Chapter 15: Indiana

Before 1930, Indiana schools relied primarily on local revenue from property taxes, supplemented by state distributions from a dedicated common school fund and a state tax levy for special relief to districts with low taxable wealth.¹In 1933, in order to provide poorer school districts with a proportionately greater share of state funds than wealthier districts, the state began to assume a substantial share of local school costs, distributing funds raised through a new gross income tax as tuition support on a per teaching unit basis.² In 1949, the Indiana legislature adopted a traditional minimum foundation type formula to fund public schools. From 1949–1973, districts were given a guaranteed minimum grant (foundation) for imposing a minimum property tax rate (called the qualifying rate) and if they did so, the state guaranteed a specified number of dollars per pupil (called the foundation).³ Regardless of property tax wealth, each district was guaranteed at least a minimum number of dollars to spend. Consequently, wealthy districts with higher assessed valuations per pupil raised more money than poorer districts.⁴