Indiana bill to shift more dollars from traditional publics to charter schools earns Senate approval

Yahoo

21-02-2025

Sen. Linda Rogers, R-LaGrange, answers questions about her charter school funding bill on Thursday, Feb. 20, 2025. (Casey Smith/Indiana Capital Chronicle)
A bill to expand property tax revenue for charter schools cleared a key legislative hurdle Thursday despite fierce pushback from both sides of the aisle and hours of debate on the Senate floor.
Within Senate Bill 518 are provisions to require all Indiana public school districts to share property tax dollars with charter schools in their attendance boundaries if 100 or more students leave the traditional district for brick-and-mortar charters. Districts under that threshold would not have to fund-share. Virtual charters also would not qualify under the latest draft of the bill.
Affected school districts would additionally have to share with charters a portion of property taxes used to pay off debt for long-term projects — known as debt service levy. The amounts shared would be based on the number of students attending the charter school.
'We talk about school choice, and we talk about kids. But we need to also think about the parents that are choosing to send their child to a different school — to a charter school,' said Sen. Linda Rogers, R-Granger, just before her bill advanced 28-21 to the House. 'Those tax dollars, for years, have not followed their children. Today, we need to make that change.'
The legislation was scaled back Wednesday to slow down the timeline for revenue sharing. Rogers said the amendment 'concessions' were largely prompted by her Senate Republican caucus colleagues. Twelve GOP senators ultimately voted against the bill.
'It's a contentious issue. … There are some members of ours that had concerns about it. I wasn't surprised that it was going to be a close issue,' said Republican Senate Pro Tem Rodric Bray. He cited specific concerns about the combined impact of the charter school bill alongside Senate Bill 1, the state's pending property tax reform.
'The combination of Senate Bills 1 and 518 make it, maybe, a little bit more difficult to really see with 20/20 vision the impact that's going to have on our local government, but in particular on our schools,' he continued. 'We just have to make sure that what we do there is good policy. But that does bring some trepidation to some of the members, I think.'
The bill prompted widespread pushback from Democrats and advocates for traditional public schools, who argued that it will drain critical funds from already cash-strapped districts. They worried, too, that such policy will force more school closures, especially within Indianapolis Public Schools.
'The clear losers here are the students and the parents who have chosen to send their students to traditional public schools. We hear people talk about school choice, but it robs tax dollars from the parents of 90% of our future students who choose public schools. Where is the respect for their choice?' asked Senate Minority Leader Shelli Yoder, D-Bloomington. 'This bill takes away that local choice. It overrides the rule of voters, the will of voters.'
Democrats offered 18 amendments to the bill on Wednesday, all of which failed. Those included proposals to reduce revenue sharing requirements, and to pause the bill altogether to allow for further study on impacts.
'The bottom line here today is that we've got a false argument to suggest that taxpayers benefit from money following individual children when we're talking about property taxes. Property taxes are meant to fund local systems, to strengthen entire communities,' said Sen. Andrea Hunley, D-Indianapolis. 'There's no harm in us taking a step back and evaluating the entire landscape of our schools and how we fund them before we start destabilizing them.'
Data compiled by the National Alliance for Public Charter Schools shows that 52,399 Hoosier students attended charter schools during the 2023-24 academic year — up from 46,796 in 2019-20.
A state law adopted in 2023 already requires school districts in Marion, Lake, St. Joseph and Vanderburgh counties — which have high shares of charter attendance — to share a portion of property taxes used for operations with charters located in the same county.
Rogers' bill seeks to extend that requirement statewide. Rogers said there are 36 Hoosier school districts that would meet the 100 or more student requirement.
The phase-in period now included in the bill varies, depending on the number of students attending charter schools within each school district.
Districts with fewer than 500 students attending charter schools would have three years to phase in revenue sharing. Districts with between 500 and 5,000 charter school students must complete the transition within four years, and those with 5,000 or more charter students would have five years.
Rogers said the slower approach will give districts more time to assess budget impacts, including from possible property tax reforms in Senate Bill 1. The current version of that measure is projected to cost school districts more than $370 million in property tax revenue across three years.
'This provides school corporations plenty of time to make any needed budget adjustments,' Rogers said. 'We'll continue to see what the impact is of Senate Bill 1. Specifically, that's why I moved (bill provisions) to 2028, because we don't know, in essence, what we're doing with that.'
The bill gradually increases the amount of school district operating and debt service revenues that are subject to sharing, from 33% in 2026, to 66% in 2027, and the full amount in 2028. As a distressed political unit, Gary Community School Corporation would be exempt from any tax sharing 2028.
An updated legislative fiscal analysis estimates that Rogers' bill will redirect $18.6 million to charter schools over three years. That's a drop from the $150 million that was expected to be redistributed over the same period under an earlier version of the legislation.
Charter schools would additionally have increased access to funds collected by school districts through voter referendums; any school district that adopts a property tax levy for a controlled project after May 10 — such as for new building construction or a school safety referendum — must allocate a portion of the revenue to nearby brick-and-mortar charters.
The state currently gives charter schools an extra $1,400 per pupil to compensate for their lack of property taxes. But under the new funding plan, grant amounts would decrease — or be eliminated altogether — for charters netting property tax dollars. Grants would only kick in if charters receive less than $1,400 from property taxes.
By further shifting the funding burden onto local property taxpayers, the state is estimated to save roughly $19 million.
Rogers did not close the door on future legislative 'adjustments,' however, if the new funding model causes school districts to struggle.
Unlike traditional public school districts, which receive local property tax revenue, charter schools have primarily relied on state funding. Even so, charters continue to take in more state tuition support dollars on a per-student basis than their traditional counterparts, according to legislative fiscal analysts.
Charter school critics have long argued that such schools are not obligated to serve every student in a given community — unlike those in traditional public school districts. That's because capacity limits student enrollment. If a charter has more applicants than spots, a lottery is used.
The public charters also have private boards and are therefore not accountable to voters, opponents say. That could change slightly; Rogers' bill includes a provision to allow traditional public school districts to appoint a member to a charter school's board.
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