Who Is In Charge

Study says relying on sales tax could hurt Indiana schools

PHOTO: Alan Petersime

Indiana’s reliance on sales tax as a critical piece of its education funding system isn’t doing any favors for schools, according to a report from a national credit rating firm.

The report, released Monday by Standard and Poor’s, says that not only has an growing income gap nationally between the wealthiest and poorest Americans led to slower economic growth, it could also lead to a drop in the revenue the state collects in taxes. That means Indiana could see less and less state money coming in from sales tax and have less to to pay for education.

Indiana is unusual in how it gathers tax dollars used to fund education.

States and school districts typically fill their general funds each year with money residents pay from some combination income tax, sales tax and property tax. A 2009 change in the way Indiana funds schools means property tax money no longer flows into its general fund. Instead, schools’ day-to-day operations primarily are funded with sales and income taxes. Collections from sales and income tax tend to fall and rise more dramatically with swings in the economy than property taxes.

But a key state legislator said in response to the report that Indiana might not be done tinkering with its school funding method. Indianapolis Public Schools Superintendent Lewis Ferebee said he also expected more debate about how to pay for schools when the legislature returns to work on the 2016-17 budget beginning in January.

“I expect this legislative session will be heavy on school funding,” Ferebee said. “I appreciate the willingness to look at other options.”

When the economy dips, it causes workers to be laid off and the state quickly begins collecting less income tax, which is tied to Hoosiers’ pay checks. Consumers also spend less in a recession on goods and services, leading to less sales tax collected by the state. Changes in property tax collections, which are based off the assessed value of a home or other real estate, happen more slowly. Even when a home is sold or enters into foreclosure, the property tax are often still paid, so the state still receives that revenue.

But Derek Redelman, vice president of the Indiana Chamber of Commerce, said it’s only fair to fund schools the way other parts of government are funded, even if it means they aren’t shielded from dramatic changes in the economy.

“Schools were one of the government entities that were completely protected from changes in the economy, and I don’t know how that’s justified,” Redelman said. “The property tax method said, ‘We don’t care how much money you have to spend, we don’t care if you’re employed. If you own a house, you’re going to pay anyway.'”

Ferebee, who came to Indiana last year after spending most of his career as a school administrator in North Carolina, said even the more stable property tax system that state uses, and Indiana used in the past, has disadvantages. Funding based on local property tax can result in rich schools for wealthy communities and poor schools for communities with fewer high earners.

That’s not fair either, he said.

“Property tax is a lot more consistent and predictable but with property taxes there is less control over the high and low poverty areas,” Ferebee said. “It creates a divide.”

The state’s current funding system has resulted in a steady drop in state aid to IPS since 2009. But if Indiana was completely on a property tax-based system, it might actually hurt IPS more because the portion of the city that includes most of IPS looks very different than the rest of school districts.

“In Center Township, there’s not a lot of residential property and lots of tax exempt properties,” he said. “We wouldn’t generate the same revenue.”

The Standard and Poor’s report found that a measure of volatility in state taxes in Indiana has doubled since 2009, which means the amount of money states collect each year from income and sales taxes varies more widely than other states. When state revenue is more unpredictable, so is school funding.

Indiana was identified in the report as one of the 10 most sales tax-dependent states in the country. Of the states listed, Indiana had the second lowest average annual state tax revenue growth at 3.2 percent since 2009. Only Florida was worse, with a growth rate of 1.9 percent in the same time period.

State Rep. Todd Huston, R-Fishers, noted that income and sales tax are not the only funding sources for the state’s and the education system. It still relies on property tax dollars to a lesser extent to pay for building projects and busing.

Huston, who is on the both Indiana House’s education committee and budget-making ways and means committee, said a discussion about how school funding should work in Indiana is ongoing.

“This isn’t a static conversation,” Huston said. “We’ll always continue to look at what the appropriate balance is, and what the revenue sources are and what we think is the right long-term solution to fund schools in the state of Indiana.”

The best way to improve this income gap situation might be through education itself, he said.

“We control some of this by how well we educate our kids,” Huston said. “If we continue to improve and get more kids across the finish line, that’s going to help kids become more successful economically, and that’s how you really close the income gap.”

newark notes

In Newark, a study about school changes rings true — and raises questions — for people who lived them

PHOTO: Naomi Nix
Park Elementary principal Sylvia Esteves.

A few years ago, Park Elementary School Principal Sylvia Esteves found herself fielding questions from angst-ridden parents and teachers.

Park was expecting an influx of new students because Newark’s new enrollment system allowed parents to choose a K-8 school for their child outside of their neighborhood. That enrollment overhaul was one of many reforms education leaders have made to Newark Public Schools since 2011 in an effort to expand school choice and raise student achievement.

