Vic’s Statehouse Notes #178 – March 13, 2014
Good news on the last day of the session: the preschool bill House Bill 1004 was passed today by both the House and the Senate creating a 5-county pilot program without any link to K-12 vouchers. Sections 10 and 11 which many of you have written about have disappeared. To public school advocates who contacted legislators about keeping K-12 vouchers out of the preschool bill, I say thank you!
This key bill represents both a new day for preschool in Indiana and a rare moment of success for public school advocates. Thanks to all who participated!
Details of House Bill 1004
A silence lasting several days on the preschool bill was broken when a Conference Committee on 1004 was held at 9:00 am this morning. Representative Behning reviewed the key features of the Conference Committee report:
A pilot program will be established in five counties selected by FSSA.
The Family and Social Services Administration will supervise the program.
Families making 127% of poverty will qualify for grants of $2500 up to $6800.
It will be funded by unspent money reverted to FSSA and by CCDF block grant money.
At least 10% of the funds are to be from private donations or from federal funding.
The receipt of a grant has no impact on eligibility for a K-12 choice scholarship.
A longitudinal study will follow 4 year olds in the program through their assessment results in Grade 3.
Expenditures are limited to $10 million in the first year, with a limit of an additional $1 million for the longitudinal study.
Providers may include public or private preschools that meet Level 3 or 4 standards in the “paths to Quality program.
A prekindergarten and early learning study commission will study ten key topics to develop Indiana’s program.
All All members of the Conference Committee should be thanked for advancing this proposal: Representatives Behning, VanDenburgh, Thompson, Sullivan and Vernon Smith and Senators Pete Miller, Rogers, Kenley, Broden, Kruse and Yoder. Senator Kenley played a crucial role in bringing the House and Senate versions together.
Floor Votes on HB 1004
The House voted first this afternoon on HB 1004, passing the bill 92-8. All Democrats voted for the bill along with most Republicans, except for Representative Baird, Culver, Harman, Ober, Rhoads, Thompson, Turner and Wesco.
I was able to hear the floor debate in the Senate. Senator Pete Miller introduced and supported the bill as the sponsor. Senator Schneider then rose to oppose the bill, calling it a “budget buster” and a “camel’s nose under the tent” for a “catastrophic fiscal impact on the state of Indiana.” Senator Holdman supported the bill, especially the longitudinal study and the “paths to Quality” standards. Senator Head rose to support the bill, saying it is run on reverted funds and that the sunset provisions “won’t let the camel get too far.” Senator Becker supported the bill, saying that Evansville business leaders have already told her they will help support the matching dollars. Senator Rogers then rose to support the bill, saying that if we can expend revenue for breaks to business as they just did for Senate Bill 1, they can fund a small preschool pilot program. She called it a matter of priorities. Senator Leising supported the bill, urging the early learning commission to coordinate several early childhood programs already funded by federal and special education dollars.
Then came the vote. The Senate passed the bill 40-8, with Senators Crider, Delph, Kruse, Schneider, Smith, Tomes, Yoder, and Michael Young voting no.
Senate Bill 1 easily passed both houses today allowing local options to reduce the business property tax and putting approximately $2 million in school property tax funding at risk two years from now, as I described in Statehouse Notes #177 last Tuesday.
The House adjourned sine die about 10:00 pm this evening and the Senate did the same at 10:40. The short session is over. It is a rare treat and a great pleasure to be able to report a success for public education on the last day of the session.
Your messages throughout the session on behalf of public education made a big difference. Thanks for participating!
Please keep up your steadfast support of public schools!
Vic Smith firstname.lastname@example.org
The Conference Committee on Senate Bill 1 and House Bill 1001 met at 4:30 this afternoon to make public the details to reduce the business property tax. Hopes that it would all go to a study committee to delay any damage to local government and school revenues were not fulfilled. Local school revenues are likely to take a hit based on two local options made available to each county, effective two years from now for property taxes payable in 2017.
The “Replace Don’t Erase” Coalition worked hard to eliminate the local option provisions to keep counties from pressuring each other to cut taxes, thus cutting school, library and local government revenue. The RDE efforts mitigated the potential damage, but the final deal now has two types of local options. If school and local government revenues are to be left intact, county officials will have to reject both local options, an outcome that seems unlikely.
