School Finance Basics
Indiana public schools receive funding from two main sources:
- State funding (primarily through the Education Fund)
- Local property taxes (primarily through the Operations and Debt Service Funds)
Each fund has strict legal rules about how dollars can be used. School districts cannot move money freely between funds, even when facing financial challenges.
- Education Fund (State Dollars)
- Operations Fund (Local Property Taxes)
- Debt Service Fund (Local Property Taxes)
- Referendum Fund (Local Voter-Approved Property Taxes)
Education Fund (State Dollars)
Operations Fund (Local Property Taxes)
Debt Service Fund (Local Property Taxes)
Referendum Fund (Local Voter-Approved Property Taxes)
Why Construction/Debt Dollars Cannot Solve Operating Shortfalls
Indiana law strictly separates construction dollars from operating dollars. Even if a district has a major building project underway, those funds cannot be used to pay for:
- Teacher salaries
- Bus drivers
- Utilities
- Classroom programs
- Technology
- Safety staff
- Transportation
- Day-to-day operations
Construction and renovation projects are funded through bonds, which are legally restricted to capital improvements. Using those dollars for operating costs is not permitted under Indiana law.
This separation ensures:
- Transparency
- Accountability
- Longterm financial stability
- Protection of taxpayer intent
It also means that operating shortfalls cannot be solved by delaying or canceling construction projects, because the dollars are not interchangeable.