Explain the state funding formula and how changes are made?

The state distributes money from revenue it collects in income tax, sales tax, gaming revenues,  etc. to the almost 400 Indiana school corporations, virtual schools and charter school  associations based on a funding formula the state legislature creates and passes bi-annually as  part of the state budget process. 

All funding issues begin with the 100 legislators in the Indiana House. The state funding formula  provides about 85% of the revenue in DCSC’s Education Fund. About 90% of this fund pays for  teachers and staff of the corporation. The funding formula begins with a per pupil “foundation” or  base amount.  

The foundation amount is multiplied by the “complexity index” to determine additional funding  required for the education of “at-risk” children. A significant inequity in the funding formula  occurs when the money for an at-risk student does not follow the child to another school district.  For example, the top funded districts receive over $2,000 extra for each at-risk student. When  these same students move to DCSC, the millions of extra dollars do not follow those students.  There are no significant adjustments to the funding formula for a school corporation based upon  achievement scores. Most discussion on “merit pay” centers on individual teacher pay and not  the amount given to schools to fund those teachers. There is also no accountability for  achievement results from those school corporations and charter school associations with higher  levels of at-risk students from the additional money they generated.  

The 2008 Property Tax Reform legislation and the continuing funding decline against inflation  since, has now made the inequities in the funding formula a serious funding crisis by making  state funding based on the General Assembly’s formula the only source of funding to pay for  

classroom instruction. Changes to the foundation amount, adding an index for academic results  and some other tweaks to the formula are all possible, but will most likely be gradual changes  over the next several years if at all. 

The legislature addressed some of these concerns in the spring 2021 legislative session.  School districts in Indiana will receive new money from the state this year and Delphi is  appreciative of the increase. However, this percentage increase still means a substantial  inflation adjusted deficiency since 2010 as little change has occurred in the actual amounts.