IPS referendum

Big blow to Indianapolis Public Schools’ bid for tax increase: Realtors aren’t sold

PHOTO: Alan Petersime

A politically influential group representing real estate agents is taking the rare step of opposing Indianapolis Public Schools’ $725 million proposal to raise property taxes to increase school funding.

The opposition deals a harsh blow to the referendums, which the district downsized earlier this week in the face of criticism and little public support.

“Most importantly, we are concerned that property owners have not been given enough detail or clarity on the individual impact,” said the statement from the MIBOR Realtor Association. “The recent change to the proposed dollar amount only elicits more concern with IPS moving forward with their short timeline.”

 

The association opposes the request because it would be burdensome for Indianapolis residents, CEO Shelley Specchio said. She also criticized the district for not providing clear enough information on how the tax increase would impact individual property owners and how it would be used in schools.

“It was a difficult decision — not something that we took lightly, because of course, we really value strong quality schools,” Specchio said. But “we felt that the tax increase would be burdensome to homeowners.”

In a statement, chief of staff Ahmed Young said the district will continue working with the community.

“IPS is committed to being a good steward of taxpayer resources,” Young said. “We lowered the operating referendum ask on Tuesday as part of this commitment. We look forward to further collaboration with the community to advocate for our schools.”

The real estate agents group has about 8,000 members in Central Indiana. It has been one of the largest local contributors to campaigns for seats on the Indianapolis Public Schools board, giving thousands of dollars in recent years to support at least four of the current board members.

This is the first time the group has opposed an appeal for more money from a school district, said Chris Pryor, vice president of government and community relations. It has not taken a position on any Marion County school funding referendums, he said. But it has supported raising taxes for schools in other places, such as Anderson, and donated money to the campaigns.

Other influential groups, such as the Indianapolis Chamber of Commerce, have not yet taken positions on the referendums. Many community leaders agree that the district needs more funding, but they have raised concerns about the size of the request.

The opposition from the real estate industry group is a significant blow for the district because there has been virtually no campaign in support of the measures so far, said Ed Delaney, a Democratic state representative who lives in the district. The association is the first civic organization to take a position.

“I’m sorry that an organization like that, which has shown an interest in our community, would feel that they had to take this position,” Delaney said. “I’m saddened that we’ve come to this.”

Just two days ago, the school board responded to community concern by cutting its request from nearly $1 billion to about $725 million over eight years in a bid to win political support. The two measures, which will go before voters in May, would raise money for expenses such as teacher pay, special education services, and building improvements.

If the referendums pass, the tax increase for homeowners would be $0.58 per $100 of assessed value. For taxpayers with houses at the district’s median value — $123,500 — the new plan would increase property taxes by $23.24 per month.

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.”