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Bite-Sized Budget Breakdown: How Are Schools Funded?

Background

K-12 Funding

Indiana’s state funding formula is the mechanism for determining how much money the state gives to each school corporation. Currently, each district receives a minimum amount of $4,280 per enrolled pupil. (Kindergarteners are counted as half a student.) “Average daily membership” is determined by a single-day head count. For the 2012-13 school year, that day was Sept. 14. ADM isn’t a measure of attendance — kids who are absent on count day are still included in the district’s total enrollment.

The formula is changed and modified during the legislature’s biannual budget process. Additional funds are distributed based on the number of students who receive free and reduced-price lunches, students who graduate with honors and students who have disabilities.

The legislature has eliminated a number of funding programs, including additional grants for small school districts and K-3 students. The state also eliminated the “de-ghoster” or “re-ghoster” program, which allowed schools to spread out any loss of funding due to declining enrollment over three years.

As Indiana expands choice programs like charters and vouchers, some districts have complained that they’re footing the bill for students who return to their local public schools after count day. That’s why the legislature added a second count day — Feb. 15, 2013, this year. In the future, it’s likely schools will see their funding adjusted based on the second semester count. Indiana Department of Education officials say it’s one more way to make sure funding follows the student in Indiana.

What About Higher Education?

IU president Michael McRobbie looks on as Higher Education Commissioner Teresa Lubbers speaks during a press conference on Monday, October 24 in Indianapolis. McRobbie was announcing a 25 percent summer semester tuition discount for in-state undergraduate students.

Courtesy Indiana University

IU president Michael McRobbie looks on as Higher Education Commissioner Teresa Lubbers speaks during a press conference on Monday, October 24 in Indianapolis. McRobbie was announcing a 25 percent summer semester tuition discount for in-state undergraduate students.

The influential Indiana Commission for Higher Education, an executive agency that oversees the Indiana’s public universities, came out with a plan to tie a greater portion of state funding to a college’s academic performance. Indiana’s revised performance funding formula is designed to give schools specific targets that fit the state’s policy goals.

“We’re really trying to increase the number of people who complete [degrees], who complete on time, and we want to make sure we are incenting the right kinds of degrees,” says Teresa Lubbers, the state’s Commissioner for Higher Education.

Currently, 5 percent of the Indiana’s $1.2 billion higher education budget — roughly $61 million — is distributed based on performance metrics. After the Commission’s approval of the new funding formula on December 9, that figure will increase to 6 percent in 2014 (an estimated $73 million based on current funding levels), and 7 percent by 2015.

Compared with previous years, where the state based 1 or 2 percent of its funding formula on performance measures, “we’re starting to talk about real money now,” Lubbers says.

The state will rate schools and determine their funding levels based on these criteria:

  • Overall Degree Completion: What’s the change in total certificates and degrees a school gave out?  (All campuses)
  • At Risk Student Degree Completion: What’s the change in the number of degrees and certificates a school gave to students who were eligible for Pell Grants? (All campuses)
  • High Impact Degree Completion (New): How many bachelors, masters, or doctoral degrees did universities give out in science, technology, engineering, and math — or “STEM” — fields? (Only IU Bloomington, Purdue-West Lafayette, Ball State, IUPUI)
  • Student Persistence Incentive: At two-year campuses, what’s the change in the number of students who successfully completed 15, 30, and 45 hours? At four-year non-research campuses, how many students successfully completed 30 and 60 credit hours? (Non-research campuses)
  • Remediation Success Incentive: What’s the change in the number of students completing remedial courses in Math and English at two-year institutions? (Two-year institutions)
  • On-Time Graduation Rates: What is the change in a school’s the two-year and four-year graduation rates for first-time, full-time students? (All campuses)
  • Wild Card (New): Each college selects “one productivity metric linked to their strategic plan,” and will submit it for approval by January 2012. The metric should “focus on reducing cost of attendance for students.” (All campuses)

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