Lawmakers weigh increased funding for school districts
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In response to repeated requests from school officials and education advocates, Indiana lawmakers might be inclined to increase the amount of money the state awards to schools with at-risk and low-income student populations.
The deliberations come ahead of the General Assembly’s January return to the Statehouse, when writing is set to begin on a new state budget.
An interim study committee on fiscal policy is already exploring Indiana’s “complexity index,” which is used to calculate supplemental aid for schools. The dollars awarded are in addition to the base funding schools receive for all students.
“When it comes to the necessity of working with at-risk children and high poverty children, it’s all about having more hands on deck,” said David Marcotte, executive director of the Indiana Urban Schools Association. He noted those additional needs come with a price tag —“We need people, more adults, professionals, working with children.”
Complexity grants are intended to cover costs incurred by school districts for additional teaching and support staff, social workers, instructional aides, alternative programs and other tools needed for serving at-risk students.
School officials from around the state maintain that the funding formula has not kept up with their actual costs, however. They also said the increased price of special education and English language learning (ELL) has stretched current funding even thinner. That’s even after lawmakers earmarked an additional $196 million in the 2021 budget towards special education funding.
The funding gap has forced many schools to instead spend complexity grants on other expenditures, leaving fewer dollars available for kids in need.
Rep. Greg Porter, D-Indianapolis, requested that the interim committee address the topic before the upcoming legislative session and advocated for increased funding for the complexity index. He said lawmakers should make the issue a priority in the 2023 session.
“This will help enrich the lives of individuals … and it also aims to help with our workforce in the future,” he told the committee earlier this month. “To increase academic success, I believe we have to have the tools in the tool chest to make this happen, and adequacy in this funding, adequacy in education, will help us get to that point, and it will help us with jobs in the future.”
Complexity grants lagging
Indiana’s base funding for all students has increased from $4.75 billion in 2015 to $6.3 billion in 2023, according to an analysis by Policy Analytics and presented by the Indiana Urban Schools Association. The base grants are awarded regardless of a school’s population of disadvantaged students.
But in that same timeframe, complexity funding has decreased by 40% — from $1.15 billion to just $700 million. School expenditures to address challenges created by poverty additionally exceeded revenues by 14% during the 2021 school year.
“That’s a significant number to remember,” Marcotte said. “The most complex schools are actually spending more money than they’re receiving in the complexity grant to support at-risk children.”
The most complex schools still get funded at a higher rate than others, Marcotte continued. In 2015, the funding margin between the least and most complex schools was 20%.
But that gap is shrinking.
In 2023, the average per-student funding for the most complex schools is estimated to be 13% more per student funding than the least complex schools.
Trying to calculate who qualifies
Further complicating matters, school officials emphasized to lawmakers that Indiana’s process for calculating complexity status doesn’t account for some qualifying students.
Most states calculate complexity through Free and Reduced Lunch counts. Indiana used to but changed that in 2015.
Now, the state calculates complexity by using the number of students in a district who are enrolled in food assistance programs, as well as the number of students in foster care. Illinois is the only other state that calculates complexity funding in this way, according to the Indiana Urban Schools Association.
Since the switch, the number of Hoosier students identified as high-risk or disadvantaged has dropped from 250,000 in 2015 to 187,000 in 2022, according to the Policy Analytics analysis. Marcotte said some qualifying families don’t enroll in those assistance programs — leaving those students out of complexity considerations. He also pointed to state agency databases that don’t properly align records, causing some students to be missed in the count.
Fort Wayne Chief Financial Officer Kathy Friend said roughly 67% of students in the district qualified for subsidized meals during the last academic year, but only 29% were captured under the state’s current model.
“We’re feeling the greatest impact — those with the highest complexity,” Friend said. “We would love to see the formula changed, and maybe even using multiple factors … that would be more fair to all districts in the state. And then more categorical funding for special education and ELL.”
School districts’ funding can also be hampered by the deadline for student data to be captured.
The calculations that feed into Indiana’s biennial budget process are based on complexity certification counts as of Oct. 1. That means, currently, a school district’s complexity funding for the 2024 and 2025 academic years will be based on data that is only as current as Oct. 1, 2022.
“If a family turns in their forms on Oct. 2, they’re not in (the count). And so that date is very, very important,” Marcotte said. “Then, that is a static number — it doesn’t change until the next biennial budget.”
Porter said those numbers “are not adequate and not accurate,” adding that Indiana should move back to a formula model based on Free and Reduced Lunch counts.
Increasing funding for English learners and special education
School officials said significant chunks of their complexity grants are being used to cover education costs for other students in need, especially English language learners and those receiving special education.
The number of ELL students in Indiana has grown by more than 50% since 2017, according to the Indiana Department of Education. English learners now make up more than 6% of Indiana’s total student population.
To hire additional teachers to help ELL students, the Fort Wayne school district had to dip into $4.7 million of its $30 million complexity grant, Friend said. Special education program funding in the district required another $7 million from the complexity funds.
Statewide, 16% of all complexity dollars backfill special education and ELL costs, Marcotte said.
“If we could fully fund special education and the English language learners, it would put that money back in the complexity where it was supposed to be,” he said, adding that it’s difficult to know how much additional complexity funding is actually needed until funding increases for special education and ELL programs.
Marcotte said Indiana needs to appropriate $122 million more — on top of the $725 million the state currently plans to spend — to adequately fund special education. Fully funding English language learners would cost up to $54 million, double what Indiana appropriates now.
“This would help every school district in the state, not just high complexity districts,” he said, referring to increasing funding for special education and English learners. “Everyone would benefit from additional dollars in both those programs.”
The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.