Commentary: Schools are making cuts even though more money is coming in

Many of you will see a property tax referendum for your local school district on your ballot this year. And you have likely heard lots of concern from superintendents and school boards about cuts to their funding.

I wanted to give you some important context before you make your decisions.

A lot has been made of the changes in Senate Enrolled Act 1, which will lower schools’ property tax revenue by $744 million over a three-year period. Those savings are going mostly to homeowners.

But some lawmakers think there is nuance being lost in the message.

One important caveat is that property tax revenue for schools is still increasing — just not as fast or high as before.

An analysis from the Legislative Service Agency showed that school property tax levies increased 3.2% in 2026 over 2025. That is still a healthy increase, though much lower than the 6.5% and 6.9% in the two years prior. In 2023, the jump was 11.8%.

These increases include all three levers in school property taxes — the operations fund, the debt service fund and special referendums — approved by voters that are outside the state’s property tax caps.

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It is that growth rate that Republicans wanted to slow when lawmakers took action in 2025, largely at the urging of Gov. Mike Braun.

But it doesn’t mean that K-12 schools collectively aren’t getting new dollars.

In addition to the property tax revenue funding buses and healthcare and utilities and buildings, the General Assembly also uses state tax revenue to cover the education fund for teachers, textbooks, food and more. And they have added money to that pot consistently every year. This is generally known as K-12 tuition assistance.

That funding has increased 41% since 2016 – a $2.8 billion jump.

“Indiana has continued to increase funding for schools at both the state and local levels. State funding for education has increased every year over the last decade, including a 5% increase in our most recent budget, even as we reduced spending in other areas of government,” said House Ways and Means Chairman Rep. Jeff Thompson. “SEA 1 put reasonable limits on local property tax growth to protect taxpayers. Even with the taxpayer relief in SEA 1, schools are still receiving more local property tax revenue statewide this year than they did last year.”

Terry Spradlin, executive director of the Indiana School Boards Association, acknowledged that schools collectively are still getting new money under the revamped system. But he said that leaves out important context.

Specifically, the changes giving homeowners relief has caused the operations fund to decrease overall in 2026. And debt service increased only $100 million statewide.

The operations fund is important because 76% of that fund goes to transportation, insurance and utilities. As you know from your own household budget, those are areas that are increasing at a much faster pace than inflation.

One example is that the cost of school buses has risen from an average of $90,000 pre-COVID to about $160,000 now.

In personal terms, the situation seems like when you get a 2% raise but your expenses go up 4%.

Spradlin said 196 school districts received less in the operations fund than last year. And even with the 3.2% increase overall in school property taxes, that is below the pace of inflation at 3.7%.

“We need more money to keep up with the cost of doing business,” Spradlin said.

38 Indiana school districts to seek property tax referendums this fall

To cover the losses in operations, many schools are shifting dollars from the education fund. And that means less money there to meet state mandates on teacher pay and benefits. He added that the tuition support increase for public schools this year was just 2%. And many individual districts saw no increase at all due to falling enrollment.

Spradlin noted that Indiana is 38th nationally in per pupil spending, including all types of funding. The national average is more than $16,000 and Indiana is at about $13,000.

That big picture has led to districts cutting transportation, staffing and more. And all of that brings me back to referendums.

Many districts trying to keep pace with inflation have turned to public referendums for additional funding. In fact, 38 of them are on the ballot Nov. 3. That is partially due to the property tax changes enacted and because lawmakers have limited when districts can take these questions to voters to General Election years only.

One of those is Noblesville. The district is asking voters to extend an expiring referendum.

Sen. Scott Baldwin, R-Noblesville — who supported Senate Enrolled Act 1 — posted a letter commending the district for lowering its portion of the property tax rate and making $4 million in cuts.

He said the referendum provides 20% of the districts’ operating funding and cannot be used to build schools or athletic facilities.

Baldwin said that the ballot language is misleading and the Legislature should fix it.

“Every family has its own budget, and I respect that this is a decision each voter must make,” he said. “For me, supporting this referendum comes down to responsible management, results for our kids and the kind of community we want Noblesville to be.”