NCPA - National Center for Policy Analysis


October 5, 2005

Education finance policy has become a concern for many states and as the demand for greater equity and accountability increases, many are reviewing and revising their school funding methods, particularly Indiana, says Susan Aud of the Friedman Foundation.

Indiana's public K-12 education system is wrought with many serious problems including a financial system that is needlessly complex and obscure. During a recent legislative session, two of the most basic components of the funding formula - the way the state counts students and the way it determines the amount of revenue for each student - were somewhat simplified, says Aud.

But, serious problems of transparency, accountability and equity remain to be addressed:

  • The system continues to require the calculation of confusing multi-step formulas, the excessive accumulation of data and the use of potentially outdated Census data to determine per-student funding.
  • Information on the school finance system is still hard to obtain and is unnecessarily presented in a difficult format that prevents the public from using it easily and efficiently.
  • Equity problems are still present because funding is not generally student-centered; students who are especially expensive to teach often don't get additional funding, putting them at a disadvantage.
  • By continuing to rely on multi-year student counts, Indiana insulates school districts from the need to adjust their expenses to declines in student enrollment.
  • Nearby states are doing a better job of providing school finance that is as clear, simple and fair as possible.

Moreover, Indiana legislators should continue their efforts to refine and improve their school funding formula; expanding the availability of knowledge and data will only help stakeholders improve the system in the future, says Aud.

Source: Susan L. Aud, "Indiana's New and (Somewhat) Improved K-12 School Finance System," Friedman Foundation: School Choice Issues in the State, July 2005.


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