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Schools would have more control over their money under GOP plan, but it’s unclear whether students would benefit

Alan Petersime

Indiana schools could see a fundamental shift in how they budget if a new bill proposed by House Republicans moves forward, a change that experts say could also bring some unintended consequences.

House Bill 1009, authored by Rep. Tony Cook, R-Cicero, and Rep. Tim Brown, R- Crawfordsville, would collapse several pools of money schools and districts use down into three beginning for the 2018-19 school year: education, operations and debt service. Cook says the move gives schools more flexibility to control how they spend money at a local level and could lead to more money for the classroom.

“Schools for a long time have wanted to have more flexibility to break down the silos of where they can move money,” said Cook, a former school district superintendent. “Those funds that they currently work with, from transportation to capital projects, to bus replacement, they have to be specifically tailored to those areas.”

Typically, schools have several areas where the state distributes money or where local property tax dollars are distributed. These usually include a general fund, which includes sales and income tax dollars that come from the state that pay for teacher salaries and classroom materials; a capital fund, which uses local property tax dollars to pay for building projects and technology; and a transportation fund, which also uses a share of property taxes to pay for getting kids to and from school.

The bill would re-name district general funds “education funds,” which would house all expenses related to student learning, much like it does now. An operations fund would replace several of the other funds, including capital projects and transportation.

The plan would also allow districts to be able to shift dollars back and forth between the operations fund and education fund to close gaps when necessary. Under the current system, money cannot generally be moved between funds, which means districts can find themselves in a tight spot if referenda fail or property taxes fall short.

Dennis Costerison, the executive director of the Indiana Association of School Business Officials, helped Cook research and draft the bill. He said while he’s been lobbying for this setup for a while now, he’s not sure other states have explored a similar option.

“This is a major change,” Costerison said. “I’m optimistic that this is a move in the right direction.”

Jeff Butts, superintendent in Wayne Township, said while he wants to be cautious and monitor the bill as it goes forward, so far, he thinks it could offer some much-needed control back to district leaders. But he’s also not sure exactly how lawmakers might change the proposal if it moves forward.

“It allows some control back in the local municipalities with the boards of education to have greater input and oversight into those budgets,” Butts said. “Conceptually it’s great, but it’s so early now.”

The flexibility to transfer money between accounts is particularly appreciated, Butts said, because his district, along with others across Marion County and the state, have struggled to make up for limits put in place in recent years on how much they can collect in from local property taxes.

Cook and other Republican House leaders have said this method would also give schools the ability to have more money go toward classroom instruction. Keeping up buildings is important, Cook said, but if a school could instead purchase something that would enhance teaching, such as blocks to help kids learn to count, add and subtract, that might be more valuable.

“I trust school people to make those good decisions for the communities they represent,” Cook said. “Instruction is first and foremost.”

But Ashlyn Nelson, an Indiana University professor who studies school finance, said there could be some unintended consequences of making these budgeting changes. First off, there’s no good evidence that shows more local control of finances actually helps kids do better in school, she said.

“We think that local operators know how to spend money in an educationally productive way,” Nelson said. “And there’s basically no evidence that that’s the case.”

Plus, districts aren’t required to report budgets at the school building level, so much is still unknown about how money gets spent within districts at all. Similarly, there are no hard-and-fast rules about what constitutes a “classroom” or “instructional” expense.

“The whole dollars to the classroom thing … a lot of that is a big smoke-and-mirrors exercise,” Nelson said. “It just really depends on which types of spending you call instructional.”

Teacher benefits, for example, could be characterized as instructional spending, she said, because teachers are the drivers of instruction. Or, they could be classified as another type of expense because that money isn’t technically used on curriculum, programs or classroom materials.

Cook said he thinks lawmakers will be supportive of his bill. He’s also had conversations with other state agencies who responded positively.

“It’s really been vetted now by all the major players in the state government,” Cook said. “So we’re feeling pretty positive about the way it’s shaping up.”

The bill is expected to be heard in the House Education Committee on Tuesday.

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