IPS referendum

Indianapolis struggles to balance how much money schools need with what people will pay

PHOTO: Dylan Peers McCoy
Lewis Ferebee

Without a massive influx of cash from taxpayers, Indianapolis’ largest school district could be in dire financial straits. But the fate of the referendums asking voters for more money is in limbo.

Even as the Indianapolis Public Schools board revealed plans to reduce how much money it is seeking from voters, the administration portrayed the district’s financial future as precarious. During a board discussion Thursday, officials underscored how critical it would be for the tax increase to pass. It’s unclear, however, whether the district will get the extra cash it needs to avoid making painful cuts.

Critics have suggested the request — $936 million over eight years — is too high and that the district has not offered enough detail on how the money raised would be spent. With only tepid support for the tax plan, district leaders appear poised to reduce the amount they are seeking. That move could win over new allies, but it could also undercut their efforts to gain support.

Next year, the administration is expecting spending could outpace income by more than $45 million. The plan for filling that gap hinges on raising more than $46 million from a referendum that will go before voters in May.

Without that extra money, Superintendent Lewis Ferebee said, the district would have to burn through its savings or make vast cuts that could include freezing teacher pay, cutting school budgets, and reducing transportation.

The district would need to begin making cuts immediately, said board member Kelly Bentley. “It’s just going to get worse the next year, and the next year,” she added.

The district’s future will look brighter if leaders are able to win public support for more funding, although it’s no longer clear how much money they will ask for. The original plan, which was approved by the board in December, includes two referendums to raise property taxes. One would ask voters to give the district as much as $92 million more per year for eight years for operating expenses such as teacher pay. Another measure, which the district is not expected to change, would pay for $200 million in improvements to buildings.

Ferebee said the amount he originally proposed was based on what the district needs rather than what would be politically feasible. In the face of community feedback, however, the district is crafting a plan that would have a lower price tag. Next, the district will need to explain what services will be cut to keep down costs, he said.

“I anticipate people will want to know, ‘what are the tradeoffs?’ ” Ferebee said. “We owe it to the community to provide that explanation, and we will.”

Indiana districts have pursued more than 160 property tax referendums since 2008, when state lawmakers created the current school funding system. About 60 percent of those referendums have been successful, according to data from Indiana University’s Center for Evaluation and Education Policy.

Stephen Hiller, who has been studying referendums with the center for nearly a decade, said that it’s likely that many districts have had to reconcile how much money they would ideally want with how much taxpayers might be willing to pay. But that conversation likely happens before a referendum is announced and approved by the board.

“I think IPS has it a little more difficult here that it’s happening in the open after they’ve approved it in a very public way,” he added.

School board president Michael O’Connor said that the district’s willingness to change the plan is a sign that local government works.

“We live in the community within which we serve, and all of us have heard pretty plainly and clearly, ‘we think that number might be too big,’ ” he said. “We are being responsive to our constituents.”

Reducing the referendum could be enough to win over many supporters. Several groups that have supported the current administration in the past have not yet taken a stand.

Tony Mason of the Indianapolis Urban League said in a statement that the district needs more money to pay high-quality teachers and meet the needs of its diverse students. But he raised concerns about the potential impact of the tax increase on residents with fixed- or low-incomes.

“IPS will still need to continue in its efforts to make the case for the substantial amount it is requesting,” Mason said. “The IUL is an avid supporter of education, particularly for urban schools that struggle with unique challenges.”

Chelsea Koehring, who taught in the district and now has two children at the Butler Lab School, shares the view that the district needs more money. But leaders have not offered enough details about how the money would be spent, she said, and changing the request raises red flags.

“People, you should’ve had this together before you asked,” she said. “Lowering it at this point — I don’t know that that’s going to instill confidence in anyone that they have any clue what they are doing.”

Correction: February 17, 2018: This story has been corrected to reflect that Indiana districts have pursued more than 160 property tax referendums since 2008. Some districts have held multiple referendums.

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.

