problem solving

Indiana bill would tap savings to fix $11.8 million school funding shortfall

PHOTO: Scott Elliott

Indiana lawmakers have a proposal to shuffle state money around to cover an $11.8 million shortfall in school funding that emerged late last year.

The plan, should it pass into law, would make up the gap in the state’s general fund, which is where school dollars come from. Senate Bill 189, authored by Sen. Ryan Mishler, a Republican from Bremen who chairs the Senate Appropriations Committee, would allow the State Budget Agency to transfer the money from Indiana’s tuition reserve account, which includes dollars that are set aside to ensure the state can adequately cover its education expenses if revenue falls short. Lawmakers had initially estimated the shortfall at about $9 million.

The bill was filed this week and is expected to head to Appropriations for consideration and potentially a vote in the coming months. Lawmakers have said over the past couple months that this fix would be a priority, so opposition appears unlikely.

State officials said the funding gap, which amounts to about $11 per student, was the result of higher student enrollment for public school districts than was initially expected when the budget was passed in April.

Transfers from reserves are already allowed if more voucher students enroll in private schools than projected, or if state revenue is less than expected. The new bill would also now allow transfers from reserves if public school enrollment is higher than expected, as well as to make up for funding gaps for grants for students with disabilities or students pursuing career and technical education.

As Chalkbeat previously reported, it’s not clear how the miscalculation in enrollment numbers occurred. Rep. Tim Brown, a key budget-writer and chairman of the House Ways and Means Committee, said money for schools are estimated based on projected school enrollment counts from districts, the education department and the legislative services agency, which helps provide information and data to lawmakers.

The $32 billion two-year budget passed in April increased total dollars for schools by about 3.3 percent from 2017 to 2019, for a total of about $14 billion. Included within that was a 2.5 percent average increase for per-student funding to $6,709 in 2019, up from $6,540 last year.

But despite those small increases, many school leaders have said they struggle to pay salaries and maintain buildings, which is why funding shortfalls — even small ones — matter. This year’s unexpected shortfall was particularly problematic because districts had already made plans based on the state budget.

For example, Indianapolis Public Schools recently approved a plan to ask voters to greenlight  a tax increase of $936 million dollars over the next eight years to pay for costs such as raises for teachers, special education services, and building security updates. They join seven other districts in Marion County, and 104 across the state, that have held local elections to raise more money for schools.

Indiana's 2018 legislative session

Here’s what the Gary and Muncie takeover bill could mean for other Indiana districts

PHOTO: Shaina Cavazos
Rep. Tim Brown, the author of House Bill 1315, makes his closing remarks.

Disregarding opposition from teachers and local leaders, Indiana lawmakers overwhelmingly voted Monday to strip power from the Gary and Muncie school boards, potentially eliminate the Muncie teachers union and place the district under outside control — and exempt it from required annual performance reports.

The groundbreaking bill delivers control of Muncie public schools to Ball State University, which has never run a public school district (although it currently operates two schools in the area), and frees Muncie from state performance reports imposed on other school districts.

During Monday’s special legislative session to wrap up unfinished work, a far-reaching district takeover bill easily passed — 63-30 in the House and 34-14 in the Senate — with dissent primarily from Democrats. The bill next heads to Gov. Eric Holcomb, who is likely to sign it.

Opponents said the bill infringes on residents’ control and stifles public input.

“Teachers in Muncie are despondent,” said Pat Kennedy, Muncie’s teachers union president. “Ball State keeps talking about partnership, but in a partnership both parties have meaningful impact, and this bill does not allow for that.”

Fortifying unprecedented legislation last year that enabled the state to intervene in Gary and Muncie, this year’s House Bill 1315 would put the Muncie district under the control of Ball State University, further empower Gary’s emergency manager, and effectively turn both districts’ elected boards of education into figureheads.

Read: Race can’t be ignored in takeover of Gary and Muncie schools, civic leaders say

For Indiana, district takeovers are uncharted territory, even though other states have seized such power with mixed results. Although the bill specifies the Gary and Muncie school districts, it alters state education policy in ways that could affect the rest of the state.

Rep. Tim Brown, a Republican from Crawfordsville and the bill’s author, said the bill gives troubled districts more opportunities to turn themselves around sooner.

“To say we’re going to do it the same way is just banging out head against the wall,” Brown said. “We have to change as we go forward because the times demand we change.”

