IPS referendum

Indianapolis Public Schools may ask taxpayers for more money. A three-year deficit and raises for teachers are driving the decision.

PHOTO: Dylan Peers McCoy
Indianapolis Public Schools leaders may ask the public for more funding.

With Indianapolis Public Schools slowly burning through its savings, district leaders may soon ask taxpayers for more money.

For the third year in a row, the district expects to operate at a deficit, following years of declines in state funding and growing spending on teacher pay. Now, to balance the budget, some district leaders say IPS may need to ask taxpayers for more money through a referendum.

It will be more than a year before the district can put a referendum to increase property taxes on the ballot, said Superintendent Lewis Ferebee. But with state funding stagnant or declining, Ferebee said that he believes the district will “absolutely” need to have a referendum for more funding to pay teachers at the current rate and potentially increase pay in the future.

In recent years Indiana schools have become largely reliant on state funding for operating expenses, with local money primarily paying for transportation and facilities. But districts with pinched budgets often appeal directly to residents to increase property taxes and send more money to schools. Of the 11 school districts in Marion County, eight have asked taxpayers for more funding to pay operating expenses such as teacher salaries and six were successful. The most recent district to make an appeal was Washington Township, which passed a referendum last fall.

Next year, IPS expects to spend about $22 million more on operating expenses then it receives in state, local and federal dollars. The district can make up for that gap in the short-term because it has about $57 million in savings, and it is adding millions of dollars to its coffers each year from the sale of unused buildings. But neither strategy is sustainable in the long term.

“We know we have deficits,” said Weston Young, the district’s chief financial manager. “Ultimately, much like a lot of the other local districts and state districts, an operating referendum is very much a consideration for our district.”

Before district leaders appeal to voters for more cash, however, they are aiming to cut some of the costs that are weighing down the shrinking district — which has lost thousands of students over the last decade. The biggest drain are the district’s underused schools. The district has nearly three times as many seats as there are high school students to fill them, which dramatically pushes up costs at some schools.

(Read: Empty hallways, higher costs force Indianapolis Public Schools to consider closing high schools)

Last summer, IPS leaders announced plans to close some of the district’s high schools. Ferebee said last week that the district could close schools by 2018-2019.

Board member Kelly Bentley said that closing some high schools is one way that the district can show taxpayers that it is managing its finances responsibly — and win more support for a referendum.

“I think the district has been and continues to be really good stewards of the money that we have,” she said. “We need to continue to do that so that the taxpayers feel comfortable that we are doing what we can with what we have, and there really is no other alternative.”

IPS leaders are also looking to prove their fiscal responsibility in other ways: Since Ferebee took the helm three years ago, the district has touted a focus on making sure funding goes directly to schools. Last year, consultants for the district found that spending on management and leadership had fallen to $684 per student in 2015-2016 from $876 in 2012-2013.

But IPS leadership has also spent big on some areas. The district has spent hundreds of thousands of dollars to pay outside consultants to help plan a new approach to school budgeting. And last fall, the district approved the first teacher raise in years, which increased the minimum salary for teachers to $40,000 — at a price tag of about $1.7 million per year, according to an IPS spokesperson.

If the district wants to raise teacher and principal salaries again, the district will need to have a referendum, Bentley said.

“With concentrated poverty like we have in IPS, I just think it’s a huge challenge for principals and teachers,” she said. “We just need to be able to pay them competitively. I just hope that the public will see that.”

IPS referendum

Indianapolis Public Schools scales back referendum (again) to win chamber support

PHOTO: Dylan Peers McCoy

To strike a bargain with a politically powerful ally, Indianapolis Public Schools leaders voted to shrink — again — the district’s multimillion-dollar funding request to taxpayers.

The new request amounts to $220 million over eight years. And this time, the proposal will be supported by the business group, which could play a pivotal role in helping the district win over voters.

The new request comes after a week of intense negotiations between the district and the chamber, which threatened to oppose the district’s operating referendum. Chamber officials had presented a plan that asked taxpayers for $100 million along with massive cuts that they said would make Indianapolis Public Schools operate more efficiently. The district then countered that $315 million was the bare minimum needed to serve students.

The school board voted 5-0 in favor of the reduced request at its meeting Tuesday night. Board members Mary Ann Sullivan, Venita Moore, Michael O’Connor, Elizabeth Gore, and Diane Arnold supported the measure. Board members Dorene Rodriguez Hoops and Kelly Bentley were absent. The plan will appear on the November ballot with an additional tax measure to raise $52 million for building improvements.

