Indiana bill would tap savings to fix $11.8M school-funding shortfall

Indiana lawmakers have a proposal to shuffle state money around to cover an $11.8 million shortfall in school funding that emerged late last year.

The plan, should it pass into law, would make up the gap in the state’s general fund, which is where school dollars come from.

Senate Bill 189, authored by Sen. Ryan Mishler, a Republican from Bremen who chairs the Senate Appropriations Committee, would allow the State Budget Agency to transfer the money from Indiana’s tuition reserve account, which includes dollars that are set aside to ensure the state can adequately cover its education expenses if revenue falls short.

Lawmakers had initially estimated the shortfall at about $9 million.

The bill was filed this week and is expected to head to Appropriations for consideration and potentially a vote in the coming months. Lawmakers have said over the past couple months that this fix would be a priority, so opposition appears unlikely.

State officials said the funding gap, which amounts to about $11 per student, was the result of higher student enrollment for public school districts than was initially expected when the budget was passed in April.

Transfers from reserves are already allowed if more voucher students enroll in private schools than projected, or if state revenue is less than expected. The new bill would also now allow transfers from reserves if public school enrollment is higher than expected, as well as to make up for funding gaps for grants for students with disabilities or students pursuing career and technical education.

As Chalkbeat previously reported, it’s not clear how the miscalculation in enrollment numbers occurred. Rep. Tim Brown, a key budget-writer and chairman of the House Ways and Means Committee, said money for schools are estimated based on projected school enrollment counts from districts, the education department and the legislative services agency, which helps provide information and data to lawmakers.

The $32 billion two-year budget passed in April increased total dollars for schools by about 3.3 percent from 2017 to 2019, for a total of about $14 billion. Included within that was a 2.5 percent average increase for per-student funding to $6,709 in 2019, up from $6,540 last year.

But despite those small increases, many school leaders have said they struggle to pay salaries and maintain buildings, which is why funding shortfalls — even small ones — matter. This year’s unexpected shortfall was particularly problematic because districts had already made plans based on the state budget.

For example, Indianapolis Public Schools recently approved a plan to ask voters to greenlight a tax increase of $936 million dollars over the next eight years to pay for costs such as raises for teachers, special education services, and building security updates. They join seven other districts in Marion County, and 104 across the state, that have held local elections to raise more money for schools.

Chalkbeat is a not-for-profit news site covering educational change in public schools.