School Finance

Schools could get different amounts of money as Indianapolis tweaks its funding plan

PHOTO: Alan Petersime

Indianapolis’ largest school district will only make a few changes to the rules that govern how much money schools get next year. But some schools, including those that serve many undocumented students, could get less money.

New guidelines that will help determine how much money schools get for 2018-2019 were approved by the Indianapolis Public Schools at a meeting Thursday, with every member present voting in favor. It’s the second year budgets will be crafted using a new approach that is supposed to tie funding to student needs instead of the programs schools offer. The aim is to give principals more control over their school budgets and send extra money to schools based on how many poor students they educate.

But a change in the rules could result in schools receiving less money to educate poor students next year. The district will continue to award schools $500 per student to help educate poor children. Instead of basing that funding on how many students at each school are poor enough to receive free or discounted meals, however, the district will count students from families who qualify for food stamps and welfare programs, and students in foster care.

That’s the same metric the state started using to determine poverty aid for districts in 2015. Chief financial manager Weston Young said the district is making the switch because it is a more reliable measure of poverty and many families in the district do not submit the paperwork to qualify for subsidized meals.

The district will be giving schools less money overall to help educate poor students because some students who qualify for meal assistance don’t qualify for those state benefits, Young said. Primarily, that includes undocumented students. But because the state is giving schools more money for students who are learning English, the district believes those funds will help make up the loss, he said.

“We believe dollars are still going towards the need, they are just not reflected in the formula,” Young said.

Another change could mean that schools that have historically received extra funding will lose more money next year. The district doubled the amount of money that schools might lose, meaning their budgets could be cut as much as $260,000. If a school is expected to lose more than that, it would receive extra cash from the district.

Preventing schools from losing too much money in one year is just one way the district has limited the impact of the new budgeting approach. As Chalkbeat reported last month, district leaders have made several decisions that mute the changes, and some schools with lots of poor students are still getting shortchanged. The district is also sending millions of extra dollars to magnet programs that attract middle-class families.

District leaders told Chalkbeat they did not want to transition too swiftly because it could be hard for schools to adapt. They emphasized that the board could adjust the rules each year and potentially send more money to high-poverty schools.

“I anticipate that we will adjust each year, so as we learn from each year’s implementation, we will continue to make adjustments,” said Superintendent Lewis Ferebee.

Ultimately, district leaders see the new funding approach as one piece of a larger district push to give principals more freedom to decide how schools run. Young said that because the funding model is still new, the district is focused on training principals.

“There’s a lot of dollar changes,” he said. “What we are trying to do is … get in front of principals and teach them how to best use those dollars.”

Petition Time

Try, try again: Latest attempt at school funding measure would raise $1.6 billion with income, corporate tax increases

Colorado voters could see a $1.6 billion tax increase for education on their November ballots.

Backers of a major school funding measure have been cleared to gather signatures by the Colorado Secretary of State’s Office. The measure – going by Great Schools, Thriving Communities – would increase the corporate tax rate and increase income taxes for people who earn more than $150,000 a year, as well as change how residential property is taxed for schools.

“Colorado schools are severely underfunded right now, and this initiative is a way we can ensure that every student has access to the supports they need for success,” said Susan Meek, a spokeswoman for Great Education Colorado, one of the groups supporting the measure.

Colorado’s Taxpayer’s Bill of Rights requires that voters approve any tax increase, and voters have twice before rejected statewide school funding measures, most recently in 2013.

To get on the ballot this time, supporters need 98,492 valid voter signatures. Amendment 71, approved in 2016, requires that those signatures be gathered in every state Senate district in the state, imposing – by design – a logistical and financial hurdle on all constitutional amendments. (A federal judge has suggested that requirement might violate the U.S. Constitution, and it’s not clear right now whether it will remain in effect.)

The tax measure calls for:

  • Raising the corporate income tax rate from 4.63 percent to 6 percent.
  • Raising the income tax rate from a flat 4.63 percent to between 5 percent and 8.25 percent for people earning more than $150,000. The highest tax rate would be paid by people earning $500,000 or more.
  • Setting the residential property assessment rate at 7 percent for schools. That’s lower than it is now but higher than it is predicted to be in 2019 because current law has the unintended effect of gradually reducing the residential assessment rate.
  • Setting the non-residential property assessment rate at 24 percent, less than the current 29 percent.

According to a fiscal analysis by the state, the average taxpayer earning more than $150,000 would pay an additional $519 a year, while those earning less would be unaffected. The average corporate taxpayer would pay an additional $11,085 a year. The change in property taxes would vary considerably around the state, but based on the average statewide school levy, many property owners would pay $28 more on each $100,000 of actual value in 2019 than they otherwise would. Commercial property owners will see a decrease, and total property tax revenue collected by school districts would go down statewide.

