Education, From The Capitol To The Classroom

1-2-3’s: The Battle Over Funding For Pre-K In Indianapolis

    Most figures in Indiana politics agree on the importance of and need for high-quality preschool. The issue of how to pay for it? That’s a different story.

    Preschool-age students in Indianapolis are on their way to having high quality options for education - as long as state officials can agree on how to pay for them.

    Rachel Morello / StateImpact Indiana

    Preschool-age students in Indianapolis are on their way to having high quality options for education - as long as state officials can agree on how to pay for them.

    The most recent battle is playing out in Indianapolis, where Mayor Greg Ballard introduced his preschool initiative in late July. Ballard’s initiative would fund preschool for children from low-income families, as well as boost the quality of local providers. The mayor has called his five-year program a preventative measure, part of a new plan to reduce crime in the city.

    That plan calls for an estimated $50 million by 2020 to cover preschool for about 1,300 kids who qualify for free or reduced lunch.

    Ballard says over the next five years, the city hopes to raise half that amount through philanthropy. The other half would come from taxes – specifically the homestead tax credit. The mayor wants to eliminate the credit, which would cost the average homeowner about $22 per year.

    Shaina Cavazos of Chalkbeat Indiana explains:

    Mainly, the confusion arose over the Homestead Tax Credit vs. the Homestead Tax Deduction — two different things, the mayor’s chief of staff, Ryan Vaughn, explained. […]

    The Homestead Tax Deduction gives relief to taxpayers by reducing the amount of property taxes they owe. Instead of requiring taxes to be paid on the full assessed value of a home, taxes are only required to be paid on 40 percent of the assessed value of a home (the deduction is capped at $45,000). For example, if a home is assessed at a value of $100,000, the homeowner would only pay taxes on $40,000.

    Funding for the preschool initiative has no effect on that deduction.

    Ballard proposes to eliminate the homestead credit. Anyone who lives and works in Indianapolis pays income taxes to the city. Currently, Ballard said, the city gives some of that money back to homeowners as a credit on their taxes.

    The estimated revenue ($25 million in tax dollars) would go toward grant programs run by the United Way of Central Indiana.

    Joe Hogsett, a Democrat and former U.S. attorney, could potentially run for mayor of Indianapolis next year — against Ballard. And he has opposing views on the subject of paying for pre-k.

    In an op-ed for The Indianapolis Star last week, Hogsett wrote that while he supports high-quality early childhood education for all families, he wants to find a “fiscally responsible” way to do so:

    Simply put, I do not support the mayor’s plan to levy a permanent tax increase on homeowners to pay for a small pilot program with a five-year timeline. Is there anyone who believes that city government will give us back this money once the program has ended? Such short-term fixes to long-term problems are how budgets get bloated and out-of-control spending becomes the status quo.[…]

    If it is truly a priority to fund expanded pre-K before the state can take action, I believe interim local funding should be found within Mayor Ballard’s proposed $1 billion budget. Surely, $5 million in annual funding can be found without taking resources away from local schools and libraries, as Mayor Ballard’s tax increase proposal would do.

    Hogsett also argues that the state government should be responsible for providing funds for pre-k, rather than individual cities.

    “We don’t need a permanent tax increase for a short-term program,” Hogsett writes. “We need a permanent solution backed by state investment.”

    Multiple local and statewide groups have already backed Ballard’s plan, most recently including Indiana University Health, who pledged a $1 million donation in support of the program.

    Ballard’s initiative is similar to, but separate from the state’s new pre-k pilot program. Marion County was one of the five counties selected to participate in that program, which is also scheduled to launch during the 2015-16 school year.


    About StateImpact

    StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.
    Learn More »