Indiana’s “$1 Law” to expire — plus new funding for charter schools — under newly amended Senate Bill 391

A bill originally focused on school building closures was transformed Wednesday to primarily provide Indiana charter schools with access to more state and local funding.

Lawmakers in the House Education Committee adopted the sweeping amendment to Senate Bill 391 along party lines and with mixed opinions from Hoosier parents and education advocates. Republicans supported the changes and Democrats opposed.

The latest version of the bill would sunset Indiana’s existing “$1 Law,” which requires public school districts to sell or lease vacant or unused instructional buildings for a single dollar to public charter schools.

The change — an about-face from years of GOP support — was embraced by traditional public school officials, who maintained that local school boards should retain authority to decide what to do with their buildings — especially because local districts are the original financers.

“We’re making a lot of decisions around facilities, painful decisions, not to operate schools anymore,” said Aleesia Johnson, superintendent of Indianapolis Public Schools. “We want to ensure the use of those buildings supports our community. And there are a number of ways for that to happen. That flexibility, I think, would be great.”

But another provision in the bill seeking to force school districts to share referendum funding with charter schools drew pushback from traditional school officials. They argued that charters are not entitled to funding from local property taxpayers because those schools generally do not have the same expenses as their traditional public counterparts.

Charter school proponents praised the move, however. 

Advocates for the alternative public schools have ramped up lobbying during the legislative session in an effort to “equalize” charter funding and ensure that students in those schools receive the same amount of dollars as students who attend district schools.

“I send (my son) to a charter school because it’s a smaller school. I know he’s going to get individual attention. I know he’s going to get what’s necessary for him to succeed — and that is important to me as a parent,” said Susan Sharp, whose son attends Rooted School, a charter high school in Indianapolis. “Our facility deserves to be maintained at a world class level. Our educators deserve to be paid a phenomenal wage because those educators are going to be the ones who send our kids out there into the world.”

The GOP-backed measure stripped language from similar proposals that did not advance earlier in the session. It now heads to the House Ways and Means Committee.

More money for charter schools

The amended bill requires school districts in Lake, Marion, St. Joseph and Vanderburgh counties — where a majority of the state’s charter schools are located — to provide a pro rata share of an operating or school safety referendum adopted after June 30 with area charters. In other counties, sharing those funds would remain optional, at least for now.

Rep. Bob Behning, R-Indianapolis, called it a “pilot” plan “to see how this would work.” 

Still, charter schools that want their share of local tax dollars must “share in the burden of marketing and helping get this referendum passed,” Behning said. According to the bill, that includes posting certain information on the charter school’s website.

Under Indiana’s current school finance system, state tax dollars are used to provide comparable per-pupil funding to district and charter schools. Districts can also levy local property taxes to pay off debt and for their operations funds. 

Charter schools cannot draw on local property tax dollars like traditional public schools can, however, putting them at a disadvantage for paying for certain expenses, like transportation or facilities costs.

The state gives charter schools an extra $1,250 per pupil to compensate for their lack of property taxes.

The House GOP state budget plan — now under consideration in the Senate — additionally proposes to eliminate that existing charter school grant program and replace it with an “Operations Fund” as part of the student funding formula.

The fund would ensure that every non-virtual charter school receives the same amount of per student funding as traditional public schools. The state would also subsidize any traditional public school that generates less than $1,400 per student from its operation levy.

Another provision in the latest draft of Senate Bill 391 extends Indiana charter schools’ authorization up to 15 years. Current law allows charters to be approved by the state for up to seven years.

Behning said the change intends to help charters take out bonds for facility expenses. 

“How many lenders are going to agree when the contract says your charter goes away in seven years?” asked Behning. “There are very few lenders who are going to say, ‘Well, I’m going to roll the dice and hope that you’re here seven years from now.”

The bill additionally seeks to authorize the state board of education to advance money to charter schools that can be used for school building construction and educational technology programs.

Getting rid of Indiana’s “$1 Law”

The major change ending Indiana’s “$1 Law” would occur in July 2025. 

“There’s been a lot of, I think, schools that have tried to deliberately work around it, and other schools who have tried to follow it, and it appears to me that it’s just not working very effectively,” Behning conceded. 

House Democrats claimed victory over the expiration of the “$1 Law,” saying the “white flag” was waived on a key Republican education policy.

“With this flag of surrender, Republicans have accepted what public education advocates have known for years: A key component of the effort to redirect public education dollars to private pockets lacking public oversight has failed,” Rep. Ed DeLaney, D-Indianapolis, said in a statement.

But in the meantime, while the existing law is still active, a school building “that is vacant or is not used in whole or in part for classroom instruction” would still be made available to charter schools for $1, according to the Senate bill.

“This is going to force public schools with a referendum to ask for even more dollars from their local property taxpayers to cover the added expense of funding students who may live in that district but attend charter schools outside of the district,” said Joel Hand, representing the Indiana Coalition for Public Education and the American Federation of Teachers of Indiana.

Even so, it’s a rollback from earlier language in the measure that sought to expand the $1 Law to include “underutilized” buildings.

Charter school critics have long argued that such schools are not obligated to serve every student in a given community — unlike those in traditional public school districts.

The public charters also have private boards and are therefore not accountable to voters, opponents say. They hold, too, that finances at charter schools are also less transparent, given that they are not subject to the same budgetary oversight as traditional public schools. 

“School choice” supporters maintain that parents deserve the right to more flexibility and customization in their children’s education. Doing so requires increased access to private schools, but also public charters.