As the state Senate considers a budget bill passed by the House that includes record-high K-12 education spending, area superintendents have mixed reactions to how an overhauled funding formula will affect their districts.
The House Republicans' goal in revising the school funding formula was to provide more equitable funding for school corporations across the state, but some educators still see winners and losers emerging under the new model. The budget bill – which included $6.98 billion for K-12 tuition support – passed the House 69-29 on Tuesday, and it will be taken up by the Senate appropriations committee on Thursday.
“I’m excited to see some of the changes we’re making,” said Rep. Heath VanNatter, R-Kokomo, who voted in favor of the bill. “I’m glad to see the increase for one, and that the ADM foundation will be leveled out by the end of the budget. It’s certainly more equitable than it was.”
The school funding formula is complicated – but getting simpler. In general terms, the amount of money school corporations receive from the state is based on their student enrollment, called Average Daily Membership (ADM). There are allowances for additional funding based on the number of low-income students (complexity), kindergartners, special education students, career and technical education students and students who earn honors diplomas.
The bulk of state funding schools receive (85 percent) is referred to as “total regular funding” in the formula and is based on the foundation, transition to foundation (a line item that is being phased out), complexity and kindergarten students (who will be included in the foundation amount in 2016).
The elaborate formula has resulted in a gap in the dollar amount per student that school districts receive from the state. The proposed changes to the school funding formula focus on reducing that gap by making the foundation amount equal for all corporations at $5,135 by 2017, and then giving less weight to the complexity index.
That’s where most critics of the new formula have a problem.
Previously, the complexity index was based on the percentage of a corporation’s student body that qualifies for free or reduced-price lunches which is determined by federal income guidelines. The complexity index is roughly half that percentage, and the index would be multiplied by the district’s foundation amount per student to determine how much additional state money would be allotted to the school to provide additional support for low-income students.
To illustrate how the complexity index works, look at Kokomo School Corp., where about 70 percent of students qualify for free or reduced lunches in the 2014-15 school year. The corporation’s complexity index is roughly 0.34. Multiplying that by Kokomo’s foundation amount per student of $4,399 means the district would receive almost $9.2 million for complexity.
Under the new formula, only students who qualify for free lunches will be counted in the complexity index. And the index will be multiplied by a flat rate of $4,000 per student, rather than the foundation amount per student. So going into the 2016 fiscal year, Kokomo’s complexity index will drop to 0.3, and it’s complexity funding will decrease to $7.3 million – a 20.3 percent drop from the previous year.
“I have some serious concerns that the new funding formula is discriminatory in nature,” said Kokomo Schools Superintendent Jeff Hauswald, noting that schools with a more diverse student body also tend to have more low-income students. “It costs more to educate students in poverty.”
Closing the gap
Rep. Mike Karickhoff, R-Kokomo, agrees that schools need more resources to educate low-income students, who have unique needs. But Karickhoff, who is chair of the budget subcommittee of the House Ways and Means Committee, thinks the modifications to the complexity index still provide sufficient funding. Plus, there are other provisions in the budget – like the federal Title I funds for at-risk students and increased funding for school social services – that offer additional support, he said.
The focus, Karickhoff said, is on increasing the foundation and reducing the funding gap among districts. The old complexity index formula contributed to that gap, he said.
“A rising tide lifts all boats and that’s what we’re doing here, and we’re shrinking the funding gap,” Karickhoff said.
In 2010, there was a $3,208 difference per student in what the highest-funded and lowest-funded school districts received from the state, according to the House Ways and Means Committee. That gap gradually declined to $2,787 in 2015, Karickhoff said, and the proposed budget would further reduce it to $2,148 in 2016 and $1,618 in 2017.
Hauswald agrees the funding disparity is an issue, but he thinks reducing the amount schools receive for complexity will disproportionately benefit schools with more affluent students that are already high-performing, at the expense of districts serving student populations with higher poverty rates.
“It’s the wrong solution to a legitimate problem,” Hauswald said. “It’s nice to see an increase in our funding. However, it’s not enough to keep up with inflation, and I think this change to the funding formula is creating winners and losers.”
