LINCOLN CITY— The North Spencer School Corporation will seek a change to Indiana state law governing school funding during the 2019 legislative session.
North Spencer is seeking the change so that the corporation can collect additional money in its capital projects fund that school officials believe should have become available with the expiration of the tax increment financing (TIF) district set up when AK Steel came to Spencer County about 20 years ago. The TIF district ended in 2016, but the school did not receive the full benefit of the county’s increased assessed value due to a quirk in school funding law.
Under the law, the state legislature appropriates schools’ general funds, which cover operating expenses such as staff salaries, insurance and utilities. All other funding comes from property taxes, and is split among several funds. Those funds include the capital projects fund that pays for major maintenance or construction projects for corporations, the bus replacement fund that pays for new school buses and the transportation fund, which pays to operate buses. Schools funds that use property tax revenue are further divided into levy-based and rate-based funds. In levy-based funds, the amount of money that goes into the fund stays the same year to year, and the tax rate fluctuates to accommodate the levy. In rate-based funds like the capital projects fund, the rate stays the same, and the amount of money that goes into the fund changes with assessed value.
The issue for North Spencer arose when Spencer County’s assessed value jumped from roughly $700 million to just under $1 billion when the AK Steel TIF district dissolved in 2017. The corporation didn’t gain as much funding in the capital projects fund as school officials believe it should have due to a quirk in the law that calls for the capital projects rate to be capped at a three-year average if a county’s assessed value changes dramatically. That requirement makes the capital projects fund behave like a levy-based fund, which it is not, Superintendent Dan Scherry said. It also shortchanges the school corporation by about $600,000 a year in the capital projects fund.
To remedy the issue, the corporation plans to lobby for a change to the law during the 2019 legislative session. To prepare to lobby, the board approved a lobbying agreement memorandum of understanding at its Nov. 15 meeting, and hired Barnes & Thornburg LLP of Indianapolis to act as the 2019 governmental relations counsel for the corporation.
This will be the second time the corporation lobbies for the change. School officials first tried to make the change during the 2018 legislative session. It went well, Scherry said, and both sides seemed to be on board with the change, and the amendment was placed as a rider on a larger bill. But the bill didn’t come up during the short 2018 legislative session or during the emergency session that followed. With the longer legislative session in 2019, Scherry is optimistic the change will make it to voting this time around and pass.
“I’ve learned there’s a lot of things about the legislative session where you just have to wait and see,” Scherry said.