BLOOMINGTON, Ind. – Employment in Indiana’s education industry grew nearly 30 percent over the past two decades, but increased competition in wages and shortages in staffing have created a challenging environment, especially for public institutions, that is expected to continue. That’s according to a new report from the Indiana Nonprofits Project, which analyzed data from the Quarterly Census of Employment and Wages from 1995 through 2019.

In Indiana, total employment in education grew 29 percent during that period, when it reached more than 250,000 paid employees, said Kirsten Grønbjerg, Distinguished Professor of Public Affairs at the O’Neill School and the Efroymson Chair (2001-2020) in Philanthropy at the IU Lilly Family School of Philanthropy at IUPUI.

Grønbjerg, who directs the Indiana Nonprofits Project, noted that education is a major industry at the national level with total expenditures in 2018-19 at $1.5 trillion. It is also one of the largest industries with significant nonprofit employment in both the U.S. and Indiana, second only to health care.

As detailed in the report, nonprofit employment in the education industry increased 83 percent over the 1995-2019 period in Indiana, more than twice as fast at total employment in the industry (29 percent) and more than six times faster than total employment across all industries (13 percent) in Indiana. Nonprofit payroll increased even faster, up 120 percent (adjusted for inflation); that was also faster than total education payroll (up 24 percent).

Despite the rapid growth, nonprofits accounted for only 16 percent of all those employed in the industry by 2019 (up from 11 percent in 1995), a distant second to government (79 percent), with for-profits trailing even further behind at 5 percent. However, these patterns differ considerably across the seven sub-industries.

• ‘Elementary and secondary schools’ is the largest subindustry, accounting for 63 percent of all jobs. However, almost all jobs (91 percent) are found in public schools, with nonprofits making up almost all other jobs.
• ‘Colleges and universities’ is the second largest subindustry, with 29 percent of all jobs. Almost two thirds of the jobs (64 percent) are accounted for by public universities; the rest are employed by nonprofit colleges and universities.
• The remaining five subindustries account for only 8 percent of all education jobs. This includes junior colleges (all public employment) and a variety of other types of schools and educational support services. Nonprofits account for almost half of all educational support service jobs, but the vast majority (71 – 89 percent) of workers in various types of other schools are employed by for-profits.

Grønbjerg says that closer analysis suggests that Indiana’s education industry faces a number of challenges.

“This is especially true for elementary and secondary education where many public schools are thought to be failing to meet the needs of particularly low-income students. However, the property tax cap amendment in 2008 to the Indiana Constitution made it difficult for local school districts to raise the necessary funds for some critical needs including transportation, bus replacements, capital projects, and debt service,” she noted.

Although outside the period covered by the study, Grønbjerg adds that the COVID-19 pandemic resulted in additional new expenses for schools (technology, cleaning, contact tracing), off-set in part by federal stimulus funding.

Indiana public schools have also struggled to recruit top teachers, and several efforts to increase teacher salaries have failed. The challenges faced by public schools to provide quality education have been further intensified by several school choice programs Indiana has enacted since 2009. Nationally, Indiana has been considered a leader in school choice, and the increased public funding for those programs has raised concerns from teacher organizations and public school administrators about diversion of support from public schools.

The combined effect of these policies help account for the stagnation of employment and payroll for employees in public elementary and secondary schools that the report documents, along with the steady increases in employment and payroll for nonprofit schools.

The nonprofit share of employment in this subindustry almost doubled over the 1995 to 2019 period (although still only 7 percent in 2019), as more students enrolled in private schools, supported at least in part with state funding. More than a quarter (28 percent) of all nonprofit education employees worked in elementary and secondary schools in 2019, giving them a vested interest in these policy developments.

There have also been important policy developments in higher education, where nonprofit workers account for more than a third (35 percent) of all such employees in Indiana in 2019. At the national level, policy issues have focused on high tuition cost (especially at private, elite colleges), high student loan burdens, and concerns about access for low-income and non-traditional students. Public universities receive some state funding, allowing them to offer lower tuition than nonprofit colleges, at least to state residents, but state funding has not kept up with operating costs.

Indiana has two large state university systems (Indiana University and Purdue University), a handful of smaller public institutions, and 30 smaller nonprofit colleges. The public and nonprofit institutions differ not only in size, but in the cost of tuition, the range and variety of specialties available to students, the types and quality of facilities, the nature of student experiences, and more. They compete with one another for students and staff, but they also compete with institutions at the national level for both, as well as for donations and research funding.