Many Indiana school districts will present property tax referendums to local voters this year, with 38 districts seeking additional funding on the November 3 ballot. These referendums come as superintendents and school boards express concerns about funding reductions, while some lawmakers highlight ongoing increases in school revenue.
The discussion follows changes implemented by Senate Enrolled Act 1 (SEA 1) in 2025, a measure largely urged by Gov. Mike Braun. This legislation is projected to lower schools’ property tax revenue by $744 million over a three-year period, with the savings primarily benefiting homeowners.
However, some lawmakers argue that the message regarding funding cuts overlooks important nuances. An analysis from the Legislative Service Agency indicates that school property tax levies are still increasing, though at a slower pace than in previous years. The analysis showed a 3.2% increase in property tax levies for 2026 compared to 2025. This increase is lower than the 6.5% and 6.9% seen in the two years prior, and significantly less than the 11.8% jump observed in 2023. These figures encompass all three components of school property taxes: the operations fund, the debt service fund, and special referendums approved by voters that fall outside the state’s property tax caps. Local property tax revenue is used for expenses such as buses, healthcare, utilities, and buildings.
In addition to property tax revenue, K-12 schools also receive funding from the General Assembly through state tax revenue, specifically for the education fund, which covers costs like teachers, textbooks, and food. This “K-12 tuition assistance” has seen consistent annual increases. Since 2016, this funding has grown by 41%, representing a $2.8 billion jump. House Ways and Means Chairman Rep. Jeff Thompson stated that state funding for education has increased annually over the past decade, including a 5% rise in the most recent budget. He added that even with taxpayer relief from SEA 1, schools are collectively receiving more local property tax revenue statewide this year than last.
Despite these overall increases, Indiana superintendents report cutting jobs as a result of property tax reforms. Terry Spradlin, Executive Director of the Indiana School Boards Association, acknowledged that schools are collectively receiving new money under the updated system but emphasized that this perspective misses critical context.
Spradlin highlighted that the operations fund, a key component of school budgets, has decreased overall in 2026 due to the changes in property tax relief. This fund is crucial, with 76% of it allocated to transportation, insurance, and utilities—areas experiencing cost increases that outpace inflation. For instance, the average cost of school buses has risen from about $90,000 before the COVID-19 pandemic to approximately $160,000 currently. Spradlin reported that 196 school districts received less in their operations fund this year compared to last. He added that the statewide 3.2% increase in overall school property taxes is still below the current inflation rate of 3.7%. “We need more money to keep up with the cost of doing business,” Spradlin stated.
Furthermore, the debt service fund saw a statewide increase of only $100 million. To compensate for shortfalls in operations, many schools are reportedly reallocating funds from the education fund. This shift can reduce money available to meet state mandates for teacher pay and benefits. Spradlin also pointed out that the tuition support increase for public schools this year was only 2%, and some individual districts experienced no increase at all due to declining enrollment. Nationally, Indiana ranks 38th in per-pupil spending, with about $13,000 per student compared to the national average of more than $16,000. These financial pressures have led districts to implement cuts in areas like transportation and staffing.
The challenging financial landscape has prompted many districts to turn to public referendums for additional funding. Lawmakers have also limited when districts can propose these funding questions to voters, restricting them to General Election years only. Noblesville is one district seeking to extend an expiring referendum. Sen. Scott Baldwin, R-Noblesville, who supported Senate Enrolled Act 1, commended the Noblesville district for lowering its property tax rate portion and making $4 million in cuts. He noted that the referendum provides 20% of the district’s operating funding and cannot be used for building schools or athletic facilities. Baldwin suggested that the ballot language for such referendums is misleading and should be addressed by the Legislature. He underscored the personal nature of the decision, stating that it is a choice each voter must make.
