Per reporting by Amelia Pak-Harvey for Chalkbeat Indiana: Following a decision by Indianapolis Public Schools to reorganize its schools, a plan which calls for closing six schools, there are three charter schools who expressed an intent to take IPS buildings away from the school district “through any viable means.” One of those viable means is by payment of a dollar under a state law applicable to school systems that are not currently using buildings, usually paid for with local tax dollars, requiring those schools to give away their buildings to outside charter school vendors for the nominal sum of a dollar. This is the price regardless of the market value of the buildings.
The Indiana Court of Appeals recently said that the law doesn’t constitute a “taking” of local property by the State because the takings clause does not apply to confiscation of local government property by the State of Indiana. According to the decision, the State can take any local government property it wants, regardless of how it was acquired or who paid for it originally, without paying for it. The specific question before the Court of Appeals was whether the mandatory $1 sale from school corporations to charter operators was a taking without just compensation. But the logic of the Court’s holding was not confined to the issue of schools and charters. Says the Indiana court of appeals, “[t]he takings clause does not apply against the state in favor of its own municipalities because a municipality is merely a department of the state, and the state may withhold, grant or withdraw powers and privileges as it sees fit.”
I’ve received some push back on this argument, and it’s not a slam dunk, but I continue to think that this taking of property paid for by local tax dollars in the service of the state generally violates Art. 10, §1 of the Indiana Constitution which requires the General Assembly to provide a “uniform and equal rate of property assessment and taxation.” (You can charge locals a higher local tax rate for goods and services that stay local, but you can’t balance the State’s budget on the backs of the taxpayers of, say, Benton County.) Be that as it may, I think the better course of action is for the General Assembly to back away from this indirect, uneven, and unpredictable subsidy of charter schools. It creates a disincentive for regular schools to stop operations at a building even where doing so would be rational. If the General Assembly wants to subsidize charter buildings, it should create a State funded subsidy program.
Reuben Cummings says
Is a Charter school considered a governmental unit?
We’re taking publicly fund buildings owned by a unit of government and giving them to…whatever legal entity a charter school is?
Does the Indiana code specify that the building be returned if the Charter closes?
What if the Charter school let’s the building fall into total disarray? Who’s responsible for it if the Charter leaves that building?
I’ve never dug into this code much, obviously.
But so much about it is just so fishy.
Doug Masson says
I think charters are considered public entities of some sort. They are sponsored by public entities. Like Daleville sponsored the two virtual charters that are currently being sued for receiving money for dead students and not properly accounting for something like $85 million. I believe others are sponsored by colleges and maybe cities? (Not 100% sure on that last one.)
It’s been a couple of weeks since I looked up the Code on what happens if the charter closes, so grain of salt. But I think the charter can sell it but has to give any money realized above its tax basis back to the school corporation that used to own the building. There can probably be shenanigans surrounding how you calculate tax basis, but the general idea is that if the charter invests money on improvements, then it can get that amount of money back from a sale.
I don’t think there is any penalty to the charter for failing to maintain the structure and leaving it in a shambles.
There is no oversight forcing charters to maintain the building they receive which is why most advice I have received (and given) is to sell not lease the school to the charter if you find yourself in that situation.
Doug Masson says
Actually, IC 20-26-7.1-5(b) does require the charter to “maintain the school building, including utilities, insurance, maintenance, and repairs.” However, as Paddy notes above, there is no enforcement mechanism for this. You could presumably go to court and sue for damages, but it’s pretty easy to imagine a situation where the charter school doesn’t have any assets to pay for those damages.