Indy Chamber says it can’t support Indianapolis Public Schools tax increase as proposed

Four students sit in a row of desks in a classroom lined with red lockers. One boy wears a blue shirt and blue mask while writing on a worksheet
Students draw things that start with the letter D on a worksheet at Tindley Genesis Academy on June 28, 2021. The charter school is one of several independent charters within Indianapolis Public Schools boundaries that would not receive money from a potential ballot measure for operating expenses. (Carson TerBush / Chalkbeat)

The powerful Indy Chamber business group says that it cannot support a proposed tax increase for operating and capital costs from Indianapolis Public Schools, just one day before the school board is set to vote on placing the operating proposal on the May ballot.

The statement from the Greater Indianapolis Chamber of Commerce, released Friday, acknowledged that the district needed funding for its capital and operating needs. 

But it questioned how the effort would improve academic performance, and why students in the district’s Innovation charter schools won’t receive an equal portion of the funding. 

“We believe that more time and engagement are required to allow the community to fully vet the current proposal, build support for a path forward, and work with state lawmakers to address inequities in the school funding formula that disadvantage IPS and many other schools across the state,” the statement read. “The Indy Chamber looks forward to assisting district leaders in this work and remains committed to the success of IPS and its students.”

The Chamber’s refusal to back the tax measure as proposed could be a significant setback for IPS, which says the additional tax revenue is crucial for its massive reorganization plan known as Rebuilding Stronger. The plan expands popular academic offerings to all students, as the district competes with charter schools for students.

IPS did not immediately respond to a request for comment from Chalkbeat. The IPS board will vote on whether to place the operating referendum on the ballot at a board retreat on Saturday. 

The referendum for operating expenses is expected to generate roughly $51.7 million annually over eight years. In December, the IPS board agreed to move a $410 million referendum for capital expenses onto the May ballot. 

The Indy Chamber was a critical partner to the district in its successful ballot measures for operating and capital expenses in 2018, which represented the last successful tax increase that voters granted to IPS. 

But getting that support took months of negotiation. IPS initially floated a roughly $1 billion tax increase for May of that year, but after pushback from the Chamber, the district delayed the vote to November and whittled the total figure down to $272 million. 

The parties also embarked on a three-year partnership in which the Chamber agreed to help IPS realize cost savings outlined in an August 2018 report

The report concluded the district could realize up to $328.2 million in potential cost savings over eight years through a variety of cuts. Those savings would be reached through cutting transportation, discarding unused buildings, reducing central office staff, and cutting teaching positions left vacant through attrition. 

The Chamber agreed to fund two executive positions over three years — at the cost of up to $1 million — to help IPS with this goal. Its political action committee later gave $52,500 to a “Vote Yes to IPS” campaign to help pass the tax increase. 

But in its Friday statement, the Chamber said IPS must explore other revenue and efficiency alternatives, such as utilizing remaining federal relief funding, creative reuse of facilities, and accounting for surplus revenues from the existing 2018 ballot measures. (The operating referendum passed in 2018, projected to generate roughly $27.5 million annually, has generated anywhere from $29.2 million to $35.4 million annually since 2019 due to increasing property values, according to records from the state Department of Local and Government Finance). 

“IPS’ facilities currently have capacity for 46,000 students, while district enrollment has declined to its current population of 28,000. Will constructing three new buildings and closing six effectively right-size IPS to the appropriate facilities footprint?” the Chamber asked in its statement. “What facility utilization rate is IPS targeting?”

The Chamber also questioned the timing and amount of planned tax increases, and whether that could exacerbate economic challenges as property values within IPS district boundaries increase. 

In an Indianapolis Star op-ed published in November, IPS Superintendent Aleesia Johnson said the district has acted on 90% of the Chamber’s fiscal recommendations since 2017. 

The pushback from the Chamber comes as IPS has faced increasing pressure from the charter school sector, which has called on the district to share more of any potential operating referendum funds with charter schools. Charter backers have said the district’s latest proposal for revenue sharing is inadequate.

The ballot proposals from IPS have also caught the attention of the state legislature, which has at least two bills pertaining to operating referendum expenses. 

One would require school districts to share a portion of any operating referendum revenues with charter schools. Another would cap districts’ revenue from ballot measures for operating expenses by limiting their annual revenue growth to no more than 5% from the previous year. 

Amelia Pak-Harvey covers Indianapolis and Marion County schools for Chalkbeat Indiana. Contact Amelia at apak-harvey@chalkbeat.org.

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