Here are four key takeaways:

A-F grades for Muncie schools may disappear, a departure from Indiana’s history pushing school accountability

In an effort to encourage “innovative strategies,” the bill would free Ball State from reporting Muncie schools’ performance via the annual A-F grades measuring school and district improvement.

The provision represents a big step back from the version of  high-stakes school accountability touted by Republicans. Former Gov. Mike Pence often said that if students can be graded every day, schools can be graded every year.

Participation in state ratings would be optional for Ball State. State grades can come with serious consequences if schools reach four years of Fs, including closure or takeover.

School and district leaders have told policymakers and lawmakers frequently that letter grades don’t tell the whole story of their students — even state Superintendent Jennifer McCormick has echoed those sentiments.

Although some very small schools escape state ratings, Muncie would become the only district exempt from state grading, Indiana Department of Education’s spokesman Adam Baker said.

Because Ball State wouldn’t take control until later this summer, Muncie will still receive a letter grade for the current school year.

However, the district will still be subject to  federal law, which requires releasing a rating based on test scores, graduation rates, and other student and school achievement data. That measure will be calculated on a 100-point scale similar to the state’s A-F grades.

District finances will receive higher scrutiny, but much of that will be in private.

House Bill 1315 also creates a way for the state to intervene in districts experiencing financial hardship.

If a district meets certain financial criteria — which could be based on enrollment, cash balances, deficits or financial trends — the state’s Distressed Unit Appeal Board could require it to follow a “corrective action plan.” Failure to follow that plan or to make enough improvements could land the district on a financial watchlist.

That would be much earlier and more intensive financial intervention than is currently spelled out for schools.

Yet all deliberations about the action plan would be in secret, unless the district were placed on a watchlist. That means families and even teachers might not know about district-state finance plans.

Lawmakers defended the secrecy as a way to reassure district officials and prevent families from fleeing because of potential financial trouble.

“The concerns from school officials were they didn’t want flight just because they were asking for some help,” Brown said. “This bill allows some process for a gradual assistance … It won’t be a cliff.”

But some open-government advocates have called it a dangerous move that excludes the public from important discussions in communities.

The bill “robs the public of the ability to push their school boards to accept the help” of state officials and doesn’t give people the chance to speak out about difficult decisions facing their schools, said Steve Key, executive director and general counsel for the Hoosier State Press Association. “All of that is being done behind closed doors.”

Muncie stands to lose some stigma around takeover, but also potentially its union.

With Ball State taking control, Muncie would no longer be designated a “distressed” district. That might  lend credibility to the district, which has seen years of financial mismanagement.

But the move also could destroy the district’s teachers union. Ball State will get to decide whether Muncie teachers may retain their exclusive representative. So far, said Muncie teachers union President Pat Kennedy, it’s not clear what the answer will be, nor how the process for negotiating future teachers contracts would work.

Kennedy said teachers in Muncie feel like they’ve lost their voices in the process, and some see the change as punishment for the poor decision-making of previous administrators.

“This isn’t about the quality of Ball State as an institution,” Kennedy said. “What is the real value of this bill other than to take away teacher rights?”

Gary leaders worry about losing local control and input.

Gary public schools will continue to be run by its emergency manager, Peggy Hinckley, a former interim superintendent in Indianapolis Public Schools. Lawmakers from the area said that Hinckley, who has been on the job about a year, is helping get the district back on track.

Sen. Eddie Melton, a Democrat from Northwest Indiana, and others on Monday said that House Bill 1315 adds upheaval to an already difficult process that hasn’t had time to do what lawmakers created it to do. It also wasn’t urgent enough to quickly move ahead in a one-day special session, he said.

“This bill is not an emergency, and it does not contribute to building up the overall educational quality in Gary,” Melton said.

The bill demotes Gary’s elected school board to an advisory board that only can meet up to four times a year, and Hinckley is no longer required to consult with its members.

Indiana Democrats also said the bill could be a harbinger of future takeovers, and that other legislators should be sensitive to that before they vote for dramatic changes to others’ communities.

“Yes, it’s Gary today,” said Rep. Charlie Brown, a Democrat from the area. “But it could be you tomorrow.”

 

Indiana's 2018 legislative session

Race can’t be ignored in takeover of Gary and Muncie schools, civic leaders say

PHOTO: Shaina Cavazos
Sen. Karen Tallian, a Democrat, addresses parents and students from Gary about House Bill 1315 during the regular session in March.

As lawmakers prepare to extend control over two public school districts, some civic leaders are questioning the disparate treatment of Gary, a majority-black district, and Muncie, a predominantly white one.

