Indiana schools propose flexible block grants for federal education funds: Who will be affected?
Indiana is preparing to make a bold move in how public schools access and use federal education funds. In a proposal that could set a national precedent, the state is seeking to convert multiple tightly regulated federal funding streams into flexible block grants. The goal is to give local educators greater control over how money is spent—while raising new questions about accountability and equity for students who rely on targeted support.
A new vision for federal funding
At present, Indiana receives hundreds of millions annually from the U.S. Department of Education under the Every Student Succeeds Act (ESSA). These “Title funds” are designed with separate streams and strict requirements—some earmarked for supporting English learners, some for after-school programs, others for professional development. Each category comes with a host of stipulations and reporting rules, making it both administratively cumbersome and sometimes inefficient for schools hoping to address local needs.But Indiana’s Department of Education wants to turn that model on its head. Under the plan announced this week, the state intends to seek federal permission to consolidate nearly all these funds into broad block grants. If Washington gives its blessing, Indiana schools would gain sweeping authority to direct dollars to any approved activity under ESSA, rather than being forced to spend specific pots of money on narrowly defined programs or student groups.
One notable exception
While the plan would sweep together most Title streams, there is a significant exception. The largest share of federal education aid, known as Title I-A, which supports students from low-income backgrounds, would remain separate. This decision appears to be a calculated effort to maintain support for equity-focused funding and avoid disrupting protections for the neediest learners.
Why change now?
State officials say their main motivation is to cut red tape and reduce the bureaucratic hoops schools must jump through just to fund essential projects. Instead of laboriously piecing together multiple small grants or navigating complex compliance requirements, district leaders could focus on outcomes. Reporting would not disappear, but shift to a model where schools detail how the money was actually spent—measuring support for previously mandated groups after the fact rather than before.This shift, advocates say, could also allow creative new approaches, as administrative barriers that previously confined funds to predetermined uses will be gone. School leaders could more easily respond to local priorities—whether that’s hiring teachers, expanding after-school programs, or launching new initiatives—without the need to fit every expenditure into federal silos.
Expanding opportunity through innovation
Another significant change included in Indiana’s proposal involves competitive and school improvement grants. By combining these into a new “Innovation Fund,” the state hopes to extend opportunities to a broader range of schools, including charters and other nontraditional campuses that play a growing role in Indiana’s educational landscape. This is a nod to the changing realities of Indiana’s modern school system, which is increasingly diverse in both philosophy and structure.
Open questions and concerns
Not everyone is convinced that block grants are the answer. One of the most common criticisms of such consolidation is the risk of undermining support for specialized student groups. Carefully targeted aid for English learners, migrant students, or after-school care exists for a reason: to level the playing field. Critics argue that without firm requirements, there’s a real danger that funds could drift away from these groups as local priorities shift.National politics are amplifying these debates. The timing of Indiana’s proposal follows recent moves by the federal government—including staffing cuts at the Department of Education and threats to withhold funds from states that include certain diversity, equity, and inclusion (DEI) programs in their curricula. Indiana has already signaled that it will certify compliance with federal law by excluding such DEI efforts from its programs to maintain its Title funding.Meanwhile, similar block grant proposals have surfaced in states like Iowa and Oklahoma, but none have yet been approved by the Department of Education. Federal authorities are carefully weighing these “first-in-the-nation” waivers, balancing calls for state autonomy with mandates to protect vulnerable students.
What happens next
Indiana’s Department of Education will publish full details of its proposal in the coming week, after which the public will have a 30-day window to comment. Should federal officials approve the waiver, the new model will take effect with the 2026-27 school year—launching Indiana into uncharted territory for how federal education aid is managed.What’s clear is that Indiana is betting on local innovation and trust in school leaders to deliver the best outcomes for students. If successful, its model could soon serve as a template for other states, potentially changing the face of education funding across the country. For now, though, all eyes will be on Indiana’s public comment process—and Washington’s response.TOI Education is on WhatsApp now. Follow us here.
