As in all 50 states and most countries, a good many school districts in Indiana are facing budget cuts this year. We can rest easier knowing that cuts in Indiana are small compared to most other states, leaving us with about the national average spending per student.

 There is much confusion about what is happening to schools. As of two years ago, the state paid 85% of school costs, with local property taxpayers funding the reminder. The property tax reforms in Indiana shifted the last 15 percent of school funding to the state budget. So, except in a few places, all money spent on schools comes from the general fund. The budget cuts most schools are feeling are really a result of the school funding formula and the recession, not property tax reform. There are some great lessons here.

 School funding formulae around the country moves resources from taxpayers in richer and more urban places, to residents of poorer and more rural places. Indiana’s does so as well. This is right and good. The problem is that rural places are losing population, while urban places are growing. This is especially true among families of school aged children. As a result, school districts with a shrinking population have schools that were designed for student bodies twice the current size. The funding formula for declining places will appropriately shrink the total dollars these places receive. Dollars follow students to faster growing places. We might well quibble with the particulars of the formulae, but in essence this is what must happen.

 Reorganizing school districts is difficult, but we Hoosiers have done so before. The first time came with the advent of school buses, the second as farm employment shrank dramatically in the 1940s through 1960s. Our experience today is tame by comparison.

 Ironically, shrinking school districts get three distinct advantages. First, they already have more than enough school space, second, they are already disproportionate recipients of school funding and finally, there’s a comfortable time lapse in the application of the formula. Challenges in rural places are far less than in urban and suburban communities. It is the fast growing places where the resource challenge is most dire.

 Successful and growing communities must always play ‘catch up’ with school funding. These are also places where tax dollars in general flow from to poorer, typically rural regions of the state. It is easy to sense the frustration of a growing, successful community.

 I had the fortune to visit such a place – Hamilton County – late last year. I spoke at a Chamber breakfast on the eve of a key referendum vote on supplemental school funding. I made a bold prediction that the referendum would pass easily. It did, with an overwhelmingly majority. The reason was simple: school officials explained their needs clearly and effectively, and had a track record of fiscal prudence. There’s a lesson here. Effective local government will always find willing voters to pay for more of it.