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The Indianapolis Public Schools board approved a $472 million operating budget for next school year amid great uncertainty over future revenues that could dwindle under proposed legislation at the statehouse.
IPS and other school districts typically need to implement some guesswork when they craft their school budgets during the years in which state lawmakers determine the state budget for the next biennium. But this year, the district’s finances face heightened uncertainty as lawmakers advance bills that cap property tax revenue and require IPS to share local property tax revenues with charter schools.
The latest fiscal projections for the property tax relief bill, Senate Bill 1, estimate that IPS could lose roughly $1.3 million in 2026 and $2.2 million in 2027. The larger financial impact would be from Senate Bill 518, the proposal to share tax revenue with charter schools, but it would not begin to hit IPS until 2028 under the bill’s current form.
Still, district leaders caution that spending amounts may change if these bills ultimately limit revenue sources.
“As we think about specifics around decision points for the future, those are still unknown,” Deputy Superintendent Andrew Strope told Chalkbeat on Wednesday. “We’re going to have to let the dust settle on session before we really get into that.”
Here are takeaways from the budget:
District estimates minimal growth in base tuition support
The budget assumes that IPS will receive a roughly 1.5% increase in base tuition support — the baseline amount of per-pupil funding that all students receive — in the next two years, according to Chief Financial Officer Weston Young.
Combined with complexity funds — extra funding for students from low-income families — the district estimates $8,250 in state funds per pupil in 2026 and $8,360 in 2027. That’s a slight increase from the $8,153 for this school year. Over the long term, the district projects that enrollment will decrease.
The budget also estimates $89 million in local property taxes for 2025-26.
Charter schools to receive roughly $13 million
IPS estimates it will give charter schools in its Innovation Network of autonomously-run schools $5 million of its 2018 operating referendum funds next school year.
The district also expects to give another $8 million in property taxes to Marion County charter schools enrolling students living in IPS boundaries under a law passed in 2023. That law requires districts in Marion County and three other counties to share revenue increases from rising property valuations.
The district is estimated to give roughly $4 million in such property tax revenues to charters this year — the first year districts were required to distribute it — as well as the $5 million in 2018 referendum funds to charter schools in the Innovation Network.
Top expenditures include general education, Innovation schools
The budget estimates spending $124 million of the $472 million in operating expenses to support its Innovation Network schools. The network of 30 schools consists mostly of charter schools.
While the district charges Innovation charter schools for certain services based on the school, those in IPS district buildings are not charged for the facility, Young said. Schools that receive IPS transportation also do so at no cost.
Another $108 million of the budget funds general education and $44 million funds special education.
Since 2020, roughly 4% of expenditures have been spent on administrative operations, according to the district.
District could rely on cash balance to cover property tax revenue loss
The district could draw down on its existing cash balance if Senate Bill 1 passes.
That’s what it did at the end of 2023-24, when it ended the year with a $7 million deficit across all its funding sources.
But that cash balance — estimated at roughly $113 million for 2024-25 — would slowly dwindle as the district begins to head into the red. Young has stressed the need for long-term strategic planning, particularly in 2026 when the district’s current operating referendum expires.
District officials note IPS also continues to operate on a funding gap in the state and federal revenue it receives for special education and English language learner students. From 2015-16 to 2023-24, the average annual gap between those revenues and the cost has been $19.3 million for special education and $6.5 million for English language learners.
Amelia Pak-Harvey covers Indianapolis and Lawrence Township schools for Chalkbeat Indiana. Contact Amelia at apak-harvey@chalkbeat.org.