Provisions of SB 1/ HB 1001
The provisions of the bill were presented by Senator Hershman, Senate Republican Conferee, with the support of Representative Turner, the House Republican Conferee. Senator Tallian, the Senate Democrat Conferee, brought an alternative plan which deleted the corporate tax reduction and the local option for reducing property tax on new equipment, an alternative which had the support of Representative Porter, the House Democrat Conferee. The alternative plan was not accepted.
Here are the main provisions unveiled today:
Corporate tax rate reduction to 4.9% over 6 years.
Financial Institutions Tax (FIT) rate reduction to 4.9% over 6 years.
Local option small business personal property tax exemption.
If the local COIT board approves, this would allow small businesses to exempt personal property with an acquisition cost less than $20,000. LSA estimates that if every county did this, $7.6 million would be shifted to other taxpayers and $6.6 million would be lost to local budgets due to circuit breakers. Of this $6.6 million, $2.0 million would be lost to schools.
When the Senate proposed this plan, it was a statewide plan with a fixed statewide cost that theoretically might have been replaced with state dollars. The new proposal today is to make this a local option with no prospect of state replacement dollars.
Local option for the elimination of property tax on new business personal property.
If the local COIT board approves, new business equipment would be exempted from the business property tax. Eventually as all equipment is replaced, the property tax on equipment will slowly disappear and local school and government revenue will fall.
The Impact on School Revenue
There is no good news here for public school revenue, except perhaps that it might have been worse. From the start of this debate, reducing the business property tax was going to damage public school property tax revenue. The only question was whether it would be a huge hit or a small hit. Intense lobbying has reduced the size of the problem, but there is still a problem if school officials don’t convince county officials of the wisdom of rejecting the local options, an unlikely prospect.
Governor Pence wanted to help businesses, and he didn’t mind doing that at the expense of revenues for schools, libraries and local government. He worked hard to make this happen in a sometimes reluctant legislature. Now that they have followed his lead, at least $2 million per year in school property tax revenue is at risk, just at the time when the great competition between public and private schools for the hearts and minds of parents is revving up, a competition created by the voucher program passed by the General Assembly in 2011 and expanded with Governor Pence’s strong support in 2013.
There is something wrong when Indiana’s grand experiment in a competitive marketplace is set up and then public schools are threatened with a new cut in their funding. It doesn’t look like fair competition to me. It looks to me like public school revenue support is being undermined in a creative new way every year, and the favoritism shown by the Governor for private schools in the competition and his willingness to let public school funding erode remain obvious.
This proposal today had the air of finality. It seems clear that it will go through as presented.
Let your legislators know that they are to be thanked for mitigating the original plan which threatened even deeper cuts to school budgets. You might also let them know you are disappointed that $2 million in public school revenues have been put at risk through these local option proposals.
In addition, you might ponder these things in your heart as you consider the elections coming up in May and in November. Some have taken comfort in the fact that implementation is two years away and this might be changed in the new budget in the next General Assembly after the next election.
As of late Tuesday evening, there is no further information on the status of the preschool bill.
Thanks for your active support of public education!
Vic Smith email@example.com
The “Replace Don’t Erase” Coalition has invited all who can make it to the Statehouse on Monday, March 10th to share the view that dollars cut from school budgets and local government to reduce the business property tax must be replaced with state dollars.
If you can come on Monday, link up with Mayors and other municipal and county officials to protect local property tax funding needed for vital local government and school services.
While you are there, ask your legislators to delete Sections 10 and 11 from the preschool bill to break the link between helping preschoolers and a major expansion of K-12 private school vouchers which would further damage public education.
Where the Business Tax Reduction Now Stands
The latest Senate proposal has reduced the fiscal impact to units of local government and schools from $54 million to $6.5 million. This includes a $2 million reduction in school revenue and $2.4 million less for cities and towns. These provisions would take effect in FY 2016.
While Governor Pence has said he favors using state dollars to replace this revenue loss, there is no provision in the current proposal to do so. While the magnitude of revenue loss has been reduced by the Senate, the latest reduction in business property tax would mean less revenue for local government and schools and a property tax shift to homeowners.