IPS referendum

Indy Chamber eyes cuts to schools, busing, health insurance to fund teacher pay raise

PHOTO: Dylan Peers McCoy
Michael Huber, left, and Lewis Ferebee at a March press conference.

The Indy Chamber has a host of ideas for how Indianapolis Public Schools could cut costs as leaders prepare to ask voters to increase school funding. But the group also says the district should significantly increase pay for principals and teachers.

During a presentation to the school board Thursday that previewed some of the findings of an ongoing analysis, consultant Michael Brink said there are several ways the state’s largest district can potentially save money, including relying more on public transportation for students, reducing spending on employee health care, closing schools, and shrinking the central office.

Brink, a senior director from Faegre Baker Daniels Consulting, is working with the chamber on the analysis. He acknowledged that cuts would be painful for the district, but he said they would help achieve long-term fiscal stability. “The things that we are going to include in our report are not easy, but they are necessary,” he said.

If the district makes enough cuts, it could potentially generate a surplus without a tax increase, Brink said. But the chamber also supports a substantial increase in pay for teachers and principals.

“That is a rock-solid commitment,” said Brink. “This is not just an efficiency. It’s not an austerity exercise. It’s a way of finding opportunity to drive more dollars into the classroom.”

The presentation was the latest milestone in Indianapolis Public Schools’ campaign for more money from taxpayers. Last year, officials unveiled a plan to seek nearly $1 billion from voters in two referendums in May. But when the proposal failed to win strong support, the district went back to the drawing board and agreed to partner with the Indy Chamber to craft a new, likely smaller, proposal that is expected to appear on the November ballot.

The chamber plans to release a full analysis of district finances in the coming weeks.

“We’ve identified dozens of recommendations that add up to hundreds of millions of dollars in potential savings and a new financial model for IPS,” said Chamber President Michael Huber in a statement. “A strong business climate demands high-performing schools and competitive tax rates, and we’re close to delivering a realistic blueprint for achieving both.”

The district spends about 47 percent of its budget in classroom, the report found. The remaining 53 percent of spending goes to capital needs and facilities, debt service, transportation, administration, school lunch, and other areas.

The district recently raised teacher pay, particularly for new teachers, but average pay in Indianapolis Public School is still relatively low compared with other districts, Brink said. That’s one reason the chamber hopes to increase educator pay.

Indianapolis Public Schools had the highest spending in Marion County at $15,248 per student in 2016-2017, according to the analysis. That’s nearly $2,000 more then Fort Wayne, which spent $13,368. Fort Wayne is a comparably sized district, but it has fewer high-needs students, including those from low-income families and English-language learners.

The district is asking voters to raise money for both operating expenses and building improvements.

Earlier this month, the school board approved the first of two referendums: a significantly scaled down plan to ask voters for about $52 million to pay for improvements to school buildings, particularly safety features such as new lights, classroom locks, and fire sprinklers.

But the bulk of the increase will likely be in the second referendum, which will be dedicated to operating expenses, such as teacher salaries. Details have not yet been released on that measure. The board will hold a July 17 hearing on it.

The takeaway from Huber’s presentation will likely be painful for school district leaders: As they look to close the budget deficit — which is expected to reach $45 million next school year — Indianapolis Public Schools leaders are facing tough choices.

Some areas where district spending is unusually high reflect the administration’s priorities. The district’s emphasis on letting families choose schools, for example, has driven up the cost of busing. Even among districts that offer lots of choices for families, the district has high spending on transportation, according to the chamber. It makes up about 10 percent of district spending.

In part that’s because Indianapolis does not have good enough public transportation for the district to rely on city buses for students. At the same time, the district offers generous busing as a way to make magnet schools accessible to families with limited transportation.

Superintendent Lewis Ferebee said the chamber’s analysis is helpful, but the district must still look at whether the potential cuts are realistic. The district could plan for more students to use the city’s expanding bus system, for example, but it is not yet able to transport significant numbers of students.

“We are banking on a system to be much more robust that what it is today,” Ferebee said. “How much of that do we want to build into projected savings? Those are things that we have to think about.”