State Committee Chooses 8 Measures to Alert if a School district is in Fiscal Trouble

Posted on November 1, 2018

INDIANAPOLIS — The financial status of all Indiana school corporations is poised to be evaluated next year using eight measures that are intended to indicate whether the district may require state assistance or intervention.

House Enrolled Act 1315 directed the Distressed Unit Appeals Board to establish a Fiscal and Qualitative Indicators Committee charged with identifying which financial conditions at a school corporation should trigger a closer look by DUAB.

The committee unanimously approved eight primary fiscal indicators Thursday, along with a host of demographic and other secondary variables, that it believes will signal to DUAB that a school district is in, or heading toward, financial distress.

The main indicators are: student enrollment trends; school fund balances; annual deficit or surplus; fund balances as a percentage of expenditures; a comparison of per-student tuition support with per-student expenditures; revenue by type; referendum funding relative to other revenue; and the share of general fund spending tied to salaries and benefits.

Courtney Schaafsma, DUAB executive director, showed the committee how each indicator, updated annually and with results for multiple years, could be displayed on a single webpage “to give a good feel for what’s happening on the ground at the school.”

“Nothing that we’ve looked at stands alone and says, ‘This is the red flag,'” she said. “We’re just trying to paint a complete picture of a school corporation.”

State Sen. Eddie Melton, D-Gary, was among the Hoosier lawmakers who advocated for a systematic tool to evaluate the financial health of Indiana schools following ad hoc state takeovers of the financially distressed Gary and Muncie school districts last year.

Dennis Costerison, executive director of the Indiana Association of School Business Officials, said he believes the committee did “an excellent job coming up with the indicators they have.”

“I don’t anticipate there being a lot of districts that would be initially looked at, maybe 8 to 10, and then some of those may have already gotten a plan to deal with the situation,” he said.

If DUAB determines that a school district’s fiscal indicators warrant attention, the law authorizes the board to provide information and technical assistance relating to financial management, as well as assist the district in obtaining help or relief from other state agencies.

The State Budget Committee still must sign off on the chosen indicators at its Oct. 16 meeting before they can be put into use beginning in January.

Melton wants state to develop early warning system for school financial troubles

Courtney Schaafsma, executive director of the Indiana Distressed Unit Appeals Board, right, speaks Thursday alongside Matt Parkinson, of the Department of Local Government Finance, about the fiscal indicators the state will use to evaluate the financial health of local school districts. Dan Carden, The Times