State of Indiana; Indiana Department of Education; Eric Holcomb, in his official capacity as Governor of Indiana;and Jennifer McCormick, in her official capacity as Indiana Superintendent of Public Instruction, Appellants-Defendants,
Indiana Connections Academy, Inc.; Rural Community Schools; Andrew J. Brown Charter School, Inc.; Aspire Charter Academy, Inc.;andNational Heritage Academies, Inc., Appellees-Plaintiffs
from the Marion Superior Court The Honorable Heather A.
Welch, Judge Trial Court Cause No. 49D01-1606-PL-20822
ATTORNEYS FOR APPELLANTS Curtis T. Hill, Jr. Attorney General
of Indiana, Natalie F. Weiss Frances Barrow Deputy Attorneys
General Indianapolis, Indiana
ATTORNEYS FOR APPELLEE INDIANA CONNECTIONS ACADEMY, INC.
Wayne C. Turner, Michael R. Limrick, Amanda L.B. Mulroony,
Hoover Hull Turner LLP Indianapolis, Indiana
ATTORNEYS FOR APPELLEE ANDREW J. BROWN CHARTER SCHOOL, INC.,
ASPIRE CHARTER ACADEMY, INC., AND NATIONAL HERITAGE
ACADEMIES, INC. Alan S. Brown Darren A. Craig Alexander P.
Will Indianapolis, Indiana
Indiana Connections Academy, Inc. (INCA), Andrew J. Brown
Charter School, Inc. (AJB), Aspire Charter Academy, Inc.
(Aspire), and National Heritage Academies, Inc. (NHA)
(collectively, the Charter Schools), instituted litigation
against the State, seeking to recover six months of tuition
support funding that they argue they are owed.
The trial court ruled in favor of the Charter Schools and the
State appeals, raising multiple arguments, one of which we
find dispositive: that the trial court erroneously determined
that the tuition support funding formula resulted in a
six-month funding lag. We find as a matter of law that the
General Assembly did not intend the statutory funding formula
to result in a six-month funding lag, meaning that the
Charter Schools are not entitled to recover the disputed
amounts. Therefore, we reverse and remand with instructions
to enter judgment in favor of the State.
School Funding From 2002-2013
In 2001, the General Assembly enacted the Charter School Act
(the Act) to provide an alternative option to traditional
public schools. Ind. Code art. 20-24. A charter school is a
nonreligious public elementary or secondary school that
operates under a charter, which is a "contract between
an organizer and an authorizer for the establishment of a
charter school." Appellants' App. Vol. VI p. 58. An
"organizer" is a nonprofit group that enters into
the contract to operate the charter school, id. at
59, and an "authorizer" is an entity enabled under
the Act to grant a charter to an organizer to operate a
charter school, Ind. Code §§ 20-24-1-2.5,
Because charter schools are considered public schools, which
may not charge tuition to their students, the State provides
tuition support on behalf of their students. Each two-year
budget cycle, the General Assembly determines the amount of
tuition support to be divided among and distributed to all
public schools, including charter schools. The Indiana
Department of Education (DOE) is tasked with the ministerial
duty of distributing the tuition support funds. The amount of
support is determined annually by the DOE and is based on the
Average Daily Membership (ADM) of a charter school.
Before 2013, charter schools conducted their ADM count in
September. They received tuition from the State for their
students on a calendar year basis, with the first monthly
distribution occurring in January and the final distribution
occurring in December. Thus, the ADM count conducted in
September triggered a payment stream that began in January.
Before 2013, the law provided that the DOE would not make the
first distribution of state tuition support until "after
December 31 of the calendar year in which a charter school
begins its initial operation." I.C. § 20-24-7-2(b)
(2011). In other words, a new charter school that opened its
doors in the autumn of an academic year would receive its
first DOE tuition support payment the following January.
This system created financial hardship for new charter
schools, which, unlike traditional public schools, do not
have the authority to levy local taxes. When the DOE realized
that there was a funding gap for new charter schools, it
requested an advisory opinion from the Attorney General in
2002 (the Advisory Opinion). In relevant part, the Advisory
Opinion states as follows:
. . . It cannot be assumed that the General Assembly intended
to have the new public schools operate without state tuition
funds absent clear language to that effect in the Charter
School Act. Therefore, the [DOE] is required both to
distribute tuition support and other state funding upon
verification of the required information from the charter
school organizer and to make full state tuition
payments to public school corporations.
. . . Any analysis of charter school funding requirements
must begin with the basic and irrefutable fact that charter
schools are public schools, "wherein tuition
shall be without charge."
In the absence of a specific legislative directive which
indicates that charter schools must operate without state
tuition support during the first semester of operation, one
may only conclude that charter schools, like all other public
schools, are required to be funded with public funds during
the first semester of a school year. Indeed, any other
reading would require the inference that the General Assembly
intended charter schools with inadequate private start-up
monies to never open.
. . . Of equal importance is the fact that the General
Assembly did not provide that charter schools
specifically be required to operate without state tuition
funding during the first semester they are in operation.
The fact that an already-existing school corporation must
wait until January for funding adjustments based on
September's ADM does not support the argument by
correlation that a charter school must wait until January for
any state tuition support.
. . . [T]he statutory framework established by the General
Assembly has an inherent time lag of roughly one semester
between the time a public school starts a school year and the
time it receives a distribution of state tuition support
based on September ADM.
I am fully aware that the General Assembly has created what
may be termed an "unfunded legislative mandate." It
has created a new variety of public school without either (1)
addressing the fiscal impact these schools may have on
entitlements to existing school corporations, or (2)
expressing an intent that charter schools will not receive
state tuition support during the first semester of
It is possible, given current budget projections, that the
appropriations cap set by the General Assembly in 2001 may be
inadequate. This is an issue that the General Assembly
created, and one that may require its action to remedy.
The [DOE] may find in the performance of its ministerial
duties that it is impossible to satisfy the State's
financial obligations to all public schools as required by
the General Assembly. In such an event, the General Assembly
must supply the [DOE] with the necessary funds to satisfy
these obligations. . . .
Therefore, . . . it is my legal opinion that the Charter
School Act obligates the [DOE] to distribute tuition support
and other state funding upon verification of the required