Legislation Would Give Schools 'Freedom' To Spend State Funds How They Want, Lawmakers Say

Some Indiana lawmakers and school representatives are supporting a new bill that aims to simplify how schools are funded.

Currently, funding streams for traditional public schools are divided into a handful of areas -- including facilities, replacing buses, transportation costs and “general” expenses that include teacher salaries and class instruction.

For years some lawmakers have said those earmarks have limited the dollars spent on classroom instruction. A 2010 state budget agency study found that only 58 cents on the dollar of state funding was spent on student instruction expenditures.

House Bill 1009 would collapse the various funds schools are required to use when paying for certain types of expenses and just have two: educational and operations. 

It would also allow schools boards to transfer funds between those two accounts.

“I think it is gives the freedom to schools that they always have wanted,” said bill author Republican Rep. Tony Cook during the Education Committee meeting Tuesday.

So far there are no major objections. Though of the Gail Zeheralis Indiana State Teachers Association said the group would like to see a panel of educators review details of the plan before it becomes law.

“We believe at the very least we should be able to develop a stakeholder committee to discuss, what is ‘classroom instruction?’,” Zeheralis said, referring to how one of the two funding accounts would be defined.

Dennis Costerison, Indiana Association of School Business Officials executive director, said the change would let local school boards take control of how they spend state funds and better plan for the future.

“They may have money set aside in their capital projects fund to put a roof on but they don’t have money to operate their transportation system,” he said. “It’s just the way the funds have been set up over the years. Putting them together will take all of those restrictions away.”

Essentially, the bill gets rid of the school general fund and replaces it with the “Education Fund” to “be used as the exclusive fund to pay expenses allocated to student instruction and learning,” according to the state budget agency’s report on the legislation.

The new “Operations Fund” would replace a number of funds: capital projects fund, the transportation fund, the school bus replacement fund, an art association or a historical society fund, and the public playground fund.

House Bill 1009 is being debated in the House Education Committee this week.

Contact WFYI education reporter Eric Weddle at eweddle@wfyi.org or call (317) 614-0470. Follow on Twitter: @ericweddle.