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To a long list of last-minute legislative sleights-of-hand, add the mysterious “restoration grant.”
This never-before-seen calculation emerged in the school-funding formula in the final hours of the General Assembly last June, enriching some Indiana school districts and ignoring others:
•Northwest Allen County Schools: $1.85 million
•Southwest Allen County Schools: $2.7 million
•Fort Wayne Community Schools: Zero
dollars
•East Allen County Schools: $77,866
As a legislative study committee begins a two-year effort to revise Indiana’s school-funding formula, the example of the restoration grant shouldn’t be overlooked. The goal of devising a formula that treats students equitably is a waste of time if legislators are allowed to nullify its intentions with last-minute maneuvering.
If the state is to continue demanding accountability for school dollars, as it must, lawmakers must also ensure those dollars are distributed equitably, without the last-minute gimmicks that make a mockery of any formula.
That’s what seemingly occurred with the restoration grant. It was devised to ensure school districts received, at minimum, the amount they received in 2009.
In the last hours of the special session, when figures were released detailing how the biennial budget would treat each school district, almost everyone was satisfied with the final figures, given the state’s dismal financial outlook. After the budget was approved, however, a closer look at the numbers showed that some districts were treated better than others.
For 2010, the budget starts with a “foundation” amount of $4,550 for every Indiana student. That figure is then multiplied by something called the “complexity index,” which takes into account the number of students who receive free- or reduced-price lunches. Legislators generally accept that poverty is the best indicator for determining which students need more help. Fort Wayne Community Schools has the 15th highest complexity index among Indiana’s 293 school districts.
As a result of tax law changes, tuition support for schools now comes entirely from the state, with no contribution from local property taxes. In spite of assertions that only a handful of people in the state understand the funding formula, it’s quite simple. It’s what happens beyond the base formula that’s baffling.
This year, it was the appearance of the restoration grant. It uses a complex, two-tiered calculation that steers $238 million to 73 percent of the state’s school districts. Indianapolis Public Schools receives an additional $381 per pupil outside the basic formula. Gary Public Schools nets an extra $14.6 million over two years. Hamilton Southeastern Schools, where former Southwest Allen County Superintendent Brian Smith’s new school board is preparing to sue the state for inequitable funding, is in line to receive an extra $6.1 million.
Rep. Jeff Espich, R-Uniondale, was a vocal participant in legislative hearings designed to solicit opinions of school funding earlier this year. He repeatedly pressed FWCS Superintendent Wendy Robinson and others to give lawmakers a figure for how much it costs to educate a student in an urban district. Espich is a 37-year veteran of the General Assembly and arguably one of its brightest fiscal leaders.
But asked last week about the restoration grant addition to the final budget bill, Espich was clueless. He did have an explanation for how such a thing happens, however.
“You’ve got 300 school corporations. You come up with these school (formula) runs and you see every rural school is getting the devil beat out of them,” he said. “So they plug in a way to do it that so that they aren’t hurt and they run those numbers. It takes care of that issue, and then we’ve got another. So they plug in a supplement and go through it again. With each run, they get a different result.
“Writing formulas is not a science,” Espich said. “You get to your base number and you see who got creamed here; how did the other side do?”
Kathy Friend, chief financial officer for FWCS, said she was initially pleased by the state figures, which finally brought the second-largest district in the state to where it would receive full funding under the foundation formula, a mark it has missed since property tax controls were adopted in 1973. But the addition of the restoration grant widens the gap once again. Efforts to achieve equity in funding, where students with similar needs generate similar per-pupil funding, are lost. Students from poverty in one district should be supported as well as students from poverty in another.
“In 2011, we will transition to full funding. I don’t want to seem ungrateful for that, but the equity piece got lost in the process,” Friend said. “The equity gets lost every time this gets worked on at the end of the session.”
She noted that if the legislature had taken the $238 million in restoration grant dollars and distributed it to all corporations through the formula, FWCS would have received an additional $11 million this year and next.
Steuben County Schools is another district left out of the restoration grant distribution. But business manager Monte VanGessel said she’s just pleased that the formula treated the district, which lost 77 students this fall, as well as it did.
“We all need more,” she said. “But it could have been a lot worse.”
Sen. Luke Kenley, R-Noblesville, is responsible for inserting the grant provision into the budget. He said his intent was to move all districts along a per-pupil-funding continuum so that similar districts are treated similarly.
“This year, in particular, we found that when you moved them to where they should be, there were districts that were overfunded or underfunded. The restoration grant was an effort … to get where they should be on the (funding) continuum.”
Kenley said that when he develops a calculation, he is blind to its effect on individual districts for the very reason that he wants to take politics out of the process. Indeed, the restoration grant benefited districts of all types – urban, suburban and rural. Likewise, all types of districts lost out on the extra money.
In a policy brief on the legislative changes in school funding, Indiana University’s Center for Evaluation and Education Policy, however, noted that the restoration grant “could well produce unintended effects such as impacting horizontal equity adversely.” That’s precisely counter to the goal Kenley said he is trying to reach, although he insists the measure doesn’t stop progress in reaching equity; it only slows it down.
Terry Spradlin, associate director for the center and a former legislative director for the Indiana Department of Education, said he believes lawmakers want to understand the formula and make decisions based on sound research, but acknowledged that the process is a challenge because it produces winners and losers. IU’s center is working with the study committee, which meets for a second session Monday, and has proposed a set of goals the state should set in devising a formula.
Rep. Terry Goodin, D-Austin, is chairman of the study committee. He said issues like the restoration grant were why the committee is seeking a new formula.
“In the past, it’s become political,” he said. “Whoever’s party controlled the process, the pin seemed to be the group of people they represented – they came out best.”
“We can make this process more transparent and build a common objective,” Spradlin said. “I am optimistic that they will make progress. If we can come to some consensus, it’s going to be so helpful.”
The state has made progress in improving the imbalance left by the 1973 property tax legislation and, on whole, done a better job than many other states in ensuring equity across the board. But a General Assembly that has placed achievement demands on all schools, regardless of available resources, has an obligation to ensure state dollars are distributed fairly.
The study committee’s work on a new formula is a good first step, but it will be a worthless exercise if lawmakers nullify its effects with minimum guarantees, restoration grants and other measures to sway the results to their liking. All schools – and all students – must have a level playing field.
