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Breaking Down the IPS Budget and Financial Outlook

With these rapidly changing times, Indianapolis Public Schools is working harder than ever to ensure the district maintains a balanced budget providing the best resources for students and teachers while being good stewards of taxpayer dollars. Currently, the Indiana state legislature is moving toward finalizing the next two-year education budget and there is a lot at stake. 

Let’s take a look at:

Where the District is Financially

Due to many unforeseen circumstances surrounding COVID-19, expenses are up, and enrollment is down by 4%. That combination has created a $15 million budget shortfall for the current school year with a projected shortfall of $18 million for the 2021-22 school year.

“Reductions for this year would have potentially happened through personnel, but we chose not to right-size our school budgets given all of the changing dynamics with COVID-19 and that is part of why the deficit is up next year,” said Aleesia Johnson, IPS superintendent.

It’s important to note 50% of the district’s budget comes from the state, around 15% is federal funding leaving about 35% that comes from local property taxes. 

Federal funding covers areas including Title I programs, food services, special education and English Language Learners (ELL). Local funding includes facilities and transportation. The area of most concern right now is state funding, which includes state tuition and complexity support. Total Tuition Support is made up of two pots of money – Foundation Funds are the same amount given to all students in the state. Complexity Funds are based on the needs of the students in each district. This is particularly important in a high-needs district like IPS where nearly 70% of students are reported as economically disadvantaged.

How We Got Here

Since the 2013-14 school year, Indiana lawmakers have consistently shifted how they fund schools. While IPS did receive more in Foundation Funding, the district received significantly less in Complexity Funding – money for students who need it most. Add the two together and the total tuition support has not increased in the last seven years. Over the same time period, the average funding across the state increased 15% per student, including many who live in wealthier districts.

“What we’ve heard is state lawmakers feel putting the dollars into the foundation means all students get something, which in theory is not bad if all students are experiencing the same conditions and opportunities,” said Johnson. “But that is not the case. A student coming from a family with additional resources, such as Wi-Fi at home or access to tutors, enjoys a very different experience than a student who is at home without access to the internet or additional funding to seek resources like tutors. The flawed thinking that everyone gets something doesn’t take into consideration that not everyone is at the same place or existing under the same conditions. This is why we need to fund equitably and not equally.”

To do that, the administration recommends state funding that includes a weight in the school funding formula for English Language Learners as well as homeless students. 

“We also need to make sure equitable funding is at the forefront of the decision-making and state lawmakers fund complexity at the same or greater rate as the foundation,” said Weston Young, IPS chief financial officer.

“The questions we’ve received from legislators is they don’t know how districts are using the resources to address students who have more needs,” said Johnson. “Our team has been able to outline all of the resources we have put in place for our students who have higher needs that the complexity dollars fund. That includes additional counselors, alternative resources for students and the Newcomer school for families who are new to the country. Those are a few of the supports for students with additional needs.”

What We’re Considering Doing

IPS did receive some federal relief funds, but those dollars are restricted and can’t cover the budget shortfall. Federal relief funds were vital for the new challenges the district faced — everything from masks and touchless water fountains to the thousands of laptops, iPads and mobile hotspots IPS provided to ensure every student had access to high-quality remote learning. A new round of federal funds was granted in December 2020, but those funds are also restricted and can’t be used to fix the ongoing need. The administration is working on a framework aligned to the district’s Strategic Plan 2025 and will focus the funds on learning acceleration to address learning loss related to COVID-19, IT investments and student and staff safety.

Referendum funds approved by voters in 2018 are also not the solution to the budget deficit. The referendum specifically dedicated those dollars to costs like much-needed facilities upgrades and well-deserved teacher salary increases. 

IPS is currently looking at several potential cuts to balance the budget. 

“We’re looking at school and central services budgets to see if there are places where we can cut from non-personnel categories first. But, we’re also looking at potential personnel reductions and some cuts to operations,” said Johnson. “Our goal is to ensure classroom instruction, including leading and learning, is impacted as little as possible.”

Additional dollars through complexity funding or adding a weight for ELL and homeless students would allow additional dollars that come into the district, but that depends on the number of students coming into the district. 

“We are checking those early elementary grades like Pre-K and kindergarten where we know enrollment is down,” said Johnson. “We’re doing our best to keep tabs and see if those families are going to be opting back into the traditional K-12 setting next year. It’s a big question mark for every school district. If COVID rates remain low and families see schools can remain open consistently that would be encouraging for families.”

By making strategic decisions now about how IPS spends money based on current projections in federal, state and local funding, the district can avoid having to make dramatic cuts later, like layoffs and cuts in pay that the district worked so hard to increase.