State to assume school general funds

BY BRIAN WILLIAMS, Times of Northwest Indiana
bwilliams@nwitimes.com

Starting in 2009, the state will assume responsibility for funding 100 percent of school districts' general funds, from which salaries, benefits, insurance, supplies and utilities are paid. The state now pays an average of 85 percent and the remainder is paid through local property taxes.

Some critics have said the move will give the state undue control over local education decisions. But boards still will approve budgets, negotiate with teachers and decide other spending, said Denny Costerison, executive director of the Indiana Association of School Business Officials.

What's worrisome is the move away from the stable funding source of property taxes and reliance on state income and sales taxes, said Valparaiso Superintendent Michael Benway. The latter two are more susceptible to economic downturns, making general fund funding an annual unknown, he said.

Cuts in state funding, Benway said, would fall primarily on staff.

The state has created a rainy day fund of almost $400 million for when it falls short on the school funding formula. But as with other reserves, the fund could be tempting to lawmakers needing to make ends meet elsewhere in the state budget.

School officials say they have been tightening their belts for years and don't know where else to cut. Valparaiso has cut three central administration positions and an assistant principal job at the high school, not to mention field trips and elective courses. Hammond has experimented with a four-day school week.