Education Funding

Indiana Shifts School Costs Away From Local Tax Rolls

By Michele McNeil — March 25, 2008 1 min read

Capitol Recap offers highlights of the legislative sessions. Precollegiate enrollment figures are based on fall data reported by state officials for public elementary and secondary schools. The figures for precollegiate education spending do not include federal flow-through funds, unless noted.

Indiana

Gov. Mitch Daniels

Republican
Senate:
17 Democrats
33 Republicans

House:
51 Democrats
49 Republicans

Enrollment:
1.6 million

The Indiana legislature in its recently completed session passed sweeping changes to the state’s property-tax system that give substantial breaks to homeowners by shifting the costs of running schools entirely from local tax rolls to the state. Before the change, about 15 percent of school districts’ general operating funds, or about $2 billion statewide, came from local property taxes. Now, that $2 billion will be picked up by the state.

The measure also caps the amount a homeowner’s property-tax bill can increase, which could further limit the flow of such revenue into schools. Property taxes will still help pay for school construction. The tax breaks, the top item on Republican Gov. Mitch Daniels’ agenda, will be funded by raising the sales tax from 6 percent to 7 percent.

Under the legislation, which was approved on March 14, the final day of the 2008 session, districts would also be required to get voter approval for high school building projects of at least $20 million, and elementary and middle school projects of at least $10 million.

This was not a budget year for Indiana, which runs on a two-year spending plan.

See Also

See other stories on education issues in Indiana. See data on Indiana’s public school system.

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A version of this article appeared in the March 26, 2008 edition of Education Week

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