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IPS to Ask Indiana Lawmakers for $24M Special Education Fix in 2027 Budget

Indianapolis Public Schools will urge the General Assembly to close a $24 million special education funding gap and revise how the state pays for high-need students, as the district grapples with a $20 million deficit and looming school closures.

IPS to Ask Indiana Lawmakers for $24M Special Education Fix in 2027 Budget

Indianapolis Public Schools is preparing to ask state lawmakers to close a roughly $24 million gap between what Indiana provides for special education and what the district actually spends to serve students with disabilities, making it the centerpiece of IPS's 2027 legislative agenda.

The request comes as the General Assembly prepares to write the state's next two-year budget in the session that begins in early January. IPS enrolls about 3,600 special education students — 18% of enrollment — in the schools it directly manages.

Superintendent Aleesia Johnson said the district has absorbed the shortfall for years, and that full state funding would free up money for general education students.

"We've just reached a point now where, again, that funding pie has continued to shrink, has continued to be divided into many pieces and so we believe this is the time to really push on making sure that our special education students are served well," Johnson said.

The district's financial pressure is mounting from several directions: declining enrollment, Indiana's property tax reform that restricts local revenues, and a requirement to share more property tax dollars with charter schools. IPS is also preparing to announce school closures in November as it works to close a $20 million deficit for the next school year.

Rachel Santos, executive director of IPS's office of deputy superintendent, said the district hopes to build a broad coalition at the Statehouse because many other Indiana school districts face the same special education shortfall.

"I think the only way it's going to be successful is if no one knows who's leading because we're all leading the same issue," Santos said.

Beyond the special education gap, IPS is asking lawmakers to change the state's complexity funding formula, which directs extra money to districts with the highest-need students. The formula currently relies on the share of students receiving SNAP, TANF or foster care services; IPS wants English Language Learners included as well. Over time, the state has shifted school funding toward the base per-pupil amount that all schools receive and away from complexity funding.

The district also wants to lift a cap, imposed by a 2024 state law, on what IPS can charge its Innovation school partners for services such as utilities, food service, janitorial maintenance and transportation. Under current law, IPS cannot charge more than each school receives in local property taxes. The district argues it should be able to recover the actual cost of serving its 30 partner schools. IPS recently said it is considering charging Innovation schools for certain services to help recoup the anticipated $20 million deficit.

In addition, IPS is seeking more state funding for pre-K, including an expanded pool for the On My Way Pre-K program that helps low-income families pay for early childhood programs. Its final request is for the state to fully cover the cost of advanced coursework exams — such as Advanced Placement, International Baccalaureate and Cambridge tests — and to maintain reimbursements for teachers who earn credentials to teach college-level courses.

The legislative push follows Indianapolis voters' approval in November of a referendum generating $95 million annually for IPS and charter schools, a measure the district had described as a lifeline amid its financial troubles. Even with that revenue, Johnson has said school closures remain likely.

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