FORT WAYNE – When lawmakers passed a two-year $30 billion budget this year, both sides of the aisle boasted about a 3 percent increase in education funding.
On average, schools will receive an increase of 2 percent the first year, and a 1 percent increase the second year, for a statewide total of about $180.6 million. But those increases are just averages.
Most schools and districts won’t see increases of those amounts, and many could see decreases in funding over the two-year period, according to legislative estimates.
The effects of the new formula vary by school and district. In Allen County, Southwest Allen, East Allen and Northwest Allen county schools will see slight increases both years, while funding for Fort Wayne Community Schools and the county’s three charter schools will decrease in the second year of the formula.
The changes seen by some districts could require cuts and keep salaries and wages stagnant, local officials say.
A change in the distribution of full-day kindergarten funds will affect districts’ 2013 budgets, and other changes will result in reduced funding over the two-year period for districts considered complex, meaning they have higher populations of low-income students.
Schools’ and districts’ general funds are supported by state tuition payments based on enrollment. The more students enrolled in a school or district, the more funding it receives. General funds pay mostly for the salaries and benefits of employees along with some utilities.
Because the fund supports staffing, when schools and districts must cut costs to meet declining state revenue, they are left with few options but to lay off employees. Raises are also afforded only as state funding revenue increases.
Virtual schools are defined by state code as schools that offer at least 50 percent of instruction through virtual or online means or computer-based instruction.
Virtual schools are funded at 90 percent, an increase from 85 percent in previous years, of the base per-student amount. They also are eligible for state grants such as the full-day kindergarten grant.
The rise in funding for virtual schools makes up about $25.4 million of the total increase in education funding.
Publicly funded vouchers are also a part of the state’s school funding and benefit from the increase. Families who qualify based on income are given vouchers to attend private schools. Currently, more than 9,000 students receive vouchers worth a collective $37 million in tax dollars.
In the next two years, voucher funding will account for about $25.8 million of the total increase in education funding to support the anticipated increase in students taking advantage of the program.
That leaves about $129.4 million in funding for traditional public schools and nonvirtual charters.
Here is a breakdown of how the funding will affect local districts and charter schools and how key education issues will affect the money.
Fort Wayne Community Schools will see increases in funding next year but a dip in funding for the following school year.
The reason is likely the slow elimination of funding that schools and districts receive for being especially complex. All districts and schools in the state receive extra funding based on the number of low-income students enrolled.
Those with higher populations of these students have received even more funding, called second-tier, on top of the normal rate. FWCS has a free and reduced-price lunch population of about 70 percent and received second-tier funding in previous years.
Fort Wayne Community Schools has already made some cuts in anticipation of the decrease in funding. It reduced the hours of more than 600 employees June 1 to save money as well as avoid possible penalties under new federal regulations related to the Affordable Care Act. Most were part-time employees whose hours were reduced, but some, fewer than 50, were full-time employees who will no longer be eligible for health benefits.
If you have this pot of money, you have to prioritize, Superintendent Wendy Robinson said at the time.
The district is negotiating with its teachers union regarding salaries and benefits, and cuts down the road are kept in mind throughout the process, said Kathy Friend, chief financial officer.
We always plan out for five-year implications, Friend said. We will have cuts to make over the next five years. Fortunately we’re in a good spot right now, so we have some time to work through that.
Southwest Allen County Schools, Northwest Allen County Schools and East Allen County Schools are expected to see small but steady increases in funding over the two-year budget.
But the increase might not be enough to offer Southwest Allen employees wage increases, according to Jim Coplen, business manager for the district.
We want to continue to pay additional money to our staff, but we’re not going to be able to do that unless we’re getting new dollars, he said. It doesn’t appear we’re going to get a lot of new dollars. I guess it is what it is.
The district hasn’t increased wages much in recent years, but a $3.5 million operating referendum has protected the district from cuts. The referendum expires in 2016, so it will have to be renewed by voters to remain in effect for 2017, Coplen said.
All districts’ general funds will be stretched further as utility costs continue to rise and the employer contributions for the Public Employees Retirement Fund increases, Coplen said.
We may need a small increase (in referendum amount), but at this point I don’t know whether we will, or if we do what that amount would be, he said.
Like Fort Wayne Community Schools, the county’s three charter schools – Timothy L. Johnson Academy, Thurgood Marshall Leadership Academy and Smith Academy for Excellence – will see increases in funding next year but a decrease in funding for the following school year for the same reasons affecting FWCS.
Charter schools, however, are not supported by local property taxes, so state revenue is the major source of funding for charters, along with state and federal grants.
For Thurgood Marshall Leadership Academy, the decline in per-student funding will be great enough that the school will receive less funding per student in 2015 than it received this past school year, according to Journal Gazette estimates based on the state’s numbers.
Timothy L. Johnson Academy boasts the highest per-student funding in the county with 98 percent of its students considered low-income because it qualifies for free or reduced-price lunches. But like other schools, it will see a slight decrease in funding for 2015.
Johnson Academy Leader Steve Bollier said the decrease isn’t enough to make a major impact, but he said it becomes difficult when the school’s health care costs jump 20 percent, while its revenue increases by less than 5 percent.
Rev. Mike Nickleson, Johnson Academy board president, said when the state cuts funding from charters, it has a direct effect on the services and opportunities charters provide to students because charters don’t have the option to levy property taxes to pay for transportation or building maintenance.
We’re trying to do our best. We’re doing everything we can with our per-pupil funding and our grants, he said. We’re held to an equal or even a higher standard (than traditional public schools), and at this moment, it’s not a level playing field.
Thurgood Marshall Leadership Academy recently approved a budget based on an estimated enrollment of 130 students. The budget doesn’t allow the school to hire art or music teachers unless the school can increase enrollment to bring in more revenue.
While the state provides some funding for full-day kindergarten, each kindergartner is counted only as half a student for funding purposes. An additional state grant is provided to make up the difference, but FWCS’ Friend said it doesn’t cover the cost of educating these students.
This is the first fiscal year that funding for full-day kindergartners will shift from a yearly, lump-sum grant award to a monthly payment, Friend said. Because of the change, districts and schools will collect half as much funding for its kindergartners this year, with monthly payments beginning this month, more than halfway into the year.
It’s a one-time loss, but a significant one, Friend said. For Fort Wayne Community Schools, the loss totals about $3 million.
That is revenue we counted on for the 2013 budget that’s not there, she said.
The money will be recouped when payments begin, but it won’t be within the cycle during which districts budgeted for the funds, SACS’ Coplen said.
Two count days
Another change to school funding that will affect schools across the state is the addition of a second count day.
On count day, the number of students enrolled is tallied to provide the basis for the per-student tuition payments. In the past, one count day took place in September. This year, a count day was added in February.
This will result in a change in how revenue is distributed, Friend said. It will also complicate the budgeting process, which for many districts will take place over the summer, because districts will have to estimate an inevitable decrease in enrollment for the second part of the year.
That’s something most schools experience, Friend said.
Much of the lost enrollment occurs in high schools as students drop out or graduate early, she said.
Even though districts may lose students midyear, they cannot adjust staffing levels to account for the losses, said Kirby Stahly, business manager for East Allen County Schools.
He said districts are encouraged to get students to graduate early to pursue college or careers, and we’re being penalized for that.