Dropout recovery charter schools go the go ahead to consider new locations across Indiana Monday when Gov. Mike Pence signed a bill into law that drops the cap on new schools.

But future expansion may not stop at the state border.

Dropout recovery charter high schools serve mostly adults and a handful of traditional high school students. They cater to a variety of students, from those in their teens to others old enough to have multiple children and regular jobs. Some of the schools even have on-site child care.

Led by Goodwill Industries Excel Centers and Christel House Academy’s Dropout Recovery School (DORS), the idea has been hailed by school choice advocates as one of the best examples of successful charter school innovation. But the schools’ unusual design has made funding them a challenge, which caused lawmakers to cap the number of schools at 11 last year.

House Bill 1028, signed into law Monday, aims to address that problem. It creates a specific procedure for creating new dropout recovery high schools. They must be approved by the state charter school board first. Then they wait to see how much money the legislature allocates to see if there is enough for new schools to open. The current budget has just enough to fund the schools now opened or planned — about $22 million. Lawmakers will revisit that amount when they make the next two-year state budget in 2015.

“What we’ll be doing is working with policy leaders and people around the state to say, OK, how many of these should there be, where should they be and obviously where would we go?” said Scott Bess, chief operating officer of Goodwill’s Education Initiatives.

Goodwill had ambitious plan to build on the success of its four Excel Centers in 2013. That year, it opened four new centers, going outside Indianapolis for the first time, with new centers in Lafayette, Kokomo and Richmond. Long term, Goodwill was looking at expansion across the state.

That’s what made lawmakers nervous.

However well intended, Appropriations Committee Chairman Sen. Luke Kenley, R-Noblevsille said last summer, per pupil aid from the state formula was only intended for children 18 and under who attend public K-12 schools — not for adults.

Payments to the dropout recovery schools that opened since 2010 probably shouldn’t have happened, Kenley said. He believed paying for them using the state K-12 school funding formula was an error by the Indiana Department of Education.

But the Indianapolis Mayor Greg Ballard’s office, which sponsors the schools, and other supporters argued dropout recovery charter schools were just the sort of never-before-considered innovation that charter schools were designed to spur.

Advocates for the school also point to their success not just as helping dropouts finish school, but leading them to better jobs.

Excel Centers alone have helped more than 350 dropouts earn high school diplomas since 2010. About two-thirds of those earned industry certifications or college credit along the way and about 75 percent now have full time jobs. Of those not yet working, some of them went onto college instead.

Even so, Bess said he believes the door on funding through the K-12 formula is probably closed, leaving dropout recovery charter schools at the mercy of the legislature every two years.

“I think it’s very clear, both on the legislative side and in the K-12 arena, that they are very supportive — the education department and all the associations — as long as it’s not carving out of the formula,” he said. “Sen. Kenley was very clear about that.”

That could make it tougher, for example, for dropout recovery charter schools to find building space. For charter schools, landlords often ask for proof that the schools have reliable, longterm funding through the funding formula.

Bess said the Excel Centers can manage, however.

“It really is up to us,” he said. “It’s how much risk we are willing to assume and how creative we can get writing leases that are contingent on full appropriation.”

The new approval and funding process, Bess estimated, should allow Excel to seek to open three to four new schools each year beginning in 2015, assuming lawmakers approve funding.

But that doesn’t mean Goodwill in Indiana can’t spread its concept to other states.

In fact, Goodwill has already licensed the dropout recovery charter school model to its Austin, Texas, affiliate, which has state approval to open an Indiana-style Excel Center there next fall. The school will serve 150 students age 26 or older. A second application has been submitted for an Excel Center for dropouts age 25 and under.

An application for an Excel Center also will be submitted by April 1 in Tennessee, seeking to establish an Excel Center in Memphis.

“We had great response from their political leaders and community organizations,” Bess said of Memphis.

In each case, Goodwill in Indiana will collect a license fee.

“We don’t want to lose money but we don’t have to necessarily make money,” he said. “It’s just recovering our cost. The biggest thing from our perspective is creating a network all across the country of people who are doing pretty innovative things who can share with each other so everybody benefits. That’s really what we’re after there.”

Other bills signed into law by Pence on Monday included: