Charter schools could gain local tax dollars under new Indiana House plan

Have a news tip for WFYI's education team? Share it here.

Indiana House Republicans have proposed splitting local property tax revenue between traditional public school districts and charter schools as part of a broader tax relief plan.

The controversial language from Senate Bill 518 that would make significant changes to how charter schools are funded was added into an amendment for the reform package in Senate Bill 1. Currently, some charter schools recieve a small amount of local taxes compared to districts.

Lawmakers passed the bill out of the House Ways and Means Committee along party lines Monday. The bill now heads to the full House.

Under the updated SB 1, local school districts would start to share property tax levies and voter-approved referendums with charter schools beginning in 2028. 

School districts where more than 100 students – or 2% of the district’s spring average daily enrollment count — attend an eligible charter school would be required to share property tax revenue with charters.

The sharing of operations fund revenue — which covers transportation, utilities and capital projects — would be phased in over four years.

Virtual charter schools and adult high schools are excluded from all forms of property tax sharing under the bill.

The original SB 518 – on its own – would have shifted more than $370 million in property tax money away from public schools. The updated financial impact on school districts was not yet shared Monday. 

Indianapolis Public Schools responds

Indianapolis Public Schools informed parents over the weekend about House lawmakers’ new  property tax sharing plan with charter schools. They called on them to ask lawmakers to adequately fund all schools without taking resources from IPS.

In a statement, IPS Superintendent Aleesia Johnson said the district is still reviewing how the updated SB 1 would impact the district. 

But IPS projects it could lose more than $96 million by 2032, if SB 1 becomes law. 

Other school districts have also encouraged their communities to speak out on SB 1 because they fear a loss of local revenue could reach classrooms. 

Hamilton Southeastern Schools, asked district families to contact lawmakers and ask them “to provide tax relief without jeopardizing the future of our schools.”

“These reductions could lead to fewer academic programs, increased class sizes, and staff reductions – directly affecting the learning experience of our students,” said Pat Mapes, HSE’s superintendent. “While these cuts are being presented as property tax relief, they come at a significant cost to public education. 

Rep. Greg Porter (D-Indianapolis) said charter school funding is a distraction from reforming property taxes.

No one in his party voted for the bill during committee, but Porter said they would have voted against the measure even if property tax sharing was never added.

“I don’t think at this point we will support that,” Porter said. 

The education department will share an estimate of how much property tax revenue both school districts and charter school districts are expected to receive, according to the bill. 

The legislation no longer mandates that districts share debt service levy funds with charter schools. Porter said he hopes the bill stays that way. 

“It may stay out of this bill, but it may wind up in the budget bill,” Porter said. 

Rachel Fradette is the WFYI Statehouse education reporter. Contact Rachel at rfradette@wfyi.org.