District leaders have been collaborating with the chamber for more than four months to craft a slimmed down request after their first proposal garnered little community support. The agreement approved Tuesday represents a compromise between the chamber’s plan and the district’s request.

The reduced request was clearly a bitter pill for many of the school board members to swallow.

Moore said that the students in Indianapolis Public Schools deserve better than the district has been able to provide. The chamber has promised that if the funds are not enough to ensure a high-quality education, the business group will work with the district to pursue another referendum, she said.

Children of color represent more than 70 percent of the school district, said Moore, who is black. “We deserve a quality education,” she said. “Our children do not deserve substandard education, books, instruments, or tools.”

In a prepared statement, Sullivan raised several concerns about the impact on the district of the smaller proposal, which she said was based on assumptions that are “unrealistic, politically naive, and potentially damaging to our community.”

Sullivan said the cuts proposed in the chamber’s report would never be accepted in suburban communities with affluent families like Carmel, Zionsville, and Brownsburg.

“IPS cannot intentionally build or allow ourselves to be satisfied running a system of second- or third-class public schools simply because we primarily serve low-income families and students of color,” she said.

The $220 million request that the groups settled on includes a raise in pay for teachers, but the district is not committing to a specific increase. There will also be about $95 million in cuts, including $31 million in transportation, $47 million in facilities, and $17 million in food service, according to the district.

For now, budgets for individual schools will be “business as usual,” said Superintendent Lewis Ferebee. But, ultimately, the district may need to close more than a dozen schools as part of the plan, he said.

“It will be a complex process,” Ferebee said. Before the district makes decisions on what schools to close, he added, the board members will have to “consider the impact on neighborhoods, the impact on education outcomes.”

The plan will result in a slower process for school closings, a longer phase-in of transportation changes, and a slower pace for reducing the number of teachers compared to the chamber’s initial proposal, according to the business group.

Indy Chamber CEO Michael Huber said the district must work through “thorny issues” going forward. But he was optimistic about the plan.

“We feel strongly that where we’ve landed really balances the impacts of where you are trying to take the district, and the positive changes you are making, and also the impact with quality of life on our city,” he told the board.

The chamber has not yet determined whether to actively campaign for the referendum, but the group will vocally back the tax measure, said Mark Fisher, chief policy officer for the Indy Chamber.

“We are going to be offering our full-throated support — our full support for the referendum,” he said. “Hopefully we will be able to build a broader community consensus on the increased funding for IPS.”

The agreement entwines the district with the chamber for the long haul. The business group will help raise private funds for two staff members who would be dedicated to pushing for sweeping changes that the chamber recommended in its report earlier this month, Fisher said.

“Making sure that they are implementing at an appropriate level and speed is going to be key,” said Fisher.

The new plan is less than a third of the size of the initial proposal that the district made seven months ago, which would have raised $736 million over eight years for operating expenses. Superintendent Lewis Ferebee said last week that the district may need to return to voters for more money if the first request does not raise enough.

But while district officials clearly support a larger request, there has been significant pressure for them to come to an agreement with the chamber.

This story has been updated.

IPS referendum

To bring down potential tax hikes, chamber proposes slashing Indianapolis Public Schools budget

PHOTO: Alan Petersime
Students walk through the halls at the Career Technology Center at Arsenal Technical High School.

In a political showdown, one of the most vocal supporters of Indianapolis Public Schools is pressuring the district’s administration to make aggressive budget cuts and significantly reduce its request for more taxpayer money.

The Indy Chamber unveiled a plan Wednesday proposing nearly $500 million in sweeping cuts to Indianapolis Public Schools over eight years. And the chamber drew a line for its support of requesting more money from taxpayers: Chamber officials say they believe the district should only ask for $152 million in additional funding through tax increases, a significant reduction from what started as a nearly $1 billion request.

The district is set to decide next week how much it will seek from taxpayers in November.

Philanthropist and influential business leader Al Hubbard, who played a significant role in the analysis, gave an unvarnished pitch for the district to embrace the chamber’s recommendation during a press conference.

“Our hope is that they are going to embrace this proposal,” Hubbard said. “If they propose a referendum that’s higher than this, we will have to oppose them.”

But the district pushed back. In a statement, Superintendent Lewis Ferebee said the district will continue to work with the chamber as officials work toward a referendum amount. But he raised concerns about the cost-cutting measures recommended, particularly what he described as closing a “devastating” number of schools.

“IPS is committed to further action to reduce unnecessary expenditures,” Ferebee said. “We believe, however, that a responsible referendum request cannot be anchored solely in revenue from cost savings that to this point are on paper only.”

