BY CARMEN McCOLLUM, Times of Northwest Indiana

A tax cap law passed last year, its resulting impact on school funding and pending consolidation legislation have districts scrambling to adopt out-of-district transfer policies -- but not always with the same goal.

While Indiana does not have open enrollment, the tax cap legislation created a loophole that allows greater flexibility in students moving from one school corporation to another because the amount of transfer tuition was greatly reduced. That has left many districts looking for better ways to control their enrollments.

Using income generated from an increase in the state's sales tax, which went into effect last year, the state now is picking up the tab for school districts' greatest funding component, the general fund -- dollars used to pay salaries, benefits and some utilities. Before the change, schools relied on local property taxes as their major funding source.

"We hope all of the superintendents develop a transfer policy," said John Ellis, Indiana Association of Public School Superintendents executive director. "We also adopted a resolution at our fall conference that in a transfer, the sending and receiving superintendent would communicate with each other."

Ellis said the most common issue that comes up is when a student who is pending expulsion tries to get into another district. It also raises the question of recruitment for academic or athletic reasons.

Jeff Zaring, Indiana Department of Education administrator, said school corporations still have the authority to adopt policies concerning admission of students who do not live in the district. Seeing what was on the horizon, some Northwest Indiana school districts, including Portage, Hobart, Valparaiso, East Porter County and Duneland schools, amended their policies late last year to either place a moratorium on accepting new out-of-district students or greatly restrict additional transfer enrollees.

For the first semester in August, parents of transfer students paid the full cost of education because their children were not included in the state funding totals. In January, the cost for transfer students dropped dramatically.

Ellis said the Legislature needs to tweak the tax cap legislation this session.

In addition to the issues of open enrollment and transfer tuition, public schools are finding they are losing enrollment to charter schools, parochial schools, Christian schools and parents who choose to home school their children.

Charter schools are public schools and most are sponsored through Ball State University. Research shows that charter schools are gaining enrollment. The Thea Bowman Leadership Academy in Gary, which opened its enrollment to high school seniors in August is one of the largest with an enrollment of 1,300 students.

At the state level, the Indiana Legislature is considering a proposal introduced this session that focuses on school consolidation. Introduced by Sen. Gary Dillon, R-Pierceton, the measure calls for the state's 48 school districts with fewer than 1,000 students to consolidate.

In Lake and Porter counties, the only district affected is the Whiting school district with 860.5 students. Whiting Superintendent Sandra Martinez said the district is reviewing its options. It accepts transfer students but is considering a policy that would allow it to boost its enrollment to 1,000 by 2013.

In LaPorte County, New Durham Township, Cass Township Schools, Dewey Township Schools and the South Central schools are affected by Dillon's bill.

New Durham Township acting Superintendent Richard Cook said he has advised his board to wait and see what happens before taking any action. That district has 895 students.

Last week, Sen. Mike Delph, R-Carmel, sponsored a similar measure calling for schools with fewer than 2,000 students to consolidate. If that bill passes, it would have far greater implications locally than its counterpart. In Lake County, the Lake Station Community School Corp., River Forest Community School Corp. and Hanover Community School Corp. would join Whiting in having to consolidate. In Porter County, schools in Union, Porter and Boone townships would face consolidation.

Meanwhile, Ellis believes that Dillon's bill has a greater chance of passing the Legislature because it's closest to what the governor wants to see.

Terry Spradlin, associate director of the Center for Evaluation and Education Policy at Indiana University in Bloomington, said the research shows that school consolidation doesn't necessarily lead to greater student outcomes. He said Dillon's measure may have some opt-out provisions for high-performing schools.

"It's important to look at each district individually," Spradlin said. "If it's a high-performing district, it's meeting AYP (adequate yearly progress) and has a high percentage of students who are meeting or exceeding academic standards, why consolidate it?"

Times staff writer Jeff Burton contributed to this story.

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