in-20261007-IR-GOV260375FSA: EXECUTIVE ORDER 26-27 FISCAL IMPACT STATEMENT

LEGISLATIVE SERVICES AGENCY OFFICE OF FISCAL AND MANAGEMENT ANALYSIS EXECUTIVE ORDER 26-27 FISCAL IMPACT STATEMENT Postponing the Expiration of an Administrative Rule Executive Order 26-27 Note Prepared October 1, 2026 Date Issued September 23, 2026 Fiscal Impact State & Local Affected Counties All Funds Affected General, Dedicated, & Federal Summary of Executive Order The executive order postpones the expiration of certain rules pertaining to the Indiana Department of Education (DOE). The agency will have until January 1, 2028, to readopt expiring rules. The order addresses rules in the following sections: Explanation of State Expenditures State Tuition Support: The Individuals with Disabilities Education Act (IDEA) requires eligible students with disabilities to have access to free appropriate public education (FAPE) until they turn 22. This protection is extended under 511 IAC 7-32-90 to allow students to continue receiving access to FAPE through the end of the school year in which they turn 22. State tuition support expenditures would decrease if these rules were to expire. [An estimated $1.5 M in state tuition support will be distributed to schools for students with disabilities who are 22 years old in FY 2026.] State Distribution Formulas: The distribution formulas for the School Technology Advancement Program (STAA-3) and the Summer School Program are established in 511 IAC 1-2.5-4 and 511 IAC 12-2-2, respectively. If these rules were to expire, the Department of Education (DOE) distributions under these programs could be impacted. [Statute appropriates $5 M annually to STAA-3 while the 2025 Budget Bill appropriated $17.4 M annually to the Summer School Program.] Explanation of State Revenues Part B Special Education Funds: DOE reports that without extending the rules governing special education, an estimated $36.6 M to $48.2 M in annual federal funds under Part B of the IDEA could be at risk. Teacher Licensing Funds: DOE established their teacher licensing fee schedule in rules, 511 IAC 16-1-2. If this rule were to expire DOE could experience a temporary revenue reduction of about $1.5 M annually. Explanation of Local Expenditures If the administrative codes expired and public schools elected not to provide FAPE to students with disabilities after they turn 22 years old, school expenditures would decrease. [See Explanation of State Expenditures.] Explanation of Local Revenues Part B Special Education Funds: The expiration of administrative rules could have jeopardized an estimated $300 M in annual federal funds received by public schools through Part B of IDEA. [See Explanation of State Revenue.] State Distribution Formulas: Public school advancements under STAA-3 and reimbursements from the Summer School Program could have been impacted if certain administrative rules were allowed to expire. The extent of the impact is unknown and dependent on state action. [See Explanation of State Expenditures.] Agencies Affected Level Agencies State Department of Education Local Public schools. Information Sources The Department of Education. LSA FY 2025 Tax Handbook. https://iga.in.gov/publications/handbook/Handbook2025_5.26.pdf Fiscal Analyst: Kelan Fong, 317-232-9592.