“Replace Don’t Erase”
The “Replace Don’t Erase” Coalition is a coalition of 22 statewide local government and school associations, including the Indiana Coalition of Public Education. The coalition has been led by the Indiana Association of Cities and Towns, representing 470 Hoosier cities and towns, which issued the invitation to come to the Statehouse on Monday. In a statement issued on March 6th, the IACT said that the Senate’s latest proposal demonstrates “great movement” and then commented on the county by county option to eliminate the property tax on new equipment which originated in the House:
“In terms of remaining areas of concern, IACT continues to be intensely opposed to the county by county option to eliminate the tax on new equipment being pushed in the House. We continue to raise the red flag that this provision leaves too many cities, towns, counties, schools, libraries, townships and other local units with little to no voice in a decision to eliminate a relied upon source of revenue. What’s being considered is NOT a local option and represents a serious step backwards for economic development and growth in our state. The language in this proposal represents the beginning of a complete phase out of the tax as counties will be gradually pressured into elimination and old equipment ages out and is replaced. It’s a slippery slope and is certainly the most detrimental piece of PPT legislation still alive.”
The Indiana Association of Cities and Towns invited their 470 members to the Statehouse in the following words:
"Please come to Indianapolis on Monday, March 10 and make one-on-one contact with your legislators. We are working to make one final push to inform lawmakers of our concerns regarding PPT reform. While there has been significant evolution on this matter since the beginning of session, there is still much to say and saying it in person is how you can be most effective for your community."
IACT then added talking points, which along with the talking points provided in yesterday’s ICPE newsletter can guide your discussions with and messages to legislators. The key points prepared by IACT that I would pass along are as follows:
" All Hoosiers support the ideas of a great business climate and lower taxes. At the same time any changes to the current system must be well thought out in cooperation between the State, local governments and business so that any change in tax burdens is fair and both permits the local governments that generally provide significant incentives to business to continue to be competitive and, at the same time, to provide the services, infrastructure and education that all the members of the community embrace and desire.
Supporters maintain that the elimination of business personal property is necessary in order to attract business to Indiana, although the IEDC's website proclaims that Indiana already has the "Best Business Environment" and the "Top Tax Climate," ranking first in the Midwest in "business tax climate." If Indiana already has the "best business environment" and the "top tax climate" why is this necessary?
The top rankings for business climate are not true for Indiana's ranking in education, college graduation, high school graduation, nor is it true for the condition of Indiana's roads, bridges, water and wastewater facilities, its parks, or many of the other factors business and industry look at when deciding where to locate.
Prior to 2010, under Indiana's "frozen levy" system of property taxation, a decision to provide tax abatement simply shifted the property tax liability to residential taxpayers and to other business taxpayers. Since the enactment of the property tax caps, a decision to provide tax abatement shifts the property tax liability to other taxpayers until the caps are reached; at that point, the schools and local governments must forego tax revenues in order to provide the tax abatement. A further loss of those tax revenues also means Hoosiers forgo quality of service, infrastructure and education.
The decision to provide tax abatement is based upon the local government's determination that the benefit the new investment and new jobs would bring to residents, other taxpayers and to the state and local government outweighs the added costs, including increased property taxes and decreased quality of services, infrastructure and education, to our citizens. It is not clear what, if any additional benefits from the current proposals will outweigh the additional costs imposed on homeowners, other taxpayers, schools and local governments. If there is less assessed value, tax rates increase, causing tax bills to all other taxpayers to be higher and circuit breaker tax credits to be higher as well, thus reducing revenues for local governments.
A decision to exempt all new business personal property from property taxes affects all taxing units and all non-business taxpayers. What public process protects residential taxpayers, schools and others that do not benefit from, and may be harmed by, the exemption?"
It is amazing that public school revenues are again under attack. Public school educators don’t need this headache. If you can come to the Statehouse to join in one-on-one discussions with your legislators on Monday or even on Tuesday, please do so. Please do what you can in this final week of the session.
Thanks for contacting your legislators and for your active support of public education!
Vic Smith firstname.lastname@example.org
Vic’s Statehouse Notes #175 – March 5, 2014
Public school advocates need to send one more set of messages to their favorite legislators or to all legislators to delete the major expansion of K-12 vouchers in the preschool bill, House Bill 1004. The message is this:
If legislators heed the plea of Governor Pence to resurrect the preschool pilot program in the Conference Committee, they should delete Sections 10 and 11 which expand K-12 vouchers by giving every preschooler who gets as much as $500 in preschool help a guaranteed private school K-12 voucher, even when family income goes up past the income guidelines during their 13 years of schooling.
It is a way around Governor Daniels’ policy to “try public school first.”
Since the Conference Committee on HB 1004 could start any time now, please send your message to your legislators right away. They need to hear from a large number of advocates saying: no more expansion of K-12 vouchers.
Conference Committee on House Bill 1004 – Preschool Scholarships
Representative Behning filed a dissent on the Senate version of HB 1004, and a conference committee has been appointed to reconcile the House version and the Senate version. Conference committee members include:
Rep. Behning (R)–House Conferee
Rep. VanDenburgh (D)- House Conferee
Sen. Pete Miller (R)– Senate Conferee
Sen. Rogers (D)– Senate Conferee
Rep. Thompson (R)– House Advisor
Rep. Sullivan (R)– House Advisor
Rep. Vernon Smith (D)– House Advisor
Sen. Kenley (R)– Senate Advisor
Sen. Broden (D)– Senate Advisor
Sen. Kruse (R)– Senate Advisor
Sen. Yoder (R)– Senate Advisor
Your messages to break the link between preschool scholarships and K-12 vouchers should be sent to these members of the Conference Committee along with other legislators you may want to contact.
The House Version
The House passed their version with lightning speed on January 16th by a vote of 87-9, just one week after the initial committee hearing on January 9th. The bill provided for a pilot program in five counties, giving scholarships of $6800 for full day and $3400 for half day programs and establishing provisions for assessments and accountability.
I and many others have advocated for preschool funding for over a decade, but the Governor has crafted a bill that not only funds preschool scholarships but also guarantees private school K-12 scholarships for those preschoolers for the next 13 years. The bill doesn’t need to link preschool and K-12 vouchers. Deleting Sections 10 and 11 of the House version would break that link, keeping the bill focused on preschool and out of the controversy of our generation, whether to privatize our public schools by funding more and more K-12 private schools with public money.
The rationale often heard for linking a preschool voucher with a guaranteed lifetime K-12 voucher is to allow parents who choose a private preschool to keep their child in the same school for kindergarten, but this bill does not say that. It has no language about continuity of schools. It says that if children get at least $500 for preschool, they along with their siblings become eligible for a state-funded voucher from kindergarten through high school even if family income goes up beyond the voucher income rules.
Thus, a student going to a preschool in a public school could go to a religious school using a K-12 voucher.
That is far more than a continuity rule. That is a pipeline to K-12 vouchers for every low-income preschooler.
The House bill was never sent to the House Ways and Means Committee, which apparently aligns with Representative Behning’s statements that the program would not start this year but would start next year after money was allotted to it in next year’s budget. This is a controversial move. The General Assembly seldom chooses to pass programs which obligate the next General Assembly to provide funding.
Confusion remains about the funding issue. Speaker Bosma said at the outset of the session that 1000 scholarships would be provided, after Governor Pence called in December for funding for 40,000 scholarships. Now Representative Behning says that no scholarships would be funded this year, but the detailed CECI report on HB 1004 issued in February stated that $650,000 would be needed this year even before the new budget to pay for staff work to get the framework of the program in place and ready to begin when the General Assembly funds money for the scholarships.
Clearly, this confusing funding sequence has raised many fiscal concerns as Senators reviewed the bill.
The Senate Version
HB 1004 was amended in the Senate by a final vote of 44-5 to establish a prekindergarten and early learning study commission. It prescribes ten topics for study this summer. Senator Kenley said in committee that this study would clarify a framework for the program that could then be considered for funding alongside all the other programs that will seek funding in the next budget.
One of the ten topics says the commission will “study the appropriate state agency or entity to oversee and develop early learning accountability standards.” The House version puts the administration of the preschool program in the hands of the child care section of the Family and Social Services Administration (FSSA). Senator Kenley pointed out in committee that standards and assessment issues have always been handled by the Department of Education and the State Board of Education. In testimony on HB 1004, I and several others called for the program to be administered by the Indiana Department of Education to coordinate the P-16 plan adopted by the Roundtable several years back. This is a key point for review.
On February 25th, the Governor announced plans to resurrect the preschool pilot in the House version by making an appearance at the Shepherd Community Center preschool which is affiliated with the Horizon Christian School, a voucher school making a D in the state’s grading system last year and teaching a creationist curriculum. All this was well documented by Karen Francisco in an insightful Fort Wayne Journal Gazette column on Feb. 26th entitled “Feeding the creationist pipeline.”
The lingering question here is: Does the Governor care more about saving the preschool provisions or saving the K-12 voucher expansion? He would get a lot more support if he would decouple Sections 10 and 11 from the pilot program and thus break the link between much needed support for preschool and the next major expansion of K-12 vouchers.
Let the members of the Conference Committee know that however the bill is crafted in the Conference Committee, Sections 10 and 11 expanding K-12 vouchers for preschool scholarship students should be deleted. This is an important message that House and Senate leaders and indeed all legislators need to hear from all parts of the state.
Thanks for contacting your legislators and for your active support of public education!
Best wishes,Vic Smith email@example.com
Vic’s Statehouse Notes #174 – February 26, 2014
Let’s view the controversy over cutting the business property tax through the lens of the K-12 school voucher/school choice controversy:
Governor Pence has clearly favored private schools over public schools in the competitive marketplace of schools which we now have in Indiana. When public schools are kept in a perpetual state of financial uncertainty and budget cutting, they have a hard time competing with private schools for parent selections, especially when parents are often looking for small class sizes when they choose a school. Low school funding increases in the 2013 state budget – only 2% this year and 1% next year - have led many public schools to raise class size.
The Governor’s plan to eliminate $1 billion in business property taxes to help businesses has threatened schools, cities, towns, libraries and county governments with the latest self-inflicted crisis of financial instability. For public schools, that translates into more difficulty in competing in the school choice marketplace. Parents may not choose schools with well-known financial problems that are cutting services and even having trouble funding school buses. This is no time to give public schools another financial headache through a new round of funding cuts resulting from changes in the business property tax.
Twenty-two statewide associations representing local governments, schools and libraries have joined the “Replace Don’t Erase” Coalition. The Indiana Coalition for Public Education is one of the members. ICPE lobbyist Joel Hand has been attending weekly meetings of the “RDE” coalition, which is simply asking that the two bills that would cut business property tax, House Bill 1001 and Senate Bill 1, include dollar for dollar replacement money for any cuts enacted in business property tax to guarantee public schools and local government budgets are not harmed by the effort to attract more businesses to Indiana.
Stable funding for public schools is vital for the sake of over one million public school students in Indiana.
House Bill 1001
The House response to the Governor’s call to eliminate the entire business property tax was a locally based response. HB 1001 started out allowing each county to decide whether to zero out property tax on new business equipment. That move would guarantee that counties would not lose tax money currently coming in, but instead would stop the growth in new property taxes. Opponents say it would introduce a new era of cut-throat competition among counties, pressuring some counties to cut the tax when they really need the revenue growth.
After changes in the Senate, the latest streamlined version passed yesterday (Feb. 25th) by the Senate Tax and Fiscal Policy Committee would still cut a projected $2.0 million from public school revenue with no provision for replacement dollars.
Senate Bill 1
The Senate response to the Governor’s call was quite different. Senators introduced a bill to eliminate all business property tax for all small businesses, those with up to $25,000 in assessed value. This had a much smaller price tag than the Governor’s original plan costing $1 billion. It also cut red tape for small businesses. The Governor has said that he would support replacing the local dollars lost with state tax dollars, although Senators have not sounded like they want to back up his idea with state dollars in a non-budgetary year.
It’s All About Competition
Once again, public schools stand to lose big if the equipment property tax is dropped. Kathy Friend, Chief Financial Officer for the Fort Wayne Community Schools, has said that under the Governor’s original plan the Fort Wayne schools would take a bigger financial hit from losing this property tax money than they did when property tax caps were put into place four years ago.
If Governor Pence can keep public schools weak and reeling financially, the private and parochial schools can gain the upper hand in the live or die competition that is now a constant for schools. Public schools must have the financial support they need to remain the stable community force that they have been for decades.
This issue is active in both the House and the Senate. Let all of your legislators know that schools and local governments don’t need a financial crisis over the business property tax. Too many school districts, such as Decatur Township and Muncie, are already facing huge problems in funding school bus transportation. Any change in the equipment tax should be accompanied by a direct replacement of the lost local property tax dollars by state dollars.
The unrelenting erosion of financial stability in Indiana’s public schools must end. “Replace Don’t Erase!”
Thanks for contacting your legislators and for your active support of public education!
Vic Smith firstname.lastname@example.org