Gov. Holcomb proposes ‘solution’ for school funding

And while Statehouse leaders have said they will address the funding formula during the legislative session that starts in January, how they will address it remains a point of contention. 

Indiana funds its schools based on the number of students enrolled in them. That number, called the Average Daily Membership or ADM, is determined by a one-day count of students that happens each semester. The fall count traditionally takes place in September.

Schools get a “foundation” amount for every student and then additional dollars for students that require special services, like those with special needs or that come from low-income households. Schools only get 85% of the foundation dollars for each student that receives at least half of their instruction virtually — a provision written, before anyone had heard of COVID-19, to address the state’s fraught virtual charter schools. 

The law, which would cut about $850 out of school budgets for every “virtual” student, did not consider the effect of a worldwide pandemic that would keep thousands of Hoosier students at home this school year. 

The state’s largest district, Indianapolis Public Schools, stands to lose more than $27 million. 

Ensuring that schools receive 100% of funding 

A fix would take legislative action — a change to or exception from the current state law regarding virtual student funding.

In June, Holcomb and the General Assembly’s top budget writers said that fix was coming, and that they would support fully funding all students enrolled in public school districts, regardless of whether they attend school in person or online. But last week, Senate President Pro Tempore Rodric Bray sent a letter to schools that seemed to suggest otherwise. 

Bray said schools that do not offer an in-person instruction option are unlikely to be fully funded and should plan to receive only 85% of their foundation funding.

While most school districts have opened for in-person instruction, dozens have decided to start the year virtually. Some schools that opened in-person have already had to close and move online temporarily due to cases of COVID-19 and the number of students or staff members under quarantine orders. 

The letter raised questions for school districts across the state about how much money they would actually receive for the school year that, in many cases, had already started. It also raised concerns that schools would feel pressured to return students to the classroom, whether or not they felt it was safe to do so. 

Holcomb’s announcement Wednesday said the action he’s asking the state board to take — delaying the count day — would “ensure that Indiana’s K-12 schools receive 100 percent of funding as he committed earlier this summer.” 

Bray and House Speaker Todd Huston — leaders of the supermajority in their respective chambers — said they, too, support moving back the count day to allow schools to receive 100% of their per-student funding. 

It’s unclear how it will do that, though, unless all students are physically back in classrooms by the new count day, which will be set by the state board at a special meeting next week. 

“The board has this opportunity to build a bridge to the legislative session in early 2021,” said Molly Deuberry Craft, spokesperson for the state board. “The opportunity to move the ADM can help provide assurances to schools during a time of so many unknowns.”

Uncertainty over funding still looms

In the short term, schools will continue to be funded as if all of their students are in-person. How long that continues, though, depends on what lawmakers do.

The soonest they could take action would be on Organization Day in November, but Bray’s letter suggests little agreement on fully funding all students. Otherwise, the debate will begin in January. 

Until then, schools will continue to receive state funding in monthly distributions based on an estimated enrollment figure that schools provide to the Indiana Department of Education in the spring. This is the process every year, until the official enrollment count is certified. At that point, the state reconciles any difference between what schools received based on that estimated count and what the certified count says they should have been receiving. 

Without a legislative fix that fully funds all of a school district’s students regardless of how they receive their instruction, that reconciliation could create a fiscal cliff. The overpayment schools received in the first half of the year would be taken out of their remaining monthly payments. 

State Superintendent of Public Instruction Jennifer McCormick, who last week called on Holcomb to hold a special legislative session to address the uncertainty schools are feeling, said Wednesday she would continue to push for a solution. 

“This delay is just that — a delay,” she said in a statement. “Hoosier schools deserve a solution to secure 100% funding as districts are bargaining, budgeting and preparing for the next 18 months.”