Finding Ways to Drive Dollars into Indiana Classrooms

December 28, 2008

For release Dec. 31 and thereafter (700 words)
When Tony Bennett lobbies state legislators on behalf of Indiana public school students, it won’t be with hands outstretched. “I am not a person who thinks we need more money infused in the system,” said Bennett, who takes office Jan. 12 as Superintendent of Public Instruction.
Indiana invested $776 million extra in K-12 education over the past four years “with no appreciable change” in test scores, he noted. So a tight economy may be a blessing in disguise because it will force folks to be creative about getting dollars into the classroom.
At a time when many states have had to cut education budgets, Indiana certainly can’t be accused of inadequate funding. K-12 spending consumes 32 percent of the state budget — $8.6 billion in this biennium. That’s five percent more than the previous biennium and more per capita than the majority of states. In 2005-06, the latest year for which national statistics are available, Indiana ranked 18th in per-pupil spending at just over $11,000.
A more telling statistic is this: Indiana ranked 27th in the percentage of funding (60.1 percent) that goes into instruction instead of things like administration, support services and transportation. Twenty-six states spent more of their education dollars in the classroom.
“It comes down to how we spend the money,” Bennett said. And he has several ideas about how to drive more dollars into instruction. These include:

• Deregulation. Bennett would like to modify rules such as “seat time” for students or certification provisions for teachers that limit academic options or cost money. He cites the example of a school that recently lost vocational funds when it received a waiver so an English instructor could teach a vocational program.

• Streamline the Department of Education. “We intend to spend less money in Indianapolis if at all possible so we can send more to local school corporations to spend inside the classroom.”
• Find ways to “de-silo” spending. As it is now, operating budgets are kept separate from capital, technology, food services and transportation budgets. If a school system saves money in one area, it should be able to divert savings to the classroom. House Bill 1006, passed in 2006, took steps in this direction but has yet to achieve its potential.
Another strategy is school consolidation, although the extent to which it will shift money into instruction is disputed. The Indiana Commission on Local Government Reform recommended combining school districts with fewer than 2,000 students to achieve economies of scale. The governor is proposing that districts with enrollment under 1,000 merge central office operations with other districts.
The idea, Bennett says, is to streamline administration and pool purchasing power and not to close schools. In fact, the proposal would impose a five-year moratorium on high-school closings.
It’s not consolidation itself but the sharing of services that offers real savings. A study by Deloitte Research and the Reason Foundation concluded that school districts could save millions by sharing everything from buses to information technology to gymnasiums.
That same study, however, cited research by a management expert, Dr. William Ouchi, whose ideas have been applied to Indiana schools by the Indiana Policy Review Foundation, that indicates centralized budgeting is not a good idea. “Schools perform better on fiscal and academic outcomes when there is a) local control of school budgets by principals and b) open enrollment, which allows per pupil funding to follow the child,” says Ouchi.
The latter idea, known as Weighted Student Funding, is being piloted around the country and gaining acceptance. In its purest form, students would get to choose any public school in their region and per pupil funding would go with them. The allotment would be higher for students with special needs (such as high poverty or English as a Second Language) and school buildings would have flexibility to spend as they deem fit. Because parents would get to choose their child’s school, a competitive environment would force principals to spend wisely, thus more money for instruction.
Bennett is philosophically behind the idea. “I do believe money should follow students.” He has yet to endorse anything specific.
What’s encouraging is that he understands the next wave of education reform: Spending more effectively. This means shifting dollars from overhead to instruction and giving consumers more purchasing power.

Andrea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at the foundation,


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