— Republican leaders in the Indiana House proposed a budget Thursday that underscores their philosophy of ensuring that Hoosier students carry state education dollars with them if they switch schools.

A two-year, $28 billion spending plan offered by House Ways and Means Chairman Jeff Espich, R-Uniondale, flat-lines education funding overall but changes the way the state distributes that money so that Indiana isn't funding what he called "a ghost child."

Added to measures that would expand the number of charter schools in Indiana and allow students to use public school dollars for tuition at private schools, the budget is part of a plan to overhaul the way Indiana funds education.

"Each of the initiatives we've talked about — the school funding formula, the charter school expansion and even our education scholarships — really focus on students and not the corporations or systems that surround them," said House Speaker Brian Bosma, R-Indianapolis.

"That's definitely the focus and the philosophy: having the money follow the children," said Rep. Suzanne Crouch, R-Evansville.

Espich's budget eliminates mechanisms that slowly phase out per-pupil spending from a school after a student leaves it.

That means a little more money for districts where enrollment is growing, such as those in Vanderburgh and Warrick counties, but much less money where the number of students is on the decline, such as Posey County's three districts.

Democrats have said the proposal will cause the most pain in school districts that need the most money.

Rural schools, where enrollment tends to be on the decline, will suffer because they would have no choice but to lay off teachers and eliminate programs to meet the House budget's spending limits, said Rep. Kreg Battles, D-Vincennes.

"You can lose one child, but you can't reduce the bus routes, you can't lay off a teacher, you can't turn off the heat. The truth is, the dollars that you lose may have a disproportionate effect on the children that are left in the building," he said.

Overall, the House budget is similar to the one proposed by Gov. Mitch Daniels. But there are some changes:

Higher education funding wouldn't face the 3 percent cut that Daniels has called for, but universities would lose all of their repair and rehabilitation funding.

Optional Medicaid services that Daniels sought to eliminate, such as dental, podiatry and chiropractic, would stay.

County governments would face the blow of having to repay tens of millions of income tax dollars over the next two years — more quickly than they had expected.

The House budget keeps most spending flat, though, like Daniels' proposal, it does increase funding for Medicaid and pension funds.

But Thursday, most lawmakers were focused on how the budget would affect schools in their districts.

Rep. Wendy McNamara, R-Mount Vernon, said the funding formula changes, such as dropping the "de-ghoster," which phases the per-pupil funding for a student who leaves a district out over a three-year period, makes sense in "a logical, rational world."

But emotionally, she said, "you don't want to see your schools hurt." And the House budget would cause pain to the three districts in Posey County.

The Metropolitan School District of Mount Vernon would lose more than $2.5 million from 2011 to 2013.

"That's a big, steep hill to climb," McNamara said.

Rep. Gregory Porter of Indianapolis, the top-ranking Democrat on the House Education Committee, said public schools will struggle to survive the attrition through vouchers and charter programs added to losses because of the funding formula changes.

"It's even more devastating for public schools," said Porter, who represents part of the state's largest school district.

Indianapolis Public Schools lost $14 million last year when Daniels slashed $300 million in education funding, and stands to drop from $263 million in state funding this year to $237 million in 2013 under the House budget.

"You already cut part of the pile two years ago, and now you want to come and cut the pile again," he said, arguing that by providing students with more options but failing to add new dollars for those options, the state would in effect cut education funding.

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