It’s the end of May, which means school’s out – and a more carefree season is in. But amidst the backyard cookouts, pool parties, and AC relaxation, we’re keeping our nose to the grindstone here at the Leg Update so we can bring you insight on another – heavier – school-related topic: referendums.  

👉 Pro tip: If you want to dampen the vibe at any summer social, just bring this topic up and see how people react to talking about higher taxes!

But alas, there’s never been a more important time to be informed on the topic, as we expect an unprecedented number of school referendums to be on voters’ ballots this fall across Indiana. Among the most consequential referendum might be right here in Circle City. 

Today’s Class Schedule: 

• Policy Updates: Referendums 101 
• What We’re Thinking 
• ICYMI: News and Opinion

Referendums 101

💡 Catch Up Quickly: The Year of Our Lord 2026 is also going to be the Year of the School Referendum. That’s because potentially over 45 school districts across Indiana will pursue a referendum this fall. The increase over years prior stems, at least in part, from property tax reforms passed in Senate Enrolled Act 1 (SEA 1), which will reduce the overall amount of property taxes collected to support local public schools compared to projections schools were operating under amid the old tax code. That legislation also restricted school referendums to general elections in even-numbered years. If schools don’t pursue a referendum this November, they have to wait until 2028. 

📖  Your Referendum Primer: What is a referendum? In the simplest terms, it’s a ballot question that asks voters to approve or deny a property tax increase. The increase then supports things like programming, increased teacher pay, and building upgrades for local public schools. In certain cases, schools may use referendum dollars to expand programs or hire additional staff in key areas. There are two basic types of referendum: operating and capital. An operating referendum supports general operating expenses — think teacher pay, programming, utilities, technology, and transportation. Meanwhile, a capital referendum is earmarked to pay for major construction projects — such as renovating existing school buildings or building brand-new facilities within a district. 

💬 A “Word” On the Impact of Referendums: And the word is “complicated.” Indiana caps property taxes at 1% of the gross assessed value for homestead properties, 2% for other residential and agricultural land, and 3% for other property. Referendums add a new dimension by allowing for rates to rise above those caps. Typically, referendums are presented as increasing a property tax rate by a certain number of cents per $100 of gross assessed value. Taking the recent example of IPS’ capital referendum passed in 2023 that totalled $410 million, the median homeowner in the district has ended up paying just under $40 per year in additional property taxes.  

🌊 Schools at “SEA”: SEA 1 made four major changes to our property tax code:

1. Beginning in 2026, individual homeowners are eligible for a 10% homestead property tax credit, up to $300, with additional credits available to income-limited seniors and blind or disabled individuals. 
2. It increased the property tax exemption for business personal property to $1 million in 2026 and $2 million in 2027, thereby substantially reducing local business’ tax burdens. 
3. The capitalization rate for farmland was adjusted, resulting in approximately an 11% decrease in assessed value in 2026.  
4. Local income tax rates are now set to expire in 2028, after which individual municipalities must set new rates.  

The first three factors, while offering relief to Hoosier homeowners and small businesses, may put local government and school district budgets under increased stress. Still, it’s important to note that these tax reforms in many cases mean school districts will receive fewer property tax dollars than previously projected — and in many cases, fewer net dollars overall. 

🏫 Why Indianapolis Public Schools Need a New Referendum: Let’s bring the magnifying glass a little closer to home. Because, while as many as 100 districts might pursue a referendum this fall, perhaps the most consequential November referendum will be in Indianapolis. IPS currently has an operating referendum that originally passed in 2018. But it’s set to expire at the end of the 2026 calendar year. IPS, according to its own documentation, faces a $40 million budget deficit this year and is on track to run out of their reserve fund next year. “Budget deficit” and “run out of your reserve fund” are not the friends you want to invite for a backyard barbeque this summer. But they’re the reality facing IPS. 

🛣️ The Windy Road to an IPS Referendum in 2026: The astute observer may be asking, how is IPS in a fiscal crisis now given property tax revenues have been rising since the pandemic and SEA 1 hasn’t fully been implemented yet? A brief detour down memory lane is in order. Dial the clock to 2018: IPS proposed a pair of operating and capital referendums totaling nearly $1 billion dollars.   

