State changes poverty measure for school funding

Gone is a traditional metric based on the number of students who receive free or reduced-price school lunches. In its place is a calculation based on how many students’ families qualify for other public assistance programs. 

Though it may seem like a small accounting change, the move has a big impact on how much money the state sends to schools, especially those in low-income areas. As it’s phased in over the next three years, the switch is expected to affect one-third of the state’s 300 public school districts.

“This marks a major change in the way schools are funded,” said Dennis Costerison, head of the Indiana Association of School Business Officials.

Supporters point to loose accounting in the federal school lunch program and argue that the state can do better in verifying family incomes before dividing millions of school dollars.

The change comes as the Republican-controlled Legislature reduces the amount of the pool available to low-income schools, instead shifting its focus to an increase in per-pupil “foundation” funding for most K-12 schools in the state.

On Wednesday, lawmakers scurried to put final details on the state’s two-year budget. They faced a midnight, end-of-session deadline.

Both the House and Senate agreed to spend $466 million more on schools - increasing funding by 2.3 percent in 2016 and again in 2017. That new money applies to the baseline funds divided among schools based on enrollment.

At the same time, lawmakers agreed to pull about $250 million out of what’s called the “complexity index,” which gives more money to districts with a higher percentage of low-income students.

Lawmakers also reworked the formula - a change that Republicans have been eyeing since 2013, when questions were first raised about the school lunch program.

More than 47 percent of Indiana students receive free or discounted meals. Schools don’t require families to prove incomes when applying for the program for students living at or near the federal poverty level.

Two years ago, the Indiana Department of Education revealed that one-third of families sampled during routine audits of the program weren’t eligible or failed to provide proof of income.

“What we found was that our complexity index was not truly reflective of poverty but more reflective of a troubled program,” said Sen. Brandt Hershman, R-Buck Creek, chairman of the Senate Tax and Fiscal Policy Committee.

After the change, the Indiana Family and Social Services Administration will track the number of students from families that receive welfare payments and food stamps, and it will provide that information to budget writers.

Costerison sees the new poverty metric as more accurate.

“What’s good about it is that it’s solid data you can put arms around,” he said.

But he has concerns. Rural school leaders have noted their students’ families are often reluctant to sign up for welfare or food stamps because of the stigma associated with public assistance programs.

Those families don’t have the same hesitation about signing up for free or reduced school lunches, they’ve told him, because they want to make sure their children are fed.

State Sen. Jean Leising, R-Oldenburg, supported raising the per-pupil funding level, which will help growing schools in her rural district.

But she also worries that a new poverty metric may undercount the number of low-income students, meaning fewer dollars under the complexity index.

“Absolutely, there’s a stigma,” Leising said. “People in a lot of rural communities are proud. They have to be really, really down and out before they are going to apply for public assistance.”