Ind. Code ch. 20-40-2

in effect

Ind. Code § 20-40-2-0.2 "DUAB"

Sec. 0.2. As used in this chapter, "DUAB" means the distressed unit appeal board established by IC 6-1.1-20.3-4. As added by P.L.184-2023, SEC.43 and P.L.236-2023, SEC.149.

Ind. Code § 20-40-2-0.3 "Education fund transfer target percentage"

Sec. 0.3. As used in this chapter, "education fund transfer target percentage" refers to the threshold maximum education fund transfer percentage set forth in section 6 of this chapter. As added by P.L.161-2019, SEC.3.

Ind. Code § 20-40-2-0.5 "Excessive education fund transfer list"

Sec. 0.5. As used in this chapter, "excessive education fund transfer list" refers to the list required by section 6 of this chapter. As added by P.L.161-2019, SEC.4.

Ind. Code § 20-40-2-1 "Fund"

Sec. 1. As used in this chapter, "fund" refers to a school corporation's or, if applicable, a charter school's education fund established under section 2 of this chapter. [2006 Recodification Citation: New.] As added by P.L.2-2006, SEC.163. Amended by P.L.244-2017, SEC.66; P.L.201-2023, SEC.180.

Ind. Code § 20-40-2-2 Establishment of education fund

Sec. 2. (a) The governing body of each school corporation shall establish an education fund for the payment of expenses that are allocated to student instruction and learning under IC 20-42.5. (b) The governing body of a charter school that receives a distribution of revenue received from a tax levy under IC 20-46-8-11.2 or IC 20-46-8-12 shall establish an education fund for the payment of expenses that are allocated to student instruction and learning under IC 20-42.5. [Pre-2006 Recodification Citation: 21-2-11-2 part.] As added by P.L.2-2006, SEC.163. Amended by P.L.244-2017, SEC.67; P.L.201-2023, SEC.181; P.L.68-2025, SEC.210.

Ind. Code § 20-40-2-3 Source of fund balances

Sec. 3. Distributions of tuition support shall be received in the education fund. [Pre-2006 Recodification Citation: 21-2-11-2 part.] As added by P.L.2-2006, SEC.163. Amended by P.L.244-2017, SEC.68; P.L.136-2024, SEC.44; P.L.213-2025, SEC.183.

Ind. Code § 20-40-2-4 Education fund; permissible uses

Sec. 4. Except as provided in IC 36-1-8-5.1 (school corporation rainy day fund), the education fund of the school corporation or, if applicable, a charter school, shall be used only to pay for expenses: (1) allocated to student instruction and learning under IC 20-42.5; and (2) related to the cost of providing curricular materials. The fund may not be used to pay directly any expenses that are not allocated to student instruction and learning under IC 20-42.5, are not expenses related to the cost of providing curricular materials, or expenses permitted to be paid from the school corporation's or charter school's operations fund. [Pre-2006 Recodification Citation: 21-2-11-4(a) part.] As added by P.L.2-2006, SEC.163. Amended by P.L.145-2012, SEC.24; P.L.257-2013, SEC.36; P.L.244-2017, SEC.69; P.L.140-2018, SEC.12; P.L.201-2023, SEC.182; P.L.136-2024, SEC.45.

Ind. Code § 20-40-2-5 Payment of athletic coaches

Sec. 5. Remuneration for athletic coaches, whether or not the athletic coaches are: (1) otherwise employed by the school corporation; and (2) licensed under IC 20-28-4 or IC 20-28-5; must be budgeted in the education fund and must be paid from the education fund. [Pre-2006 Recodification Citation: 21-2-11-4(b).] As added by P.L.2-2006, SEC.163. Amended by P.L.244-2017, SEC.70.

Ind. Code § 20-40-2-5.5 Tracking of expenditures

Sec. 5.5. The state board of accounts may take action, including the establishment of an account code, to track expenditures of money distributed for curricular materials. As added by P.L.136-2024, SEC.46.