If approved, the taxes would generate an estimated $1.6 billion that would go into a new “Quality Public Education Fund.” The vision is that this money would be distributed to schools in accordance with a new school finance formula backed by nearly all of the state’s superintendents and under consideration in the legislature this year.

The new funding formula, which would increase per-pupil funding in accordance with student characteristics like being gifted and talented or learning English as a second language, only goes into effect if voters approve the tax measure. If that plays out, no school district would lose money on the deal, and some would see significant increases in funding.

If lawmakers don’t pass a new funding formula, but voters approve the tax measure, schools would still get more money. The ballot measure calls for an increase to the base amount of per-pupil funding, plus extra money for students with particular needs, money for public preschool, and money for full-day kindergarten.

Full funding for kindergarten has been an elusive Holy Grail for education advocates in Colorado.

“Our measure is addressing the needs of the kids head on,” said Donald Anderson, one of the backers of the tax increase. “You can see where we’re raising this money and you can see where it’s going, and it’s very transparent in a way that voters will be able to get behind.”

Anderson is a stay-at-home father of two children in the Poudre School District in Fort Collins who has been active on school issues.

The ballot measure also contains a provision that requires the state to keep spending what it already does. That is, lawmakers can’t lean on this new money source and divert existing education spending to other needs.

Luke Ragland of the conservative education reform group Ready Colorado supports the idea of weighted student funding contained in the proposed new finance formula, but he doesn’t think Colorado’s education system needs a huge infusion of cash – if voters even go along with the idea.

“I don’t understand why the presumption is that spending more money will make things better,” he said. “Spending money on the same things won’t produce different outcomes.”

The education spending measure could be sharing space on a crowded ballot with a governor’s race, a transportation measure, and more.

The most recent attempt to raise money for schools – Amendment 66 in 2013 – was rejected by 65 percent of voters. That measure affected all taxpayers by imposing a 5 percent income tax rate on those earning up to $75,000 and a 5.9 percent rate on those earning more. It also involved a change to the funding formula, but one that caused some districts to lose money.

Is this a good time to try again for an education tax increase? Backers of the idea say there’s only one way to find out.

“We have one of the best economies in the nation right now, and it’s the perfect time to be investing in our students,” Meek said.

School Finance

Big blow to Indianapolis Public Schools’ bid for tax increase: Realtors aren’t sold

PHOTO: Alan Petersime

A politically influential group representing real estate agents is taking the rare step of opposing Indianapolis Public Schools’ $725 million proposal to raise property taxes to increase school funding.

The opposition deals a harsh blow to the referendums, which the district downsized earlier this week in the face of criticism and little public support.

“Most importantly, we are concerned that property owners have not been given enough detail or clarity on the individual impact,” said the statement from the MIBOR Realtor Association. “The recent change to the proposed dollar amount only elicits more concern with IPS moving forward with their short timeline.”

 

The association opposes the request because it would be burdensome for Indianapolis residents, CEO Shelley Specchio said. She also criticized the district for not providing clear enough information on how the tax increase would impact individual property owners and how it would be used in schools.

“It was a difficult decision — not something that we took lightly, because of course, we really value strong quality schools,” Specchio said. But “we felt that the tax increase would be burdensome to homeowners.”

In a statement, chief of staff Ahmed Young said the district will continue working with the community.

“IPS is committed to being a good steward of taxpayer resources,” Young said. “We lowered the operating referendum ask on Tuesday as part of this commitment. We look forward to further collaboration with the community to advocate for our schools.”

The real estate agents group has about 8,000 members in Central Indiana. It has been one of the largest local contributors to campaigns for seats on the Indianapolis Public Schools board, giving thousands of dollars in recent years to support at least four of the current board members.

This is the first time the group has opposed an appeal for more money from a school district, said Chris Pryor, vice president of government and community relations. It has not taken a position on any Marion County school funding referendums, he said. But it has supported raising taxes for schools in other places, such as Anderson, and donated money to the campaigns.

Other influential groups, such as the Indianapolis Chamber of Commerce, have not yet taken positions on the referendums. Many community leaders agree that the district needs more funding, but they have raised concerns about the size of the request.

The opposition from the real estate industry group is a significant blow for the district because there has been virtually no campaign in support of the measures so far, said Ed Delaney, a Democratic state representative who lives in the district. The association is the first civic organization to take a position.

“I’m sorry that an organization like that, which has shown an interest in our community, would feel that they had to take this position,” Delaney said. “I’m saddened that we’ve come to this.”

Just two days ago, the school board responded to community concern by cutting its request from nearly $1 billion to about $725 million over eight years in a bid to win political support. The two measures, which will go before voters in May, would raise money for expenses such as teacher pay, special education services, and building improvements.

If the referendums pass, the tax increase for homeowners would be $0.58 per $100 of assessed value. For taxpayers with houses at the district’s median value — $123,500 — the new plan would increase property taxes by $23.24 per month.