A House bill is expected to speed through Indiana’s special legislative session on Monday, having received support from Republicans, who make up supermajorities in both chambers. Under the bill, Gary would remain under the control of an emergency manager, while Muncie will overseen by Ball State University and be eligible for loans. Muncie’s elected school board will be replaced by an appointed one, and Gary’s board will be demoted to an advisory body.

Dwight Gardner, a pastor from Trinity Baptist Church in Gary, said the different treatment sets up a double standard that awards Muncie opportunities denied Gary. Gardner was one of several Gary residents who traveled to Indianapolis earlier this week to give testimony to the legislative council, a group of legislative leaders who met to make recommendations about the bills for the special session.

“Legislation adopted for ‘these people’ in ‘that place’ is how Jim Crow became law of the land,” Gardner said. He also took issue with Gary losing its elected board. “The right to vote to select your own representation is a right of what we call freedom.”

Republican legislative leaders pointed out that there are major differences between the financial situations in Gary and Muncie. That, they said, is the reason for the differences in plans for the two districts. Gary’s financial situation is more severe and longstanding, and its facilities are in worse condition than in Muncie.

“Their circumstances are not exactly the same,” said House Speaker Brian Bosma. “Each one requires different assistance.”

Last year, both districts were taken over by the state following reports of financial mismanagement and requests for help from Gary officials. It was the first time Indiana took control of entire districts, rather than individual schools.

Under House Bill 1315, Muncie would also be able to ask for an interest-free state loan and have its elected school board turn into an appointed board created by Ball State University trustees. It would also be freed from some state requirements about teacher training, and Ball State could decide whether to let teachers keep their union. The Muncie provisions could help the district shed some of the stigma around state takeover, although critics and Democrats from Muncie still believe the plan is too aggressive and takes away too much local power.

Gary would continue to be run by its emergency manager, who would no longer have to consult with the mayor and school board, as has been required until now. The school board would also be demoted to an advisory board that could meet publicly no more than four times per year.

During the recent legislative council hearing, much emphasis was placed on helping Muncie get to a point where it could recruit back its 1,600 students lost to other schools. No such opportunity was discussed in regards to Gary.

That wasn’t lost on Gary Mayor Karen Freeman-Wilson, who said that she thinks “wholeheartedly” that race is a factor in the debate over this bill.

“I just found that extremely offensive,” she said. “We have 5,000 kids who don’t go to school in the Gary schools. Are you saying that it’s OK to have charter schools in Gary, but not in Muncie?”

Freeman-Wilson, who took office in 2012, said she isn’t surprised race hasn’t come up, but she thinks frank, straightforward discussions about how it intertwines with policy would be helpful.

“I rarely talk about race because I know that when you do, it immediately turns people off,” Freeman-Wilson said.

In Gary, 93 percent of the district’s 5,228 students are black, 3.1 percent are multiracial, 2.8 percent are Hispanic, and 1 percent are white. In contrast, Muncie, a district with 5,215 students, 60.5 percent are white, 21.2 percent are black, 12.4 percent are multiracial, and 4.6 percent are Hispanic.

Gary Public Schools has struggled for years with declining enrollment, financial mismanagement, and a staggering debt that has grown to more than $100 million. Last year, more than 60 percent of students living in Gary went to schools outside the district, representing potentially tens of millions of dollars in lost state revenue.

Muncie, too, has struggled to keep budgets balanced as students have left the district. The mismanagement of a recent bond issue, where money was improperly spent, alerted lawmakers to Muncie’s problems.

The legislative council recommended that the bill move ahead. It will be one of five included in Monday’s special session. Gov. Eric Holcomb called on lawmakers to reconvene because they were unable to finish their work — including a decision on House Bill 1315 — during the regular session, which adjourned in March. Democrats have lambasted the move as a waste of taxpayer dollars, and they’ve remained opposed to the bill.

Sen. Eddie Melton, a Democrat who represents Gary, said this isn’t the first instance where he’s felt that Gary hasn’t seen the state support and consideration other cities have been afforded. However, he and Freeman-Wilson both acknowledged that the city is partially responsible for its current economic problems, along with having to deal with the outfall from the subprime lending crisis and the loss of major industries and jobs.

“I’ve seen no city or community in the state of Indiana that has experienced the economic devastation that Gary has experienced,” Melton said. “It seems like there’s always an exception when it comes to how we deal with Northwest Indiana, Lake County, and Gary in particular. We’re Hoosiers, too.”