Ind. Code § 20-40-2-6 Transfers from education fund to operations fund; transfer target percentage; excessive education fund transfer list

Sec. 6. (a) Each school corporation and, if applicable, charter school, shall make every reasonable effort to transfer not more than fifteen percent (15%) of the total revenue deposited in the school corporation's or, if applicable, charter school's, education fund from the school corporation's or, if applicable, charter school's, education fund to the school corporation's or, if applicable, charter school's, operations fund during a calendar year. (b) Only after the transfer is authorized by the governing body in a public meeting with public notice, money in the education fund may be transferred to the operations fund to cover expenditures that are not allocated to student instruction and learning under IC 20-42.5 or related to the cost of providing curricular materials. The amount transferred from the education fund to the operations fund shall be reported by the school corporation or, if applicable, charter school, to the department. The transfers made during the: (1) first six (6) months of each state fiscal year shall be reported before January 31 of the following year; and (2) last six (6) months of each state fiscal year shall be reported before July 31 of that year. (c) The report must include information as required by the department and in the form required by the department. (d) The department must post the report submitted under subsection (b) on the department's website. (e) Beginning in 2020, the department shall track for each school corporation or, if applicable, charter school, transfers from the school corporation's or, if applicable, charter school's, education fund to its operations fund for the preceding six (6) month period. Beginning in 2021, before March 1 of each year, the department shall compile an excessive education fund transfer list comprised of all school corporations or, if applicable, charter schools, that transferred more than fifteen percent (15%) of the total revenue deposited in the school corporation's or, if applicable, charter school's, education fund from the school corporation's or, if applicable, charter school's, education fund to the school corporation's or, if applicable, charter school's, operations fund during the immediately preceding calendar year. A school corporation or, if applicable, charter school, that is not included on the excessive education fund transfer list is considered to have met the education fund transfer target percentage for the immediately preceding calendar year. As added by P.L.244-2017, SEC.71. Amended by P.L.161-2019, SEC.5; P.L.139-2022, SEC.19; P.L.201-2023, SEC.183; P.L.136-2024, SEC.47.

Ind. Code § 20-40-2-7 Transfers to closeout general fund

Sec. 7. (a) On January 1, 2019, the balance, as of December 31, 2018, in the school corporation's general fund shall be transferred to the education fund. (b) Before March 1, 2019, the governing body of a school corporation may transfer to the school corporation's operations fund, from the amounts transferred from the school corporation's general fund under subsection (a), any amounts that are not allocated to student instruction and learning under IC 20-42.5 or related to the cost of providing curricular materials. A school corporation may make a transfer under this section only after complying with section 6 of this chapter, including the requirements for public notice and a public hearing. As added by P.L.244-2017, SEC.72. Amended by P.L.136-2024, SEC.48.

Ind. Code § 20-40-2-8 Technical assistance for school corporations on excessive education fund transfer list

Sec. 8. The Indiana education employment relations board and the division of finance of the department shall be available to consult with and provide technical assistance to each school corporation that is included on the excessive education fund transfer list required under section 6 of this chapter. As added by P.L.161-2019, SEC.6.

Ind. Code § 20-40-2-9 Excessive education fund transfer list notice; receipt of notice

Sec. 9. (a) For each school corporation included on the excessive education fund transfer list required under section 6 of this chapter, the department shall, not later than April 1 of each year, submit in both a written and an electronic format a notice to the school corporation's superintendent, school business officer, and governing body that the school corporation did not meet its education fund transfer target percentage for the previous calendar year. (b) If a school corporation's governing body receives a notice from the department under subsection (a), the school corporation shall do all of the following: (1) Publicly acknowledge receipt of the excessive education fund transfer list notice from the department at the governing body's next public meeting. (2) Enter into the governing body's official minutes for that meeting acknowledgment of the notice. (3) Publish on the school corporation's website the department's notice and any relevant individual reports prepared by the department within thirty (30) days after the public meeting. As added by P.L.161-2019, SEC.7. Amended by P.L.139-2022, SEC.20; P.L.23-2026, SEC.207.

