INDIANAPOLIS — Indiana annually spends more money on elementary and high school education than any other budget component, a trend likely to continue when the General Assembly convenes in January to determine how to spend anticipated revenue for the next two years.
Almost half of every tax dollar collected by the state, totaling nearly $7 billion, will be distributed during the 2016-17 academic year to a public school corporation, public charter school or through a private-school voucher to pay for the education of some 1.06 million Hoosier students.
Despite leading the nation in school choice options, the bulk of Indiana's kindergarten-through-12th grade education funding still ends up at traditional public schools, according to data compiled by the nonpartisan Legislative Services Agency.
Indiana's 293 school corporations this year are projected to receive $6.5 billion (93 percent) of state education spending; the 93 charter schools will get about $305 million (5 percent); and $174 million (2 percent) will pay for children to attend private schools using a state voucher, according to the LSA.
Total education funding is up 4.75 percent compared to the 2014-15 school year. That nearly matches the 2008-09 peak when Indiana and other states received federal stimulus funds to help prop up their school budgets, as tax revenues cratered during Great Recession.
Indiana is different
Unlike Illinois, which relies heavily on local property tax revenues to pay for classroom instruction, those costs in Indiana now are borne mostly by the state.
Up until seven years ago, school districts could increase annual property taxes, which on average accounted for 15 percent of their general fund budgets.
But in 2008, Hoosier lawmakers increased the state sales tax rate to 7 percent, from 6 percent, to raise the money needed to replace the $1.8 billion a year that school corporations had been receiving from property taxes, whose rates also were capped.
Now, property taxes paid to Indiana school corporations only can be used for student transportation, building projects, debt service and other non-classroom spending.
That same 2008 law, however, also authorized a referendum process for school districts. Schools can get extra instructional funds if district voters agree to pay higher property tax rates through a ballot referendum. An operating fund referendum supports salary, benefits and some programs; a capital projects referendum raises money to build or renovate school buildings.
Money follows the child
The state takeover of student instructional costs has enabled Indiana to provide significant flexibility to parents in deciding which school is best for their child, according to school-choice proponents.
With limited restrictions, any student can attend a public school in the district they live in, a public school in a nearby district or a quasi-public charter school, which typically is operated by a private management company offering a specialized curriculum.
Children from low- and mid-income families also can choose to attend a private school on the state's dime through Indiana's largest-in-the-nation voucher program, established by the state Legislature in 2011, that now covers the tuition costs of about 40,000 students, according to the state Department of Education.
From the state's perspective, it doesn't matter where the roughly $6,500 a year per child it is paying for a student's education is going, since all public, charter and voucher schools must test students on Indiana's academic standards and submit to the state's accountability requirements.
But because the state's money follows the child, many school corporations with declining enrollments have struggled to maintain the courses and programs they've offered in the past, since losing just 10 students can require one or two full-time teachers be laid off to balance the district's budget.
The next level
In addition to deciding how much to spend on education in total, Hoosier lawmakers have said next year they are likely to consider adopting a potentially controversial program known as "education savings accounts."
With an ESA, a student's education funding that now goes to a public, charter or private school, instead is provided by the state directly to the student's parent.
The parent can use that money to pay for the child to attend any school, regardless of standards or accreditation, pocket the money if the child is homeschooled, hire a private tutor instead of going to school at all, or enroll in an online education program.
Parents also are permitted to save any money that's not spent in a school year for their child's future education expenses.
ESA supporters claim it is the ultimate in customizing education to meet a student's needs.
Critics fear the money will be wasted on programs and services that fail to provide a necessary foundation of knowledge.