Budget & Finance

Indiana Increases Funding for Charter Schools, Creates New Loan Program

By Tiara Beatty — July 08, 2015 3 min read
  • Save to favorites
  • Print

Indiana’s recently passed state budget gives charter schools and Indianapolis “Innovation Network” schools an additional $500 per student in annual state funding and establishes a $50 million loan program. It’s an effort to help close the funding gap between charters and regular public schools.

The budget bill, signed by Gov. Mike Pence on May 7, has garnered attention for offering charter schools more money after the state forgave $91 million in debt from charter schools in 2013. Brian E. Bailey, director of the Indiana State Budget Agency, said June 12 that those “loans helped provide assistance with start-up and growth costs for unopened and expanding charter schools.”

House Enrolled Act 1001 establishes two programs for charter schools: the Charter and Innovation Network School Grant Program, and a loan program called the Charter and Innovation Network School Advance Program.

Innovation Network schools are self-governing schools that have a contract with Indianapolis Public Schools to replace schools that received a D or F in overall school grading.

The grant program will give charters and Innovation Network schools $500 per student for capital improvement, innovative technology learning, and transportation. The bill will allocate $10 million annually for this grant.

The loan program gives each charter and Innovation Network schools an advance of up to $5 million over 10 years at a 1 percent interest rate. These loans must be fully repaid. There is a total of $50 million worth of loans to be split between the schools during the 2015-2017 biennium fiscal years based on need.

Schools receiving funding have to report annually to the state board of education. Only charter schools or innovation network schools that meet the eligibility requirements will receive funding. According to the bill, eligible schools must have an overall A, B or C under the state’s school grading system, be in their first or second year of operation, and not be receiving the same funding as public schools. Schools may receive funding if they support a “majority of students with developmental, intellectual, or behavioral challenges.”

In 2014, the University of Arkansas released a study on Indiana’s public and charter schools called Charter School Funding: Inequity Expands. The study found that during the 2011 fiscal year there was a 21.6 percent gap in funding between public schools and charter schools. Furthermore, it found that funding for charter schools had been on a steady decline in the state between 2003 and 2011.

Pence, a Republican, originally proposed a $1,500 per-pupil increase to provide higher-quality education at charter schools, but the grant program ultimately approved by lawmakers only includes $500 per pupil.

Advocates are pleased to see charters getting additional funding and believe this increase will help charter schools, especially those that serve children with higher needs.

“We applaud Governor Mike Pence for initially recommending a funding increase for public charter schools in Indiana, as well the Indiana House and Senate for supporting this legislation,” Nina Rees, president and CEO of the National Alliance for Public Charter Schools, said in a press release.

In 2013, Indiana forgave $91 million of debt that charter schools owed the state Common School Fund that is funded by fines, forfeitures, and other revenue from taxpayers. Legislators were criticized for forgiving only the loans of charter schools and not public schools. Opposition has arisen to the latest budget move, with the Indiana State Teachers Association speaking out against using taxpayer dollars to only benefit charter schools. The union “supports a 3 percent increase in each of the next two years so that [Indiana residents’] tax dollars are leveraged to serve all public school children,” according to its blog post statement asking readers to take action.

These additional funds became effective for charter schools July 1.

Indiana Gov. Mike Pence delivers his State of the State address earlier this year to a joint session of the Legislature at the Statehouse in Indianapolis. Pence’s 2015 legislative agenda relies heavily on increasing school choice through vouchers and more funding for charter schools. -- Darron Cummings/AP-File

A version of this news article first appeared in the Charters & Choice blog.