As schools finalize 2026 budgets, Northwest Indiana leaders worry about the revenue loss from the GOP’s signature property tax reform law estimated to erase about $744.2 million in funding from Indiana public schools.

In advocating tax relief for taxpayers, Gov. Mike Braun told public school districts to “do more with less” to reduce costs.

The cuts imposed in Senate Enrolled Act 1 are so drastic, some districts fear they won’t be able to pay utility bills or run their school buses.

Several local districts have engaged financial advisors to help them make the most of their shrinking revenue.

Last week, the Hobart School Board approved an engagement letter with financial adviser Stifel, Nicolaus & Co.

Stifel will advise Hobart on possible bond refunding, as well as other solutions for circuit breaker relief.

Superintendent Peggy Buffington called SEA 1 a second circuit breaker, as she explained the need for a financial adviser last week.

“We have to engage with our financial planners to be able to look at the devastation the legislation did,” Buffington told the school board. “They help us study the impact and what our debt structure is.”

In addition, Hobart is retaining Indianapolis-based Policy Analytics LLC to better forecast its future tax revenue based on data analysis that digs down parcel by parcel.

Hobart already loses about 80% of its tax levy to property tax caps that voters enshrined in the state constitution in 2010.

Most school district leaders have concerns about the impact on their operations fund, which relies on property taxes.

River Forest Superintendent Kevin Trezak said his district recently partnered with Policy Analytics for its expertise in providing accurate tax estimates.

Trezak said the district raised $1.7 million in its operations fund last year.

“That amount will drop every year moving forward and in 2028, we will only have $430,000 funded in operations, which will not even cover our NIPSCO costs,” he said.

Besides utility costs, the operations fund supports building repairs, cleaning supplies, maintenance of buildings, and transportation. It also covers salaries for custodians, maintenance and clerical workers and some instructional and administrative staff.

Lake Central Superintendent Larry Veracco said the district also engaged with Policy Analytics. He said the firm’s tax data analysis of the new $300 homestead tax credit in St. John Township led to an increase in the district’s referendum tax rate.

On Nov. 4, voters will decide if they want to increase their taxes from 17 cents per $100 of net assessed value to $26.14 cents to generate the same amount of money the referendum provided before SEA 1.

The Duneland School Corp. and Hanover School Corp. are also asking voters to renew operating referendums on Nov. 4.

Veracco thinks more districts will seek operating fund referendums from their communities as finances tighten.

“The large cuts to operations in an area of rising costs like NIPSCO bills and insurance costs will really cause cuts in service without some revenue offset,” he said.

Gary Schools Superintendent Yvonne Stokes said in an email that her district, like many across the state, “is undergoing significant financial restructuring” because of the changes under SEA 1.

“These changes require careful and strategic decisions regarding our already limited resources, directly impacting our ability to meet the needs of students,” she said in the email, adding the district has engaged Baker Tilly, a financial advisory firm, for guidance.

“Together, we are developing strategies to stabilize our budget and secure the long-term financial health of the district. Recognizing and addressing these challenges is critical to ensuring that our students continue to receive the high-quality education they deserve,” she said.

East Porter Superintendent Aaron Case said his district is also working with Baker Tilly to consider a bond issue, “as SEA 1 will wreak havoc.

“We are anticipating hits that will definitely surpass our current circuit breaker losses, and so we are working on a General Obligation Bond to help until we see what the impacts will be compared to our estimated losses,” he said.

Trezak, who’s District 1 chairman for the Indiana Association of Public School Superintendents, said tax law is so complex, school districts need guidance from financial advisers.

“It is my opinion that the legislators did not fully understand the incredible shortfalls that the revisions to the tax law (within SB 1) would have on schools, municipalities, and the like,” Trezak said.

Robert Taylor, executive director of the Indiana Association of Public School Superintendents, said it’s possible the General Assembly could revisit the reform law when it convenes in January, although it’s not a budget session.

He said revenue is typically dependent on enrollment.

“Some districts aren’t too bad, while others have significant impact,” he said.

Carole Carlson is a freelance reporter for the Post-Tribune.

https://www.chicagotribune.com/2025/09/11/indiana-schools-preparing-for-tax-reform-laws-devastation/