need to address the question of virtual funding in the spring.

“It gets us hopefully a step closer to the final solution of this,” Costerison said. “We’ve gone around the barn here on it — how are we going to count these students that are virtual because of COVID, not because of any other choice but that?”

IPS Superintendent Aleesia Johnson said in a statement Wednesday that she appreciated the move to protect “the funding we so desperately need this fall.”

“Their vote will allow us to continue to make the critical safety decisions necessary in the best interest of our students and staff whether remotely or in-person,” Johnson said. “However, the need for a permanent solution still exists and we look forward to continuing this discussion with our legislators.”

During Wednesday’s short meeting, State Superintendent Jennifer McCormick asked for an explanation why the state board was not addressing funding for the spring. The agency has limited authority to take this kind of action during a public health emergency, state board attorney Chad Ranney said, and it’s not clear what the effects of the pandemic will look like next year.

“If there were a vaccine tomorrow, then students would be able to return in person in a safe environment,” Ranney said. “We want to be able to check the conditions on the ground, before we make a decision, before we have to.”

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