HICKS: Good local governance will support schools

Mike Hicks
April 17, 2010
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As in all 50 states and most countries, a good many school districts in Indiana are facing budget cuts this year. We can rest easier knowing that cuts in Indiana are small compared with those in most other states, leaving us with about the national average in spending per student.

There is much confusion about what is happening to schools. As of two years ago, the state paid 85 percent of school costs, with local property taxpayers funding the remainder. Property-tax reforms in Indiana shifted the last 15 percent of school funding to the state budget. So, except in a few places, all money spent on schools comes from the general fund.

The budget cuts most schools are feeling are really a result of the school-funding formula and the recession, not property-tax reform. There are some great lessons here.

School-funding formulas around the country move resources from taxpayers in richer and more urban places to residents of poorer and more rural places. Indiana’s does so as well. This is right and good. The problem is that rural places are losing population, while urban places are growing.

This is especially true among families of school-age children. As a result, school districts with a shrinking population have schools that were designed for student bodies twice the current size. The funding formula for declining places will appropriately shrink the total dollars these places receive. Dollars follow students to faster-growing places. We might well quibble with the particulars of the formula, but in essence this is what must happen.

Reorganizing school districts is difficult, but we Hoosiers have done so before. The first time came with the advent of school buses, the second as farm employment shrank dramatically in the 1940s through 1960s. Our experience today is tame by comparison.

Ironically, shrinking school districts get three distinct advantages. First, they already have more than enough school space. Second, they are already disproportionate recipients of school funding and, finally, there’s a comfortable time lapse in the application of the formula. Challenges in rural places are far less than in urban and suburban communities. It is the fast-growing places where the resource challenge is most dire.

Successful and growing communities must always play “catch-up” with school funding. These are also places where tax dollars in general flow to poorer, typically rural regions of the state. It is easy to sense the frustration of a growing, successful community.

I had the fortune to visit such a place–Hamilton County–late last year. I spoke at a Chamber of Commerce breakfast on the eve of a key referendum vote on supplemental school funding. I made a bold prediction that the referendum would pass easily. It did, with an overwhelming majority.

The reason was simple: School officials explained their needs clearly and effectively, and had a track record of fiscal prudence. There’s a lesson here. Effective local government will always find willing voters to pay for more of it.•


Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.


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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.