LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7161 NOTE PREPARED: Dec 30, 2024
BILL NUMBER: HB 1136 BILL AMENDED:
SUBJECT: School Corporation Reorganization.
FIRST AUTHOR: Rep. Teshka BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: This bill provides that, if more than 50% of students who have legal settlement
in a school corporation were enrolled in a school that is not operated by the school corporation on the 2024
fall average daily membership count date, the school corporation must be dissolved and all public schools
of the school corporation must be transitioned to operating as charter schools. The bill establishes a new
governing board, requirements, and procedures regarding the dissolution and reorganization of the applicable
school corporations.
Effective Date: July 1, 2025.
Explanation of State Expenditures: The bill’s provisions are estimated to dissolve five school corporations
and by FY 2029, 68 schools will transition to operate as charter schools. These schools may be eligible to
receive additional state grants available to charter schools, such as the Charter School Capital Grant that was
appropriated $25 M in FY 2024. The impact to state expenditures is ultimately dependent on appropriations
made by the General Assembly and the specific eligibility rules for the grants.
Explanation of State Revenues:
Explanation of Local Expenditures: Summary - The bill is estimated to require five school corporations
to dissolve and will transition 68 schools into charter schools by FY 2029. This could increase the annual
compensation provided to school board members by $20,000. The new school boards established as a result
of this bill will also have new requirements and functions in addition to the duties and responsibilities
traditionally held by school boards, and additional funds and resources may be required. The following table
shows the school corporations who are expected to be impacted by the bill.
HB 1136 1 Impacted School Corporation Schools that will
become Charters
Gary Community School Corporation 9
Union School Corporation 5
Indianapolis Public Schools 50
Tri-Township Consolidated School
Corporation
3
Cannelton City Schools 1
Total 68
Additional Information - Current statute allows school board members to receive compensation for their
services that may not exceed $2,000. Provisions in the bill are estimated to dissolve five school corporations
and will replace the school boards for the impacted schools with a new seven member governing body. The
school boards for each of the impacted school corporations currently consist of five member bodies. This
could increase local expenditures to compensate 10 additional school board members by up to an additional
$20,000. The new board members are also eligible to receive a per-diem.
The new school boards will also have additional responsibilities in addition to those normally held by a
school board. This includes a requirement to recruit high-performing charter school organizers to take over
the operations of the 68 schools that must transition to a charter school. This represents an unknown
additional workload and/or expenditure increase for the school boards. Ultimately, the source of funds and
resources required to satisfy the requirements of this bill will depend on legislative and administrative
actions.
Explanation of Local Revenues: Charter School Grants: The schools required to transition into a charter
school may be eligible tor receive additional state grants that are only available to charter schools. The bill’s
impact to charter school revenue are ultimately dependent on legislative and administrative actions. [See
Explanation of State Expenditures.]
Property Tax Levies: Although the school boards established by the bill retain all levying authority
traditionally given to a school corporation, provisions in the bill prohibit the impacted schools from imposing
new or extending old referendum tax levies. This represents a revenue decrease for the impacted schools
dependent on the extent that the schools would have otherwise imposed a new or extended an existing
referendum levy.
Additional Information - The school boards established in this bill are required to ensure there is parity when
distributing local tax dollars amongst the schools required to transition into a charter school. This is not
expected to impact local revenue, although it may shift how much revenue is distributed to individual
schools.
The five school corporations impacted by this bill currently have three operational referendums expected to
expire in 2026, 2027, and 2029. The bill prohibits these referendums from being extended. The impacted
HB 1136 2 schools also currently have three capital referendums. The impacted school corporations had operating
referendum levies of $54.7 M and capital referendum levies of $34 M in 2024.
State Agencies Affected:
Local Agencies Affected: Certain school corporations.
Information Sources: LSA Education Database.
Fiscal Analyst: Kelan Fong, 317-232-9592.
HB 1136 3