“What’s it going to mean for overcrowding? Will our classes get so large that we won’t have the kind of success for our students that we want to have?” Esteves recalls educators and families asking.

Park’s enrollment did grow, by about 200 students, and class sizes swelled along with it, Esteves said. But for the last two years, the share of students passing state math and English tests has risen, too.

Esteves was one of several Newark principals, teachers, and parents who told Chalkbeat they are not surprised about the results of a recent study that found test scores dropped sharply in the years immediately following the changes but then bounced back. By 2016, it found Newark students were making greater gains on English tests than they were in 2011.

Funded by the Chan Zuckerberg Initiative and conducted by Harvard researchers, the study also found the reforms had no impact on student math scores.

And while many Newark families and school leaders agree with the study’s conclusion — that students are making more progress now — they had very different ideas about what may have caused the initial declines, and why English growth was more obvious than math.

Supported by $200 million in private philanthropy, former superintendent Cami Anderson and other New Jersey officials in 2011 sought to make significant changes to the education landscape in Newark, where one third of more than 50,000 students attend privately managed charter schools. Their headline-grabbing reforms included a new teachers union contract with merit-based bonuses; the universal enrollment system; closing some schools; expanding charter schools; hiring new principals; requiring some teachers to reapply for their jobs; and lengthening the day at some struggling schools.

Brad Haggerty, the district’s chief academic officer, said the initial drop in student performance coincided with the district’s introduction of a host of changes: new training materials, evaluations, and curricula aligned to the Common Core standards but not yet assessed by the state’s annual test. That was initially a lot for educators to handle at once, he said, but teacher have adjusted to the changes and new standards.

“Over time our teaching cadre, our faculty across the entire district got stronger,” said Haggerty, who arrived as a special assistant to the superintendent in 2011.

But some in Newark think the district’s changes have had longer-lasting negative consequences.

“We’ve had a lot of casualties. We lost great administrators, teachers,” said Bashir Akinyele, a Weequahic High School history teacher. “There have been some improvements but there were so many costs.”

Those costs included the loss of veteran teachers who were driven out by officials’ attempts to change teacher evaluations and make changes to schools’ personnel at the same time, according to Sheila Montague, a former school board candidate who spent two decades teaching in Newark Public Schools before losing her position during the changes.

“You started to see experienced, veteran teachers disappearing,” said Montague, who left the school system after being placed in the district’s pool of educators without a job in a school. “In many instances, there were substitute teachers in the room. Of course, the delivery of instruction wasn’t going to even be comparable.”

The district said it retains about 95 percent of its highly-rated teachers.

As for why the study found that Newark’s schools were seeing more success improving English skills than math, it’s a pattern that Esteves, the Park Elementary principal, says she saw firsthand.

While the share of students who passed the state English exam at Park rose 13 percentage points between the 2014-2015 and 2015-2016 school years, the share of students who were proficient in math only rose 3 percentage points in that time frame.

“[Math is] where we felt we were creeping up every year, but not having a really strong year,” she said. “I felt like there was something missing in what we were doing that could really propel the children forward.”

To improve Park students’ math skills, Esteves asked teachers to assign “math exemplars,” twice-a-month assignments that probed students’ understanding of concepts. Last year, Park’s passing rate on the state math test jumped 12 percentage points, to 48 percent.

While Newark students have made progress, families and school leaders said they want to the district to make even more gains.

Test scores in Newark “have improved, but they are still not where they are supposed to be,” said Demetrisha Barnes, whose niece attends KIPP Seek Academy. “Are they on grade level? No.”

Chalkbeat is expanding to Newark, and we’re looking for a reporter to lead our efforts there. Think it should be you? Apply here.  

Who Is In Charge

Indianapolis Public Schools board gives superintendent Ferebee raise, bonus

PHOTO: Dylan Peers McCoy
Lewis Ferebee

Indianapolis Public Schools Superintendent Lewis Ferebee is getting a $4,701 raise and a bonus of $28,000.

The board voted unanimously to approve both. The raise is a 2.24 percent salary increase. It is retroactive to July 1, 2017. Ferebee’s total pay this year, including the bonus, retirement contributions and a stipend for a car, will be $286,769. Even though the bonus was paid this year, it is based on his performance last school year.

The board approved a new contract Tuesday that includes a raise for teachers.

The bonus is 80 percent of the total — $35,000 — he could have received under his contract. It is based on goals agreed to by the superintendent and the board.

These are performance criteria used to determine the superintendent’s bonus are below: