A National ‘Blueprint’?: Indiana Shifts Millions in Taxes To Charters From Districts

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In what advocates are calling a national “blueprint,” Indiana legislators have passed a new law in support of the state’s rapidly growing charter schools, forcing districts to share millions of dollars in property taxes with charters. 

Legislators in a state considered a leader in promoting charter schools, earlier this month also passed a law mandating the Indianapolis school district, the state’s largest and where 60% of students attend charters, work with the mayor and charter officials on a plan to share busing and school buildings. 

The two laws share a common theme: Both continue Indiana’s steady march toward treating charters – public schools that operate outside the purview of traditional school districts — as equal parts of the state’s education system. And in different ways, the bills chip away at districts’ longstanding and exclusive control of local taxes, school buildings and busing, giving charters a greater claim to assets they have long coveted. 

The laws’ impact could extend even further, with national charter advocates saying other states could use Indiana as a legislative model to provide charters across the country with more resources.

Few states have created as “robust” a structure for sharing property taxes with charters as Indiana, according to Todd Ziebarth, a senior vice president of the National Alliance For Public Charter Schools.

“It’s a big step forward for charter school funding equity there,” said Ziebarth.  “It serves as a pretty powerful example to other states about what states should do for charter school students.”

“I think there’s a philosophical difference that people have…,” Ziebarth said. “Districts think ‘this belongs to us,’ whereas other folks think [it] belongs to the community. It’s been a philosophical split that’s been tough to break in a lot of places… and Indiana has done it.”

But school district officials say the state has only widened the gap between the district and charter families. Some Indiana residents have called the bills part of a plan to privatize education, pointing out that many public charters are run by private organizations.

“Many of our lawmakers, their top priority was not our children, but dividing our community,” Indianapolis school board member Allissa Impink said at the board’s meeting Thursday. 

Teachers unions and districts fought bitterly over the tax-sharing bill and a separate statewide tax cut that will cost districts millions more. So many teachers flooded the statehouse in protest on April 14 that Indianapolis Public Schools and three other districts had to close schools for the day.

But Indiana charter advocates have praised the tax-sharing bill for closing what they see as an unfair gap in funding between charter and district schools, which one study estimates at $8,000 per student in Indianapolis, with districts spending $18,500 and charters $10,600. The difference in per pupil spending is mostly because, while district and charter schools receive state and federal aid, only school districts can raise money through property taxes. 

The new tax-sharing law would require that eligible charter schools receive a portion of local property taxes, funds that used to go entirely to districts for daily operations such as teachers’ salaries, books, hiring bus drivers and extracurriculars.

How much money each charter would receive would be based on the percentage of students living in the district who attend charter schools. The change could give charter schools nearly $4,000 more per student when fully phased in by 2031, advocates said. 

The new law affects an estimated 30 districts, including Indianapolis. 

Indiana isn’t the first to offer charter schools local tax dollars, but advocates say the state goes further than the limited ways other states do. Sometimes local property taxes are built into state school funding formulas, for example, or only charters created by the city or school district receive local revenue. 

The second law, aimed just at Indianapolis where charter students often have no transportation to school, would require city and school district officials to work with charters on a plan outlining how bus services and school buildings can be shared. 

“We’re really trying to share a significant number of assets that have never been shared before with charters and families,” said State Rep. Robert Behning, chair of the Indiana House education committee and author of the bus and facilities plan

Opponents of the plan say that gap could be addressed by giving charters more state money instead of splitting up local property tax funds.

“I want kids in all of our public schools to succeed, no matter the school type,” State Senator Andrea Hunley, an Indianapolis Democrat, said during the  debate on the bill. “But taking money from one of our systems that’s underfunded and giving it to another system that’s underfunded isn’t the way to do it, and it’s never going to be.”

The two laws come out of a state legislative session filled with conflict between districts and charter schools. Lines were drawn early, when legislators filed a bill that would wipe out the Indianapolis district and four others where charter schools educate the majority of students.

That bill never received a hearing, but drew an angry backlash from teachers, parents and district officials, particularly in Indianapolis, where charter schools draw increasing numbers of students away from district schools.

The tax-sharing bill followed soon after, with the Indianapolis Public Schools predicting the bill would force the district to close 20 schools, cut busing for students and likely hurt its partnership with some charter schools known as Innovation Schools.

The bill was scaled back before passing — delaying tax-sharing until 2028, phasing it in over four years and dropping a requirement that districts share property taxes passed specifically for building or updating school buildings.

It kept, however, the mandate that local property taxes for operations would have to be shared with charters. 

How much money would eventually be shared and the number of charters affected is unclear, which drew objections from Democrats as Republicans passed the bill. The state has estimated that $5.4 million would be shared in 2028.

The Indianapolis Public Schools has not shared its estimates of what the new laws would cost the district. 

Behning said his plan for the school district and charters to share and coordinate use of old school buildings and bus routes will also help the district pass tax increases. Charter school parents, the majority in the city, are more likely to vote for property tax increases if they will help their children’s schools. 

“There’s no way they could get a referendum approved right now if they did not voluntarily come together and try to do this alliance and try to figure out how to share,” Behning said.

Behning’s plan creates the Indianapolis Local Education Alliance which will review busing plans for district and charter students; along with sharing other resources such as available school buildings.The alliance will report its findings by Dec. 1. Recommendations are not binding.

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