Legislators define financial roles for IPS, new Indianapolis education corporation

CORRECTION: A previous version of this story misidentified the subject of the amendment approved by the House Ways and Means Committee. The amendment clarifies legal liability for bond debt incurred, not operating referendums.

Lawmakers advanced a proposal Tuesday that clarifies financial liabilities for Indianapolis Public Schools and the proposed Indianapolis Public Education Corporation.

The House Ways and Means Committee approved an amendment to House Bill 1423, which would fundamentally restructure the district and most charter schools in the city under the new entity.

The amendment specifies that any debt incurred by Indianapolis Public Schools prior to April 1, 2026, will remain the obligation of the district and will not be assumed by the new municipal entity created by the legislation.

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.

Rep. Bob Behning (R-Indianapolis), the bill’s author, said the added language is to ensure that the creation of the Indianapolis Public Education Corporation does not disrupt existing financial agreements between IPS and bond holders. 

The amendment also states the Indianapolis Public Education Corporation would not be able to issue bonds, enter leases or incur debt after March 31, 2026, and before July 1, 2027 without the approval of the IPS Board.

During the hearing, Behning also said IPS aims to place a property-tax referendum on the November general election ballot.

"IPS has a referendum that expires in the fall of this year and IPS fiscally needs the additional revenue," Behning said.

IPS spokesman Marc Ransford confirmed Behning’s comments. “We anticipate another referendum given that expiration date,” he said in an email.

The district faces a fiscal cliff if the referendum is not renewed. 

In 2018, more than 70% of voters in the IPS district approved a property tax increase to support teacher pay. The referendum brought in at least $43 million in additional revenue 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 referendum amount would likely need to be higher than previous levies.

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

The full house will next take up House Bill 1423.

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