Bill to split some of schools’ local property tax funding with charters narrowly passes Senate

This story has been corrected.  See details below.

Some traditional public school districts would be required to share tax dollars with local charter schools under a controversial measure approved by lawmakers. After two days of heated debate, the bill was narrowly approved by Senate Republicans last week.

Senate Bill 518 requires traditional public school districts share the funding generated by local property taxes — or operating fund levies — with charter schools starting in 2028. The Indiana Legislative Services Agency estimates about $6 million could be shifted from traditional public schools to charters in 2028 alone. That doesn’t include revenue from voter-approved referendums.

Schools would phase into sharing their operating fund levies with charters between 2028 and 2032. But the rate depends on the number of students who reside within a district and attend charter schools.

Sen. Linda Rogers (R-Granger), the bill’s author, said charter schools are public schools, but they don’t get the same level of funding as traditional public schools. She said charter students should also benefit from local property taxes and their parents’ tax dollars should go toward their child’s public school, even if that school is a charter.

“We talk about school choice, and we talk about kids, but we need to also think about the parents that are choosing to send their child to a different school — to a charter school,” Rogers said. “Those tax dollars for years have not followed their children. Today, we need to make that change.”

Districts where fewer than 500 students attend charters will be phased in by 33 percent increments until charters receive their full share in 2030. Districts in which 500 to 4,999 students attend charters would be phased in by 25 percent increments until charters receive their full share in 2031. Districts where 5,000 or more students attend charters would be phased in by 20 percent increments until charters receive their full share in 2032.

School districts in Lake, Marion, Vanderburgh and St. Joseph counties are already required to share some operating funds with local charter schools by a law passed in 2023, so those districts would not be phased in under the bill.

The bill also says school corporations that pass controlled project, school safety or operating referendums after May 10, 2025 must share some of that revenue with some charter schools located within their district.

Overall, the Legislative Services Agency estimates traditional public schools could stand to lose about $18.6 million total by 2028 from the combined impact of shifting referendum and operating funds to charter schools.

Multiple Republicans urged the Senate to pass the measure. Sen. Chris Garten (R- Charlestown) said the bill rights an inequity against charter school students.

“Why do those kids matter less in the education system? Why should we fund those kids less? Because that’s the system currently,” he said.

Numerous lawmakers also spoke against the bill. Those opposed to the measure said it will increase the burden on school districts that are already struggling. They also said it will siphon money away from traditional public schools to schools that lack the same types of regulations, oversight and elected school boards.

Democrats proposed a slew of amendments to the bill Wednesday to create a temporary moratorium on opening new charter schools to evaluate the impact of the bill, require charter school authorizers to be located in the same county as their charter school, mandate charter school board members to be elected or give traditional public school districts any savings the generated by the bill. None of them made it into the Senate’s version of the bill.

The bill would save Indiana money because any referendum funding shared with a charter school would be deducted from that school’s Charter and Innovation Network School Grant Program award, if it is eligible for the grant.

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Sen. Greg Taylor (D-Indianapolis) said he served on the board of a charter school for four years before he was elected as a state lawmaker. He said one of the initial appeals of charter schools was that they claimed they could “do more with less” and did not need as much funding as traditional public schools.

However, Taylor said SB 518 creates a scenario where the two different school types must compete for local funding.

“What is enough? Do we stop when we run out of money? Or do we keep taking away from those traditional public schools that need those resources, that need to recruit some of the best students, that still educate over 90 percent of our kids in this state?” he asked.

Sen. Shelli Yoder (D-Bloomington) said two traditional public school districts in her area would be impacted by the bill.

“Senate Bill 518 is not about choice. It is about redistributing public tax dollars away from traditional public schools …and handing those dollars over to charter operators with limited oversight,” she said. “We hear people talk about school choice, but it robs tax dollars from the parents of 90 percent of our Hoosier students who choose public schools. Where is the respect for their choice? This bill takes away that local choice.”

Yoder and other Democrats said if lawmakers want to fund charter schools equally, they should appropriate additional funding without taking any money away from traditional public schools.

Sen. Fady Qaddoura (D-Indianapolis) said lawmakers have a legal responsibility to fund traditional public schools. He added that charter schools are different, and he said he rejects the idea that the two types of schools must receive equal funding.

“It is sending a dangerous message to the state of Indiana that our traditional public schools for decades have been taking money from our families and neglecting other students. That’s dangerous,” he said.

Qaddoura also said he is baffled lawmakers would pass this bill during a tight budget year when there are many uncertainties about how it will financially impact school districts.

“In the last two months, my Republican colleagues on different committees drilled in our minds a thousand times how difficult this budget session is going to be, how much revenues are declining, and we have to be fiscally responsible,” he said. “Question after question after question when we asked what is the fiscal impact of this bill, the answer is we don’t know.”

Legislation must garner at least 26 votes in order to pass the Senate. A mix of Republicans and Democrats voted against the bill, but ultimately was approved 28-21. It now advances to the House.

CORRECTION: A previous version of this story said Senate Bill 518 required some traditional public schools share referendum dollars with charter schools. While that is part of the bill, it also requires some traditional public schools eventually share the funding generated by local property taxes — or operating fund levies — with charter schools as well.

Kirsten is our education reporter. Contact her at [email protected] or follow her on Twitter at @kirsten_adair.