The report came on the heels of months of work between the district and the chamber after the school board agreed to delay a plan to ask voters for more money in May. In exchange for the delay, the chamber committed to analyze Indianapolis Public Schools’ finances, help draft a new request — and, importantly, lend its political support to a tax increase.

The proposal now puts school officials in a bind: If they adopt the chamber’s plan, or something similar, they will need to dramatically overhaul district spending in the coming years. Alternatively, if they reject the austerity measures, they could lose the chamber’s support and struggle to persuade voters that more funding is essential.

The largest savings in the chamber’s plan, expected to save $477 million over eight years, would come from:

  • Reducing the number of teachers through attrition ($126 million).
  • Eliminating busing for high school students and relying on public transit ($121 million).
  • Reducing unused space more than likely by closing schools ($100 million).
  • Cutting the central office staff by 50 percent ($33 million).
  • Reducing the number of custodians ($19 million).

Another $62 million would come from “operating efficiencies,” a bucket that includes wide-ranging suggestions such as cutting classroom assistants, contracting out nursing, expanding health savings accounts for employees, and switching to an internet phone system.

Ahmed Young, the chief of staff for the district, said Indianapolis Public Schools has significantly cut spending on its central office and sold underused properties in recent years. He said the district would continue to work with the chamber to come to an agreement in the coming days.

“There are elements that we disagree on obviously, and we are going to continue to lift up our hood and make sure our engine is running properly,” he said.

The plan also includes two potentially controversial real estate deals. It calls for leasing the Broad Ripple High School building to Purdue Polytechnic High School and Indianapolis Classical Schools, which runs Herron High School. That proposal has ignited controversy in recent weeks, as local political leaders have put increasing pressure on the district to accept an offer for the building, while Indianapolis Public Schools officials have said they plan to have an open process to gauge interest. The chamber is also calling for the district to look into selling its central office building, which officials are already considering.

The chamber contends that the cuts it recommends could balance the district’s budget — which is projected to have a deficit of about $45 million next school year. But the chamber is also proposing $243 million in extra spending on teacher and principal pay to reduce turnover and make Indianapolis Public Schools more competitive with nearby districts.

Indianapolis Public Schools spends the most per student of any comparable district, according to chamber data from 2016-17. But its teacher pay is relatively low compared to other districts, especially for mid- and late-career teachers. In part, that’s because the district only spends about 47 percent of its budget in classrooms, according to the chamber.

Under the chamber’s plan, teacher pay would go up by 16 percent and principal pay would rise to $150,000 per year by 2020-21. After that, all IPS employees would receive 2 percent raises each year.

To fund those raises, the chamber is proposing increasing local funding by $100 million for operating expenses, such as teacher pay, over eight years by asking voters to approve a tax increase. The plan also includes a second tax measure to raise $52 million for building improvements, primarily focused on safety, that was announced by the district in June.

That’s a significant decrease from the district’s original proposal for referendums. Indianapolis Public Schools officials announced last year that they would seek nearly $1 billion more over eight years from local taxpayers in May. After that plan failed to gain support from community leaders, the district first reduced its request and then delayed the vote until November.

The chamber acknowledged that the cuts it is recommending would be painful.

“What we are asking them to do is tough. Closing schools is very difficult. Reducing the number of employees is very difficult,” said Hubbard. “At the same time, we think it’s unfair to the taxpayer to pay for empty seats or to pay for unnecessary staff.”

School board president Michael O’Connor said the district has had a longstanding partnership with the Indy Chamber, and he expects them to come to an agreement in the coming days.

“If we keep that perspective, that we’ve been partners on a lot of very difficult things, in the forefront, and we keep talking between now and Tuesday afternoon at 5:45 p.m., I think we will probably find some common ground,” he said.

The chamber’s report echoes a similar finding in 2014, when the district was projected to run a budget deficit. The chamber made similar recommendations, including selling the district’s headquarters and relying more on public transportation. The administration eventually implemented some of those suggestions, but concerns about the deficit dissipated when it was revealed to be an accounting error.

The current Indianapolis Public Schools administration is often lauded by the business community, and the chamber, for steps it has taken to transform the district in recent years, including the push for more school choices and the closure of some underused high schools. Indy Chamber CEO Michael Huber echoed that support Wednesday, describing Ferebee as “one of the best superintendents in the country.”

“We very much believe in Dr. Ferebee’s abilities to implement these solutions,” Huber said. “We wouldn’t be wasting our time throwing out hypotheticals or theoretical solutions.”

The plan was crafted by consultants from Faegre Baker Daniels Consulting and Policy Analytics, LLC, who had access to reams of information and prior reports from Indianapolis Public Schools.

This story has been updated.