Your Dollars at Work

Understanding School Funding in Indiana

Indiana school finance is organized into separate funds, each with a specific legal purpose established by state law.

This structure helps ensure accountability and transparency, but it also means school districts cannot freely move money from one fund to another to cover unrelated expenses.

WWS Funding Buckets Overview

• Education Fund: Supports classroom instruction and student learning, including teacher salaries, instructional staff, curriculum, technology, and academic programs. Primary funding source: State of Indiana.

• Operations Fund: Supports the day-to-day operation of schools, including transportation, utilities, maintenance, custodial services, school safety, and other operational expenses. Primary funding source: Local property taxes.

• Operating Referendum: Provides additional local funding to support day-to-day district operations beyond the standard funding formula. This is the type of referendum voters approved in 2022 and a replacement is on the ballot for 2026. Funding source: Local property taxes (if approved by voters).

• Debt Service Fund: Supports repayment of debt associated with school construction and major facility improvements. These funds are dedicated to voter- or board-approved capital projects and cannot generally be used for classroom operations or staffing. Primary funding source: Local property taxes.

• Capital Referendum: Provides funding for major construction, renovations, or facility improvements that cannot be supported through existing capital funding sources. Capital referendum dollars are restricted to approved facility-related purposes and cannot be used for operating expenses like teacher salaries or transportation.

• Rainy Day Fund: A savings account that helps the district prepare for unexpected expenses, emergencies, or fluctuations in revenue. Maintaining appropriate reserves supports long-term financial stability and helps the district respond to unforeseen challenges. Funding source: district reserves.

Why can't money be moved between funds?

One of the most common misconceptions about school finance is that districts can simply transfer money from one fund to another when needs change. In reality, Indiana law places restrictions on how each fund may be used.

For example, money designated for debt service or facility projects generally cannot be used to hire teachers, pay counselors, operate buses, or support other day-to-day educational expenses.