More State Money for Education Equals Less Local Control

November 6, 2007

Receiving more money from the state for education sounds like something most local governments would welcome, doesn’t it? Not necessarily. The more money a local government takes from the state, the less control it has over local issues.

Indiana school superintendents have refused to support Gov. Mitch Daniels’ property tax relief plan because of concern over losing local control. The plan includes a proposal to fund $495 million in annual school transportation costs at the state level rather than the local level. Indiana’s 13,000 school buses transport almost a million children to public schools and, understandably, local officials are nervous about handing this responsibility—or at least the responsibility for paying for it—over to another level of government. From

Since 2003, local districts have used property taxes to fund the budgets for school bus maintenance and have enjoyed the flexibility to increase the local levy—up to 5 percent a year without special permission from the state—in response to fuel price increases and enrollment fluctuations that affect bus routes.

Many fear Daniels’ plan would remove that element of flexibility.

“I have more questions than answers,” said John Ellis, executive director of the Indiana Association of Public School Superintendents. “If all questions were answered so as to assure that no service to students would be lost, we could be in support of the transportation operations plan.

The concerns become more profound as fuel prices rise.

“Will there be an escalator/de-escalator clause in state funding to pay for fuel increases and decreases?” Ellis asked.

. . .

If the plan is approved, Indiana would be following other states that have structured their transportation systems in a similar way, including Illinois, Ohio and Missouri.

Historically, the state paid all transportation costs for local school districts. But in 2003, that practice was ended by the General Assembly and shifted to local school districts, who imposed a tax to pay for fuel, maintenance and salaries of bus drivers. The fund is roughly 6 percent to 7 percent of the total general fund of a school district.

As we have written before, the potential loss of local control over education is something that needs to be considered before a plan like this is enacted.

For more on state education spending, see Appropriation by Litigation: Estimating the Cost of Judicial Mandates for State and Local Education Spending.


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