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State budget falls short in fully supporting community-based public schools

There are some positive components to this year’s budget and the school funding formula. However, as the economy continues to grow, legislators didn’t make a strong enough commitment to our community-based public schools, where 90 percent of Hoosier kids are enrolled.

The General Assembly passed a budget bill early Saturday morning that would provide funding to K – 12 education over the next two years. While the General Assembly improved the House funding formula proposal presented early on, too many students will be in schools that will continue to struggle financially.

About a third of the school districts will not get any increase in funding, and some will even face decreases in the first year of the biennium.

Funding Levels 
The school funding formula provides an average increase in regular education funding at 1.6 percent in 2018 and 1.5 percent in 2019. Considering the recent cautiously optimistic revenue forecast, these funding levels are disappointing.

The spring Average Daily Membership (ADM) count will go back to be informational only.

A positive outcome in budget negotiations was an increase to funding for English Language Learners (ELL). ELL programs in high concentration areas will see a sizeable increase. While funding in general is straight-lined at $250 per student, districts that have at least a 5 percent concentration of ELL students and up to 18 percent concentration, can add $975 per student to the $250 base funding in 2018; then add $1,037 per student to the $250 base in 2019. Districts with greater than 18 percent concentration, will add $1,225 per student to the $250 base in 2018; then add $1,287 per student to the $250 base in 2019.

Most districts will see complexity funding, which targets schools with high needs students, straight-lined at $3,539 as their base. If a school district has at least 18 percent English language learners (ELL), and has an at least 45 percent decrease in SNAP/TANF (federal subsidies for low-income families) enrollment from 2015 to October 2017 (a sharp decline), there is a second step providing another $128 multiplied by the school’s ADM.

The most severe category of special education funding goes from $8,800 to $8,976 in 2018 to $9,156 in 2019.

Academic honors funding is increased from $1,400 to $1,500 in the first tier and from $1,000 to $1,100 in the second tier for both years of the biennium.

Pre-K expansion would be funded at $22 million, up from $10 million, with $1 million set aside for virtual pre-K programs.

School efficiency grants is a new allotment and is funded at $5 million in 2019 only. Any reorganizing (consolidating) set of school districts receive $250 per ADM as a one-time incentive. This grant can go towards the professional fees associated with the consolidation or for teacher stipends.

Gifted and talented programs receive $12.4 million in 2018 and $12.9 million in 2019, statewide.

There is $1 million each of the next two years going to STEM alignment.

Summer school and textbook subsidies continue to be straight-lined.

David Ford Technology Grants will receive about $3 million each over the next two years.

Teacher Stipends
Encouragingly, the budget includes teacher performance grants under a new program called Teacher Appreciation Grants with a funding level of $60 million.  There had been an effort from the House to eliminate these stipends altogether and the $60 million biennial expenditure is $20 million less than the last biennium.

Recognizing how unfairly performance grants were distributed this past year, local school districts would mostly determine how teachers will receive the grants. The budget provides a $30 per student cash stipend to the district. The awards would only have to be based on a teacher’s most recent effectiveness rating.

The differential in stipends between highly effective and effective teachers would be required to be at least 25 percent, with the stipends distributed to teachers within 20 days of the district’s receipt (which is targeted for Dec. 5). Unfortunately, the stipend would still not be subject to collective bargaining, but remains discussible.

The 13th check is funded in the budget.

A new optional defined contribution only plan was included for teachers. The decision a teacher makes on the front-end to choose between the existing defined benefit/annuity plan versus the defined contribution only plan is irrevocable.

A new alternative investment for public employees, including teachers, is created called the Next Level Indiana Fund. This is a new investment alternative within the member’s annuity account. An individual fund member may elect to invest up to 20 percent of their annuity investment into the Next Level Fund. If that initial investment is maintained in the Next Level Fund for 36 months, the state will contribute an amount that ensures a 10 percent return on that investment to the individual member. In each year thereafter, the state will do a 10 percent match for new investments in the Next Level Fund during that year, if the member continues to invest in the fund at the same rate and maintains the amounts previously invested in the fund. 

The subsequent 10 percent match only relates to the new contributions and is not compounding. The money for the state’s match comes from the personal services contingency fund.

Charter Schools and Vouchers
The budget provides significant funding increases for new charter schools in the next two years. Lawmakers allocated $11.5 million in 2018 and $11.9 million in 2019, which is a 4.2 percent increase. New charter schools starting in 2019 have been allocated $11.6 million

The total investment in new charter schools is $35 million.

The Innovative Network School initiative is getting $15 million each over the next two years.

Virtual charter schools will continue receiving 90 percent of per pupil funding, rather than 100 percent as was attempted early in the session. The schools would also be required to start reporting class sizes, student-teacher ratios, number of in-person teacher meetings and any other information determined by Indiana Department of Education.

Voucher schools receive a significant increase in funding in the budget, going from a total commitment of $146 million in 2017 to $156 million in 2018, a 7.2 percent increase. Vouchers will receive another $167 million in 2019, a 6.9 percent increase. The amount of the actual voucher is tied to public school K-12 funding. This percentage increase is in growth of the voucher program, not necessarily the growth in the voucher amount per student.

Voucher schools no longer have a spring enrollment window in which to gain students second semester.

The budget increased the private school voucher tax credit from the current $9.5 million per year to $12.5 million in 2018 and again to $14 million in 2019. The tax credit is mostly being leveraged by Indiana’s wealthiest taxpayers to support private school tuition.