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.”

Tennessee Votes 2018

Early voting begins Friday in Tennessee. Here’s where your candidates stand on education.

PHOTO: Creative Commons

Tennesseans begin voting on Friday in dozens of crucial elections that will culminate on Aug. 2.

Democrats and Republicans will decide who will be their party’s gubernatorial nominee. Those two individuals will face off in November to replace outgoing Republican Gov. Bill Haslam. Tennessee’s next governor will significantly shape public education, and voters have told pollsters that they are looking for an education-minded leader to follow Haslam.

In Memphis, voters will have a chance to influence schools in two elections, one for school board and the other for county commission, the top local funder for schools, which holds the purse strings for schools.

To help you make more informed decisions, Chalkbeat asked candidates in these four races critical questions about public education.

Here’s where Tennessee’s Democratic candidates for governor stand on education

Former Nashville Mayor Karl Dean and state Rep. Craig Fitzhugh of Ripley hope to become the state’s first Democratic governor in eight years.

Tennessee’s Republican candidates for governor answer the big questions on education

U.S. Rep. Diane Black, businessman Randy Boyd, Speaker of the House Beth Harwell, and businessman Bill Lee are campaigning to succeed fellow Republican Haslam as governor, but first they must defeat each other in the 2018 primary election.

Memphis school board candidates speak out on what they want to change

Fifteen people are vying for four seats on the Shelby County Schools board this year. That’s much higher stakes compared to two years ago when five seats were up for election with only one contested race.

Aspiring county leaders in charge of money for Memphis schools share their views

The Shelby County Board of Commissioners and county mayor are responsible for most school funding in Memphis. Chalkbeat sent a survey to candidates asking their thoughts on what that should look like.

Early voting runs Mondays through Saturdays until Saturday, July 28. Election Day is Thursday, Aug. 2.

full board

Adams 14 votes to appoint Sen. Dominick Moreno to fill board vacancy

State Sen. Dominick Moreno being sworn in Monday evening. (Photo by Yesenia Robles, Chalkbeat)

A state senator will be the newest member of the Adams 14 school board.

Sen. Dominick Moreno, a graduate of the district, was appointed Monday night on a 3-to-1 vote to fill a vacancy on the district’s school board.

“He has always, since I have known him, cared about this community,” said board member David Rolla, who recalled knowing Moreno since grade school.

Moreno will continue to serve in his position in the state legislature.

The vacancy on the five-member board was created last month, when the then-president, Timio Archuleta, resigned with more than a year left on his term.

Colorado law says when a vacancy is created, school board must appoint a new board member to serve out the remainder of the term.

In this case, Moreno will serve until the next election for that seat in November 2019.

The five member board will see the continued rollout of the district’s improvement efforts as it tries to avoid further state intervention.

Prior to Monday’s vote, the board interviewed four candidates including Joseph Dreiling, a former board member; Angela Vizzi; Andrew LaCrue; and Moreno. One woman, Cynthia Meyers, withdrew her application just as her interview was to begin. Candidate, Vizzi, a district parent and member of the district’s accountability committee, told the board she didn’t think she had been a registered voter for the last 12 months, which would make her ineligible for the position.

The board provided each candidate with eight general questions — each board member picked two from a predetermined list — about the reason the candidates wanted to serve on the board and what they saw as their role with relation to the superintendent. Board members and the public were barred from asking other questions during the interviews.

Moreno said during his interview that he was not coming to the board to spy for the state Department of Education, which is evaluating whether or not the district is improving. Nor, he added, was he applying for the seat because the district needs rescuing.

“I’m here because I think I have something to contribute,” Moreno said. “I got a good education in college and I came home. Education is the single most important issue in my life.”

The 7,500-student district has struggled in the past year. The state required the district to make significant improvement in 2017-18, but Adams 14 appears to be falling short of expectations..

Many community members and parents have protested district initiatives this year, including cancelling parent-teacher conferences, (which will be restored by fall), and postponing the roll out of a biliteracy program for elementary school students.

Rolla, in nominating Moreno, said the board has been accused of not communicating well, and said he thought Moreno would help improve those relationships with the community.

Board member Harvest Thomas was the one vote against Moreno’s appointment. He did not discuss his reason for his vote.

If the state’s new ratings this fall fail to show sufficient academic progress, the State Board of Education may direct additional or different actions to turn the district around.