Ind. Code § 20-40-2-10 Explanatory documentation; presentation; official recommendation

Sec. 10. (a) After the department completes the school corporation notice requirement under section 9 of this chapter, the department shall notify the state board, DUAB, and Indiana education employment relations board as soon as possible of all school corporations that received a notice stating they were on the excessive education fund transfer list for the immediately preceding calendar year. (b) Upon receipt of the department notice to a school corporation under section 9 of this chapter, the school corporation's superintendent and financial personnel, including the school's business officer, shall prepare and submit explanatory documentation within ninety (90) days, explaining the following: (1) How and why the school corporation's leadership believes the school corporation failed to meet the education fund transfer target percentage. (2) The steps the school corporation's leadership is planning or actively taking to budget and spend during the next calendar year to meet the education fund transfer target percentage for the next calendar year. (c) The school corporation's superintendent shall submit the explanatory documentation to the department and the DUAB. (d) Upon submission of the explanatory documentation under subsection (b), the school corporation's superintendent shall present the explanatory documentation to the school corporation's governing body at its next public meeting. The governing body shall enter both the actual documentation and corresponding discussion into its official minutes for that meeting. (e) Upon the completion of the duties under subsection (d), the school corporation shall publish the explanatory documentation alongside any further notices and related reports from the department on its website within thirty (30) days. (f) Upon receipt of a school corporation's explanatory documentation, the DUAB shall officially acknowledge receipt of the documentation at its next public meeting and enter the receipt into its official minutes for that meeting. (g) Upon receipt of the explanatory documentation, the department, in collaboration with the DUAB, shall review the documentation within sixty (60) days to make a preliminary determination of whether the documentation satisfactorily demonstrates that the school corporation's leadership has outlined and begun a corrective action plan to make progress in meeting the education fund transfer target percentage for the next calendar year. (h) If the department determines the explanatory documentation is not satisfactory, the department may contact the superintendent and financial personnel, including the school business officer, of the school corporation to schedule as soon as possible an appearance before the DUAB at a public meeting to provide an opportunity to explain the details within the explanatory documentation, and to explain to the DUAB the school corporation's budgeting and compensation levels in relation to the following for the school corporation: (1) How and why the education fund transfer target percentage was not met during the previous calendar year. (2) Total combined expenditures. (3) Student instructional expenditures. (4) Noninstructional expenditures. (5) Full-time teacher compensation expenditures. (6) Nonteaching, full-time administrative personnel compensation expenditures. (7) Nonteaching staff personnel compensation expenditures. (8) Any prior or planned attempts to seek the assistance available under this chapter from the Indiana education employment relations board and the department's division of finance. (9) Any prior or planned pooling of resources, combined purchases, usage of shared administrative services, or collaboration with contiguous school corporations in reducing noninstructional expenditures as described under IC 20-42.5-2-1. (10) Any prior or planned participation in a county school safety commission under IC 10-21-1-12 to assist and reduce school safety expenditures. (11) Any prior or planned consideration of meeting the requirements of and applying for school corporation efficiency incentive grants under IC 36-1.5-6. (i) The DUAB may contact the superintendent and financial personnel, including the school's business officer, of a school corporation that has been included on the department's excessive education fund transfer list for at least two (2) immediately preceding calendar years to provide the school corporation an opportunity to explain to the DUAB in a public meeting the school corporation's budgeting and compensation levels in relation to the items listed in subsection (h). (j) After the DUAB receives the school corporation's explanation under this section, the DUAB may issue an official recommendation to the school corporation to perform a review and improve its budgeting procedures in consultation with any state agencies the DUAB considers appropriate. The state agencies specified by the DUAB shall assist the school corporation before and during its next collective bargaining period with the goal of meeting or making progress toward the education fund transfer target percentage. If the DUAB issues an official recommendation to a school corporation, the school corporation's governing body shall officially acknowledge receipt of the recommendation at its next public meeting and enter into the school corporation governing body's minutes for that meeting acknowledgment of receipt of the recommendation. In addition, the school corporation shall publish the official recommendation on the school corporation's website. (k) The school corporation shall publish the most recent notices from the department, relevant individual reports prepared by the department, explanatory documentation by the school corporation, and official recommendations by the DUAB on the school corporation's website. (l) The school corporation may remove the notice, its explanatory documentation, and the DUAB's official recommendation from its website if the department determines that the school corporation met its education fund transfer target percentage and is no longer on the excessive education fund transfer list. As added by P.L.161-2019, SEC.8. Amended by P.L.184-2023, SEC.44; P.L.236-2023, SEC.150; P.L.150-2023, SEC.33; P.L.236-2023, SEC.151.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/20Fetched: 10/17/2026