Indianapolis Public Schools may end free uses of buildings and busing for charter schools in its Innovation Network to help close a $20 million deficit, a move charter advocates warn could strain their budgets.
The district has partnered with charter schools in its Innovation Network of autonomous schools for 11 years in a setup that allows many schools to use IPS facilities and transportation at no cost. IPS is considering ending agreements with the charter schools as it faces a financial squeeze from declining enrollment, Indiana’s property tax reform that restricts local revenues, and a requirement to share more property taxes with charter schools.
There are 30 Innovation schools, the vast majority of which are charters. Innovation charters served 22% of the nearly 49,000 public school or voucher-accepting private school students inside the IPS boundary in 2025-26, according to state enrollment records. Thirteen of these charters operate in IPS-owned buildings.
A 2024 state law limits the amount of money that IPS can charge Innovation schools for services to no more than what each school receives in local property taxes. That restriction is often below the actual cost of the service, according to the district. IPS is considering ending those agreements to recoup the cost of services like transportation as officials weigh other budget cuts for the 2027-28 school year.
But the potential solution has further frayed the relationship between the district and charter school advocacy groups, as both IPS and charters prepare to be overseen by a nine-member, mayor-appointed organization known as the Indianapolis Public Education Corporation.
Last month, the district also announced that it would end its enrollment contract with Enroll Indy — a nonprofit organization that provides enrollment services for district and charter schools — to provide its own enrollment service. Charter advocates protested the move, arguing it would create confusion for families to navigate two enrollment systems. Now, advocates worry the district may overcharge Innovation schools for services and leave charters in a tough financial spot.
The changes will impact a transitional 2026-27 school year for both IPS and charter schools.. IPEC is set to take control of school buildings and transportation in 2028-29.
And voters inside the IPS boundary will decide Nov. 3 on a property tax increase that would generate more funds for IPS and charter schools. If it passes, around 60 charter schools would collectively receive about $48.6 million annually for four years. IPS would receive about $46.4 million but still need to cut $20 million from its budget.
It’s unclear how many Innovation school contracts the district would hope to end, and how much money that could save. A spokesperson for IPS has not responded to WFYI’s questions on these details.
But at an IPEC meeting in June, acting executive director Mike O’Connor estimated in-kind services to these schools at around $12 million. O’Connor also said he’d had conversations with some Innovation school leaders about how paying for these services could be phased in over years.
The IPS school board would still need to vote to end these agreements. The district also said it plans to push for a change in state law in the 2027 legislative session to allow service charges to reflect actual costs.
“Our goal is to maintain those partnerships to the extent that we can,” Superintendent Johnson told WFYI last month. “We also know that we have a decreasing pool of dollars available to serve all schools, and so if we're going to maximize how we spend dollars across all of our schools, then we have to shift how and where we are spending money now.”
In a video to families posted Oct. 6, Johnson said the district is not trying to make profit from the change.
“We simply want to get back what we spent,” she said.
The district also said in a statement that it’s committed to working with Innovation partners on “sustainable agreements that protect student stability and classroom resources for all students across our entire IPS family of schools.”
Charter advocate warns of financial strain
But the decision could throw charter schools into financial disarray for next school year, said Scott Bess, president of the Indiana Charter Innovation Center, an association that advocates for charter schools.
Although Marion County charter schools began receiving some property tax revenue in 2025, they won’t begin receiving a larger portion of those revenues until 2028. That’s also when IPEC assumes responsibility and control of all IPS buildings and starts a unified busing system for both the IPS district and charters.
Ending Innovation agreements next year could mean charters are on the hook for services before they receive significant property tax revenue, Bess said. He also voiced concern on how much the district may charge.
“It's clear that there's a limit on what IPS can charge today, and that limit probably is not the full cost of the service,” he said. “The issue is, outside of the Innovation statute, there's no guarantee that they're going to charge what their cost is.”
Some Innovation schools have been offered the opportunity to purchase the building they occupy for $1, Bess said — an option he called great in the long term. IPS has not responded to WFYI’s questions about this proposal.
“In the short term, the problem is the charter school will take ownership of the building, but not have access to local property tax monies to pay for the upkeep and the general maintenance of the building,” Bess said.
Ending Innovation agreements likely won’t close the $20 million deficit alone — Johnson told WFYI that school closures remain likely.
Contact WFYI Education Reporter Amelia Pak-Harvey at apak-harvey@wfyi.org
