Explain the state funding formula and how changes are made?
The state distributes money from revenue it collects in income tax, sales tax, gaming revenues, etc. to the almost 400 Indiana school corporations, virtual schools and charter school associations based on a funding formula the state legislature creates and passes bi-annually as part of the state budget process.
All funding issues begin with the 100 legislators in the Indiana House. The state funding formula provides about 86% of the revenue in VCS’s Education Fund. About 90% of this fund pays for teachers and staff of the corporation. The funding formula begins with a per pupil “foundation” or base amount.
The foundation amount is multiplied by the “complexity index” to determine additional funding required for the education of “at-risk” children. A significant inequity in the funding formula occurs when the money for an at-risk student does not follow the child to another school district. For example, the top funded districts receive over $2,000 extra for each at-risk student. When these same students move to Valparaiso schools, the millions of extra dollars do not follow those students. There are no significant adjustments to the funding formula for a school corporation based upon achievement scores. Most discussion on “merit pay” centers on individual teacher pay and not the amount given to schools to fund those teachers. There is also no accountability for achievement results from those school corporations and charter school associations with higher levels of at risk students from the additional money they generated.
The 2008 Property Tax Reform legislation and the continuing funding decline against inflation since, has now made the inequities in the funding formula a serious funding crisis by making state funding based on the General Assembly’s formula the only source of funding to pay for classroom instruction. Changes to the foundation amount, adding an index for academic results and some other tweaks to the formula are all possible, but will most likely be gradual changes over the next several years if at all.
The legislature addressed some of these concerns in the spring 2021 legislative session. School districts in Indiana will receive new money from the state this year and Valparaiso is appreciative of the anticipated increase. However, this percentage increase still means a $1.1 million dollar inflation adjusted deficiency since 2010.