Lawmakers make path for IPS to seek tax referendum ahead of 2027 fiscal cliff

Lawmakers advanced a proposal Tuesday that would allow the Indianapolis Public Schools Board to initiate a property tax referendum this spring, a step officials say is necessary to secure funding before a proposed governance overhaul takes effect.

The House Ways and Means Committee voted to approve an amendment to House Bill 1423, which would fundamentally restructure the district and most charter schools in the city under a new entity called the Indianapolis Public Education Corporation. The amendment creates a specific window between March 31, 2026 and July 1, 2027 for the current school board to adopt a resolution approving an operating referendum.

If the full bill becomes law, the district aims to place the question on the November general election ballot, Rep. Bob Behning (R-Indianapolis), the bill’s author, told the committee.

"IPS fiscally needs the additional revenue," Behning said.

IPS spokesman Marc Ransford confirmed Behning’s comments. "Our 2018 operating referendum expires in 2026. We anticipate another referendum given that expiration date," he wrote in an email.

Without a renewal, the district projects a sharp drop in revenue beginning in fiscal year 2027.

In 2018, more than 70% of voters in the IPS district approved a property tax increase to support teacher pay. In part, the referendum brought in at least $43 million in additional funds in each of the past three school years, according to a district report. 

Revenue from a future operating referendum must be shared with charter schools within the district's boundaries.

Because the revenue must be split between the district and charter schools, Behning acknowledged the bond amount would likely need to be higher than previous levies.

IPS currently shares revenue with some charter schools based on its own 2021 agreement.

IPS financial pressures mount

The legislative move comes as IPS forecasts significant financial challenges. The district’s current operating referendum, approved by voters in 2018, is set to expire at the end of 2026.

According to the district’s September 2025 Quarterly Finance Update, this local tax revenue has supported teacher compensation increases of 29% since 2018. Without a renewal, the district projects a sharp drop in revenue beginning in fiscal year 2027.

District documents show that state tuition support is projected to remain "static in the long-term with very little growth," further increasing reliance on local property tax levies to fund operations.

The amendment was added at the request of holders of IPS bonds to ensure they are protected during the transition to the new corporate structure, Behning said.

School districts often fund major projects, like renovating buildings or upgrading technology, by borrowing large sums of money from investors, much like a homeowner takes out a mortgage. The loans, known as bonds, and the investors who provide the cash rely on a district’s promise to repay them over time using tax revenue.

The committee passed the amended bill by a vote of 14-8, with Democrats who have spoken out against the larger measure, voting against. The full House will take up the legislation this week.

Eric Weddle is WFYI's education editor. Contact Eric at eweddle@wfyi.org or follow him on X at @ericweddle.