Indianapolis Public Schools suspends $725 million tax hike plan after business leaders’ criticism

PHOTO: Dylan Peers McCoy
Indy Chamber CEO Michael Huber, IPS Superintendent Lewis Ferebee, and IPS Board President Michael O'Connor during a press briefing Monday night.

In a stunning twist to a sluggish effort, Indianapolis Public Schools’ bid for $725 million in tax hikes was brought to a halt Monday night by business leaders.

The Indy Chamber stepped in to ask the school board to postpone its two referendums until November. In exchange, the chamber — a key partner for the district that had been quietly withholding crucial backing for the ballot questions — said it would analyze the district’s finances and work with the community to build support.

The board voted 6-0 to withdraw the request for tax increases during the May primary election. Dorene Hoops was absent from the meeting.

Monday night’s sudden pullback from the referendums comes as another blow to the district’s efforts.

The district had already reduced its initial ask, which had amounted to nearly $1 billion, after its requests were met with hesitance from both the business community and taxpayers concerned about the substantial cost.

Board president Michael O’Connor said the fumbled approach to the referendum was his responsibility.

“It’s my fault,” he said. “I thought sincerely that that second number would get us where we needed to be with the community we needed to be behind us, and I was wrong.”

Michael Huber, the CEO of the chamber, made the appeal to the board during a public comment period at the board meeting. But the move was clearly planned in advance, and the district followed the meeting with a press conference.

Huber said that over the last few weeks, the chamber has discussed concerns about the referendum with the district. He said the district needs more time to answer questions from the community.

“While we are under the assumption that the district needs increased financial resources,” Huber said, “it is a very large number on the operating and the capital side, and some very complex questions have been generated.”

In voting to withdraw the referendums, board member Kelly Bentley acknowledged that the district hadn’t done enough work to get people on board with its proposal.

“The administration, in my opinion, needs to take the lead on engaging with the community,” she said. “I don’t know that we’ve done that very well.”

Superintendent Lewis Ferebee said his administration did not engage the community sooner because they were focused on closing three of the district’s seven high schools.

“That was driving our timeline and our process,” he said.

Officials have painted a dire financial picture for Indianapolis’ largest school district, saying the additional funding was needed to prevent cost-cutting measures such as teacher pay freezes and transportation cuts.

The tax increases would raise funds for teacher raises, special education services, and building improvements. But the district has said it would still need to dip into cash reserves, put off building maintenance, and ditch expanded transportation plans.

There are costs to delaying the referendums until November. Even if the measures pass, the district will not get more money until later in the year, so the administration will need to reduce spending at the start of the 2018-2019 school year, Ferebee said. Those cuts could include district staff, transportation, and building maintenance, he said.

“We will have to make some uncomfortable reductions,” he said. “That could be a reminder for our constituents that the district is operating a structural deficit.”

The chamber has previously recommended a financial overhaul of the district. In 2014, as it faced a projected $30 million budget deficit, the chamber recommended the district “right-size” by slashing its staffing levels and reducing its building space.

Later, the district found its deficit didn’t actually exist — and when the accounting was straightened out, the district said it was instead running a surplus.

IPS referendum

Indianapolis Public Schools offers buyouts to up to 150 teachers

PHOTO: Tajuana Cheshier/Chalkbeat TN
Indianapolis Public Schools is offering $20,000 buyouts to teachers who retire.

Indianapolis Public Schools is offering teachers $20,000 payments to retire, in a move that could cut costs amid a severe deficit.

Nearly 250 educators are eligible for the buyout, which would be contributed directly to retirement plans for teachers who take the offer, according to the district.

District officials say the offer is not a cost-cutting move but rather an effort to enhance the district’s ability to set its budget for next year and plan for its hiring needs. In a written response to questions, head of human resources Mindy Schlegel wrote the offer “is not a buyout, but an early notice incentive.”

“The district is focused on incentivizing early notice of planned retirements so we can apply those notices to budgeting and staffing work principals are doing now versus addressing those challenges in June,” she wrote. “Knowing staffing shifts early is one of the most critical levers they can use in planning for next year.”

Teachers have 11 days to make their decision. They must notify the administration by 5 p.m. on April 20 if they want to take the buyout, according to the district. The district apparently could back out of the deal, though — officials have until May 4 to decide whether to go forward with the program.

A minimum of 100 and a maximum of 150 educators would have to accept the offer for the district to go through with it. If 150 teachers accept the $20,000, the payouts could cost the district as much as $3 million. The district could ultimately save money even if it replaces retired teachers, because veteran teachers are paid more.

When asked how much the offer could save the district in the long run, Schlegel said the payments are “not really about cost savings.”

School board member Mary Ann Sullivan said the offer has a number of benefits. It could help the district get a clearer picture of its staff and finances at a time when it is facing a severe budget shortfall. But it could also help the district avoid laying off teachers, she said.

“If you can manage to not do that — avoid that situation — most people would think that’s a good goal,” she said.

To take advantage of the deal, teachers need to be eligible for regular retirement under the rules of the Indiana Public Retirement System. Teachers as young as 55 years old could be eligible if they have at least 30 years of service. Older teachers would be eligible with fewer years of service. Teachers would need to retire at the end of the 2017-18 school year.

The retirement plan administrator, VALIC, will host a session 4:30 to 6 p.m. Thursday in the boardroom of the Education Services Center, according to an email sent to teachers and obtained by Chalkbeat.

“I hate to lose teachers,” said Rhondalyn Cornett, president of the Indianapolis Education Association. But the offer could be desirable for teachers who were trying to decide whether they can afford to retire, she said. “It’s a good opportunity because I do know there are some teachers who are going to want it.”

Some teachers were already considering retirement because they were displaced during the high school closing process, Cornett said.

The incentive for higher-paid teachers to retire comes at the same time as the district is considering ways to cut costs after withdrawing a request for more funding from taxpayers. Superintendent Lewis Ferebee has told RTV6 the district might also freeze hiring and furlough administrators. Last week, Schlegel told Chalkbeat the district had not yet decided whether teachers might be laid off.

In her email about retirement incentives, Schlegel wrote she did not anticipate the plan would affect class size. Whether the district replaces teachers will depend on the subjects they teach, she wrote.

The district has been grappling with budget deficits for years, but the issue has become more severe in recent months. District leaders say the budget crunch is caused by declining state and federal funding as well as the high cost of operating expenses such as raises for teachers.

In November, the administration released a plan to appeal to voters to increase property taxes and school funding. But following a rocky rollout and campaign, district leaders first reduced their request and then withdrew the referendum. They are currently working with the Indy Chamber to review finances and craft a request that would appear on the November ballot.

IPS referendum

147 Indianapolis educators still don’t know where they will work next year

Thomas Barwick | Getty Images

Nearly 150 Indianapolis Public Schools educators don’t know where they will teach next year, more than six months after the district announced that many high school teachers would be required to reinterview for their positions.

The administration displaced 418 certified staff for 2018-19 as part of the closings of three of its seven high schools. Many of those educators have found positions, but 147 current high school staffers have not, according to the administration.

If the teachers are not hired for a new position, they remain on the displaced list. If they do not find positions by July 15, they will be placed in vacancies that match their license area, according to Mindy Schlegel, who heads human resources for the district. There are currently 163 open positions in secondary schools, and educators could move to middle or elementary schools depending on their licenses.

“We think that given the fact that 400 teachers were initially displaced as a part of the transition, this process has gone smoothly,” Schlegel wrote in an email.

The decision to displace teachers at high schools across the district — including campuses that will stay open — was designed to help educators find schools that are “the right fit.” But the move created additional uncertainty at a time when high schools were already in upheaval, and some teachers are dejected that they were required to apply and reinterview for positions they have held for years.

Now, there is additional uncertainty around the process because the district is in the midst of a severe budget crunch. After postponing a referendum that would have appealed to voters for tens of millions of dollars in extra funding each year, the district is facing a large shortfall next year. The district could impose hiring freezes or other cuts to spending on staff in order to help close that gap.

The administration has not yet decided whether to lay off any teachers through a reduction in force, Schlegel wrote, and her office is focused on placing high school teachers.

“The administration has had discussions with staff internally around what’s the best way to approach reducing expenditures, but also protecting the classroom and maintaining as many staff members as possible,” she wrote.

Not all high school teachers were displaced. Some educators remained in the same positions even if they transferred to new schools, including those with training to teach International Baccalaureate courses, arts specialists, life skills teachers, and career and technical teachers.

The move to require teachers to reinterview for positions was part of a broad push to reconfigure the district’s high schools in a bid to save money, improve the schools’ quality, and attract students. The district is closing three high schools and overhauling the academic approach at the four remaining campuses to create academies with focuses such as engineering, construction, and teaching. High school students also were required to select new schools based on their interests.

Media specialist Gregg Nowling considers himself lucky. After nearly five years at Arsenal Technical High School, he was required to reinterview for his position at the school, and he was not rehired. Within weeks, however, he had found a position at Harshman Middle School. Many of his friends have not yet found positions.

“There’s a lot of guilt there,” he said. “It’s horrible. You have teachers applying for jobs that they’ve had for years — that they’ve been really good at for years.”

Rhondalyn Cornett, president of the Indianapolis Education Association, said that many teachers are distrustful of the process. Veteran educators are frustrated watching younger teachers get placed before they do, she said, and some believe they have not gotten placed precisely because they are more experienced. (Although veteran teachers are higher paid, school principals pay the same amount regardless of experience level and the district absorbs the difference in pay.)

“It is demoralizing,” Cornett said.