Under the proposed budget, Kokomo Schools’ total regular funding per student would increase by 1.6 percent from 2015 to 2016, landing at $6,202 per student. Western School Corp. is set to see the largest increase in total regular funding per student (4.9 percent), compared to other schools in Howard, Miami and Tipton counties. That will bring its funding up to $5,523 per student. Eastern Schools will see a 4 percent increase to put its total regular per student funding at $5,479.
By contrast, Carmel Clay Schools – a district serving a more affluent student population – will see a 6.5 percent increase in per student regular funding under the new formula, moving up to $5,131.
Compared to other area schools, Northwestern School Corp. will see the most drastic reduction (42 percent) in its complexity funding next year, dropping from $1.15 million in 2015 to $668,533 in 2016.
Still, Northwestern Superintendent Ryan Snoddy is in favor of the new formula.
“What I look at as most important is the foundation,” Snoddy said. “Whatever money you give the foundation is equal for all schools. Our goal in Indiana has been to get to equal funding, and this does it. I know it does it at the expense of some schools, but we’ve been below [the top funding level] for 25 years.”
Northwestern is set to receive a 1.2 percent increase in its total regular funding per student from 2015 to 2016, so it will receive $5,404 per student. The corporation’s foundation amount is estimated to increase by 12.7 percent per student.
“I’m glad to see that legislators are doing something to distribute the money more evenly,” Snoddy added.
One thing to keep in mind when looking at the amount allotted to the foundation is that funds for full-day kindergarten students will be included in that amount in 2016, while it’s still a separate line item in the 2015 budget.
This budget is the first time kindergarten students have been counted as full-time students, and schools will be given the funding to match.
“That’s a big deal fully funding those kindergarten children as full students,” Karickhoff said.
Tri-Central Community Schools’ total regular funding per ADM remains virtually the same from 2015 to 2016 under the revised formula, sitting at $5,663 per student. But the school corporation’s complexity funds are expected to take a 36.3 percent hit and its transition to foundation funding also will drop by 49.7 percent – for a total loss of about $338,900 between the two line items.
“It’s upsetting that they’re making it out as we’re getting an increase … but they’re actually taking money from where they shouldn’t,” said Superintendent Tim Garland. “It’s hurting rural schools.”
Transition to foundation is funding that some school districts still receive based on previous parts of the funding formula, such as gradually decreasing funding for schools with dropping enrollment and guaranteeing districts wouldn’t receive any less money when school funding switched from being property tax-supported to being formula-based.
The proposed budget would step down transition to foundation funding in 2016 and eliminate it for all districts in 2017, which Karickhoff said is part of the process of simplifying the formula and reducing the variance in how much schools receive from the state.
The House school funding formula projections are based on estimates – student enrollment, complexity index, and the number of students who will fall into those other categories like special education and career technical education.
Earlier this week, after the House vote, it was discovered that the Legislative Service Agency had made an error and used 2014 data on the number of students who qualify for free school lunches, rather than 2015 numbers. An updated formula simulation has been published, with the modified complexity updates.
“I worry when they use the wrong numbers that maybe that would have changed someone’s vote,” said Heidi Miller, UniServ director representing North Central Indiana for the Indiana State Teachers Association. “The budget is better overall in that it’s more dollars than we’ve seen in the past, but it’s how it’s split up [that is an issue].”
Kevin Emsweller, Tipton Community School Corp. superintendent, also is skeptical of how the numbers will shake out, but he said he’s “cautiously optimistic” about the new funding formula. Tipton would receive $5,634 per student in total regular funding in 2016, according to projections.
“Our foundation amount, we’ll get a [13.8 percent] increase but our complexity will go down [by 25.2 percent],” Emsweller said, noting that the simulation predicts Tipton will gain 25 students each year for the next two years. “Overall, we should see an increase, but I’m still skeptical of that because they’re predicting our enrollment will increase by 1.4 percent. I don’t see the equity or consistency.”