When Indiana school districts talk about SEA 1, the word “cut” does a lot of heavy lifting. Total statewide property-tax revenue actually grew by about 3.3% this year — but many districts received less than they projected before the law changed. Getting less than you expected is not the same as getting less than you got last year. And money that follows a student to the public school educating them has not disappeared from public education. Before voters are asked to approve higher property taxes, they should know exactly which of these situations applies to their district.
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If you've followed this year's school referendum debates, you've probably heard a familiar explanation: Indiana's new property-tax law, Senate Enrolled Act 1, cut school funding, and now districts need voters to make up the difference.
SEA 1 is having a real effect on school budgets, and many districts are under pressure. But some of the language being used to describe that impact is muddying what is actually happening.
Getting less money than you expected to receive is not the same as getting less money than you received last year. And money that is redirected to another public school serving the same community has not disappeared from public education. Too often, all of that gets lumped together under one word: “cuts.”
This year gives us the first real look at what happened under the new law. Across Indiana's 290 school districts, total statewide property-tax revenue increased from about $4.6 billion to $4.75 billion, or roughly 3.3%. At the same time, schools received about $190 million less than they were projected to receive before the law changed.
So a district can be up year over year and still be below its old projection. Think of it like expecting a 5% raise and getting 2% instead. You got less than you expected, but you did not get a pay cut.
If a district received $100 million last year, expected $106 million this year, and ended up with $104 million, it has a real $2 million budget problem compared with what it planned for. But it still has $4 million more than last year.
More money on paper does not necessarily mean a district is better off. Salaries, insurance, special education, and transportation costs are rising. Diesel prices have climbed sharply, which hits districts with large bus fleets especially hard. If revenue grows 3% while expenses grow 6%, the budget problem is obvious.
Some districts are seeing actual declines. The operations portion of school budgets, which helps pay for transportation, buildings and other day-to-day expenses, fell by about 1% statewide, and nearly two-thirds of districts received less than the year before. Much of that decline is tied to SEA 1's new homeowner tax credit.
SEA 1 is putting pressure on school budgets. But we should be more careful with the word “cut.” Sometimes a district is collecting less than last year. Sometimes it is simply collecting less than it expected. Sometimes costs are rising faster than revenue. Those are not the same thing.
The conversation gets even murkier when charter schools enter the picture. Districts are increasingly pointing to local property-tax sharing with charter schools as money they are “losing.”
First, that isn't happening statewide yet. In 2026, charter property-tax sharing applies only in four counties. Statewide operations sharing begins in 2028, and the state's nonpartisan budget analysts estimate it accounts for less than 2 cents of every dollar of SEA 1's projected impact on schools that year.
More importantly, calling those dollars a district loss assumes they belonged to the district in the first place. If a charter school is educating the student, the money is following that student to the public school actually doing the work.
Indianapolis is a good example of how quickly these issues get blended together. For years, local property-tax dollars largely stayed with Indianapolis Public Schools even when an Indianapolis student attended a charter school. Now those dollars are beginning to follow students to the public schools serving them. Describing that as money IPS has “lost” assumes IPS was entitled to funding for students it was not educating.
IPS has other financial pressures as well. Its 2018 operating referendum expires this year. Special education costs are rising. Enrollment has shifted. SEA 1 is part of the financial picture, but it is not the whole picture.
Districts should absolutely explain when their costs are growing faster than their revenue. In some communities, that may be exactly what is happening. But when voters are being asked to approve higher property taxes, they should also be told plainly what changed and where the money went.
If a district gets less than it expected, say that. If it actually gets less than last year, say that. And if money is following a student to the public school serving that student, say that too.
Not every financial pressure is a funding cut. Hoosiers deserve a clearer explanation than that.
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