In 1993, the State of Indiana adopted a new funding formula for public schools. Prior to 1993, the State funding formula was challenged by several Indiana School Districts. The Lake Central School Corporation, in 1987, initiated a lawsuit against the State of Indiana for inequity in the school funding formula (Lake Central v. State of Indiana, 1987.) To settle the lawsuit, the state legislators, the governor and the plaintiffs agreed to “fix” the State’s funding formula so school corporation’s per-pupil dollars (funding or spending per pupil) would be equalized.
The impact of this lawsuit has had a dramatic impact on the West Lafayette Community School Corporation (WLCSC). The State’s new funding formula, adopted in 1993, was designed to equalize spending per pupil among school corporations. Before and up to 1993, the WLCSC was considered a high spending per pupil school district. As Dr. Larry DeBoer indicates, from 1993 to 2007, the average school corporation in Indiana experienced an 85% increase in expenditures per pupil while the WLCSC experienced only a 54% increase (West Lafayette School Corporation Enrollment, Budget and Employment Trends Over Three Decades, Larry DeBoer, 2009.)
Since 2001, because of statewide limits on revenue from property tax, school spending for the WLCSC has not kept pace with inflation. The WLCSC, in 1983, spent nearly 43% more per pupil than the state average. In 2008, the corporation now only spends about 7% more per pupil than the state average (DeBoer, 2009.)
Takeover of General Fund
In 2009 state legislators, in order to provide property tax relief, removed property tax revenue from school districts’ General Fund. Prior to 2009, revenue for school districts’ General Funds came primarily from two sources: state revenue (approximately 85%) and local property taxes (approximately 15%). To provide property owners property tax relief, legislators approved in July 2008 an increase in the state sales tax, from 6% to 7%, so the State could supposedly support 100% of school districts’ General Fund revenues. Many school administrators, business officials, and representatives from professional school associations denounced this idea because the generation of revenue was moving away from a stable revenue source (local property taxes) to an unstable revenue source (sales tax.)
In the fall of 2008 the global financial crisis created an extreme economic downturn. 2009 revenue projections for the State of Indiana predicted a shortfall of nearly $935 million. During this time, state legislators began the development of the biennial budget process (2010 – 2011) trying to figure out where to make cuts in spending. Since public school expenditures make up about 40% of the State budget, legislators began their consideration for reducing expenditures including a reduction of funding for public schools. As predicted by school administrators and business officers, using sales tax to fund the school districts’ General Funds became problematic since sales tax is an unstable source.
The Budget Battle and Its Impact on West Lafayette Schools
Throughout the State, Indiana school districts School Boards and Administrators faced the grim reality of reduced or near flat-lined General Fund revenues from the proposed 2010-2011 school funding formula. Plus the West Lafayette Community School Corporation was losing state funding which would make it the 6th lowest state supported school in Indiana.
With the new funding formula, the West Lafayette Community School Corporation faced reductions of $500,000 – $700,000 per year over the next five years. Without additional revenue to fill this budget gap, our school district was facing the possibility of eliminating music, art, sports and staff.
The budget battle and the impact on Indiana public schools was a major focus for Indiana legislators. As the battle raged over where to cut and not cut expenditures, the Governor criticized his State’s public schools by saying “We do not have one good school system in the state.” Later, the Post Tribune, a newspaper located in Northwest Indiana, quoted the Governor saying, “If this is an end to public education as we know it, I say thank goodness” (Public Education: The Cornerstone of Out Democracy, Boggs, August 19, 2009)
For the 2012 budget year, West Lafayette General Fund will be cut by $447 per student. That is around a $900K loss (7.6%) for our high achieving school district. The General Fund is the fund that pays for “people” that the state took control of with 2008 property tax reform. This is the fund that the state cut $300 million (4.5%) from schools statewide with 30 days notice in 2010 and has never replaced it. The $900K West Lafayette lost could hire 18 teachers. Also, none of the almost $1 billion dollars cut from K-12 education in the last three years has been restored.
The state average tuition support remains steady at $5,668 up $4 from last year. This means that the dollars our schools have lost are being shipped to other schools, charters and vouchers in other areas of the state. None of these 2012 loses have anything to do with the economy, although the 4.5% cut that in occurred in 2010 has never been restored. It is all based on the legislature’s school funding formula and the redistribution and dilution of the pot.
The Future of West Lafayette Community School Corporation
On May 4, 2010, West Lafayette Community School Corporation patrons went to the polls to vote on a seven-year tax referendum which, if approved, would allow our school district to raise property taxes not to exceed $.43 per $100 of assessed valuation in any given year. By a 2 to 1 margin, our community voted in favor of the referendum thus preventing Draconian cuts in music, art, and extra-curricular programs. Fortunately our community stepped up to save our school district. Unfortunately, other Indiana school districts weren’t as fortunate. Throughout the state many school districts are cutting programs and staff, and some have even eliminated school transportation.
Although our school district has been able to maintain its arts, music and extra-curricular programs, we know that we have a small window of time to prepare ourselves for our future. If we don’t find additional funding opportunities by the time our referendum ends, we may face the reality other school districts are currently facing. So, as we stand at a crossroad, there is the future that will push us down into mediocrity or there is the future that empowers us to define and achieve our own success. The decision is ours to make and our time is now. I hope you will join us in protecting the future of our school district.
Superintendent of Schools