Indiana school districts may have to turn over underused buildings to charters. Here’s what to know.

Eight kids, all wearing masks or face shields, walk in a jumbled line through a carpeted school hallway
Kindergarten students at Tindley Genesis Academy’s summer program walk to lunch. A new law would help charter schools — such as those in the Tindley network — acquire underused buildings for $1. (Carson TerBush / Chalkbeat)

Indiana’s 2023 legislative session is under way, and state legislators have introduced more than 100 new education bills and bills impacting schools and students. For the latest Indiana education news, sign up for Chalkbeat Indiana’s free newsletter here.

Legislation that would allow charter schools to acquire underused traditional public school buildings that are still serving students heads to the Senate floor after passing out of committee along party lines on Wednesday. 

The bill makes it easier for charter schools to take advantage of the so-called $1 law, which currently requires school districts to offer unused, closed school buildings to charter schools or state educational institutions for the sale or annual lease price of $1. 

Sen. Linda Rogers, a Republican from Granger who wrote the bill, has said in hearings that the intent of the bill was to clarify the existing $1 law, which a judge characterized as ambiguous in a recent ruling in favor of Carmel schools. But critics of the law, which has faced opposition from Democratic lawmakers and could have a significant impact on Indianapolis Public Schools, say it spurs the forced turnover of buildings to charter schools. 

The initial version of the bill would have forced districts with declining student populations to shutter school buildings operating at less than 60% capacity. 

But after Republicans on the Education and Career Development Committee amended the bill, the legislation now states that school districts “may” close such schools, placing the responsibility on charter schools to identify underused buildings and first work with the district to try to acquire one.

But Senate Bill 391 still allows charters to petition the Indiana Department of Education if those negotiations do not work, ultimately allowing the attorney general to enforce the sale or lease of the building. The bill also expands the $1 law to allow education nonprofits to acquire buildings.

The bill offers districts some reprieve by requiring charter schools that no longer have a use for an acquired district building to offer it back to the school district. 

Rogers declined to comment this week when contacted about the bill by Chalkbeat. 

The bill passed 8-4 out of committee. It will head to the House if it passes the Senate by Tuesday, but further amendments could still change the bill.

Here’s what we know about Senate Bill 391, inspired by questions from our readers.

How does the bill define an underutilized school?

The bill defines an “underutilized” school building as one where student enrollment has averaged less than 60% of the building’s capacity for the current school year and the previous two school years. 

If the building’s capacity is unknown, then its capacity is determined by the average maximum full-time enrollment in any of the last 25 years. 

The bill only applies to school districts where enrollment has dropped by at least 10% within the past five years. The district must also have more than one school building serving the same grade levels as the one that is subject to closure.

And schools can only close if there is another suitable building with “sufficient capacity” to take students from the closing school that is no more than 20 minutes away.

School districts could also keep buildings open if they demonstrate that they are being used for alternative education, administrative offices, or storage. In order for districts to use this provision, at least 30% of the building must be used for alternative education, and at least 50% must be used for offices or storage. 

What would this bill mean for IPS?

The bill could have huge implications for Indianapolis Public Schools, which had an average utilization rate of 60% for its buildings in the 2021-22 school year, according to a facility condition analysis. 

Paul Miller Elementary School 114 is one of six buildings that IPS will close at the end of this school year. Charter schools have expressed interested in occupying some of these buildings. (Amelia Pak-Harvey / Chalkbeat)

Sen. Andrea Hunley, an Indianapolis Democrat and former IPS principal, authored a failed amendment to the bill on Wednesday that would exempt districts like IPS where charter or innovation schools already occupy 10% of school buildings. 

“Collaboration is already happening in Marion County in unique ways,” Hunley previously told Chalkbeat. “I’m perplexed by trying to create a solution on the state level when this is a very localized issue.”

Hunley’s amendment was one of several that Democrats on the Education and Career Development Committee tried but failed to pass. 

What’s the difference between an underused building and a school with small class sizes?

Unless lawmakers amend the bill, it might not be possible to distinguish between a school that’s “underutilized” and one that has purposefully small class sizes. The latter is often a selling point for families who choose charter and private schools. 

And it’s possible that a school is “underutilized” but using all of the space, critics said. 

What happens to kids who attend a school that’s declared underused?

The bill says a building can only be closed if there is an available school within 20 minutes that can serve the same grades, meaning district students would likely go there if they didn’t attend the new charter school.

But the bill does not say whether the 20 minutes of travel would be via car, public transit, biking, or walking.

Would the law apply to charter schools?

Neither the $1 building law nor the new bill to expand it apply to charter schools. Without changes to the legislation, charter schools would not have to report and turn over their underused buildings. 

How does the law apply to a building with debt?

Generally, under the existing law, the school district remains responsible for any debt attached to the building before it was leased, while the charter school is responsible for any expenses to the building during the term of the lease. Co-located schools share expenses.

Expanding the law to cover underused buildings, rather than just vacant ones, could in theory create situations in which districts carry capital debt for buildings they are leasing to charters.

When can a district sell a building for market value?

Typically, a district can sell a building for market value if it offers the facility to charter operators and gets no takers. 

Indianapolis Public Schools recently sold the John Marshall building under this provision to create a community hub. 

Can a charter school make a profit off of a building acquired for $1?

Current law states that if a charter sells the building to a third party, it must pay the district the amount by which the property’s value increased, minus any adjustments made to the property that may have increased its value.

The amended bill advanced by the committee would require charters to first offer an acquired building back to the school district before selling it. If a school district declines the building, the charter may sell it. 

Aleksandra Appleton covers Indiana education policy and writes about K-12 schools across the state. Contact her at aappleton@chalkbeat.org.

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

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