IPS eventually settled for a much more modest number ($272 million split between a $220 million operating referendum and a $52 million capital referendum). That passed. Exactly halfway through the existing referendum, IPS pursued new ones to replace those to the tune of $810 million. Community pushback ensued, including from us here at the Chamber. IPS dropped the new operating referendum but did get a $410 million capital referendum passed to support its Rebuilding Stronger initiative. Only one problem: IPS said they needed a new operating referendum to successfully implement Rebuilding Stronger. They didn’t get one, yet pressed ahead with full implementation. And now the operating referendum they do still have is going to expire in approximately six months. 

In the meantime, IPS already announced a reduced operating budget for the 2026-27 school year given their looming financial shortfall. Cuts will reduce Pre-K offerings and lead to an increase in the number of teachers who are shared across district buildings to deliver subjects like art, music, and PE.   

🪶 IPEC? But I’m Not a Bird: While the acronym is likely what runs through a woodpecker’s mind all day, it also happens to stand for the Indianapolis Public Education Corporation. House Enrolled Act 1423 of this most recent legislative session established IPEC as a new governing body to oversee transportation, facilities, and accountability for both IPS and charter schools within IPS boundaries.  

In addition to those powers, the legislature handed IPEC the power to levy property taxes on behalf of IPS and charter schools. The IPEC board will vote by the end of June on whether to put an operating referendum on this year’s ballot. IPEC Board Chair David Harris signaled his support for pursuing a referendum this fall coming out of IPEC’s first official meeting in April. What’s more, any referendum proposed by IPEC will be shared between IPS and charter schools due to recent legislative tweaks that allow charter schools to benefit from property tax dollars. 

🙋 Also on the Roll Call: While the referendum related to IPS may be the most consequential in the Indianapolis area, a number of other central Indiana districts have already indicated their intentions to pursue a referendum this fall, including Carmel Clay Schools, Hamilton Southeastern Schools, and Metropolitan School District of Decatur Township. Others may join them in the coming weeks whereas some local metropolitan or suburban districts — like Avon, Perry, and Warren — remain in the early stages of recently-passed referendums. Meanwhile, Brownsburg Community School Corporation is seeking to avoid the immediate need for a referendum by seeking financial support from the Brownsburg Redevelopment Commission through a release of Tax Increment Financing funds. 

Here’s What We’re Thinking

The views below are expressed in the voices of our advocacy team members, but they align with the Chamber’s broad position on each topic.

Our Take: Voters Need to Know What They’re Investing In

Strong public schools play an essential role in our society – and form the backbone of any thriving region. All public schools deserve adequate resources. At the same time, where referendums are concerned, voters deserve a fair and fiscally sound proposal. Ultimately, the success of a referendum comes down to whether voters believe that one is both necessary and will accomplish what it sets out to do. 

Affordability remains a pressing concern for so many Hoosiers — in Indianapolis and statewide. Voters are rightfully cost-sensitive at a time when basic cost of living just keeps getting higher. When they head to the polls in November, an unprecedented number will be asked to balance the trade-off between increased property taxes and increased resources for their local public schools. 

That’s why any referendum amount, including right here in Indianapolis, must be balanced with a sustainable rate. It is vital that school districts statewide, and IPEC locally, engage their community in advance of a referendum request to land on agreed-upon priorities. In short, voters need to know what they’re investing in and have confidence those investments will bear fruit.   

That means a referendum in Indianapolis should be centered around fair funding for all public school students, access to reliable transportation for all families, and stabilization of core school quality. New programming and commitments should only be pursued when there is a clear indication that they will be financially sustainable over the long-term.

ICYMI: News and Opinion

Indiana Capital Chronicle: 
Housing costs are a problem in metro areas nationally, but unlike many cities, the Indy region still has time to correct the course on housing if we act intentionally, writes Indy Chamber’s chief strategy officer and chief of staff Taylor Hughes.

Thanks for reading!

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