The tension is at the heart of the debate over Senate Enrolled Act 1, the 2025 law expected to reduce school property-tax revenue by $744 million over three years, with most of the savings going to homeowners. School property-tax levies still rose 3.2% in 2026 compared with 2025, according to an analysis by the Legislative Services Agency. But that increase is slower than the 6.5% and 6.9% growth in the previous two years, and below the 3.7% inflation rate cited by school officials.

The statewide picture also masks differences among districts and funding sources. Indiana’s state tuition assistance for K-12 schools has grown by $2.8 billion, or 41%, since 2016. Rep. Jeff Thompson, a Republican who chairs the House Ways and Means Committee, said state education funding increased 5% in the most recent budget and that schools statewide are collecting more property-tax revenue this year than last.

Terry Spradlin, executive director of the Indiana School Boards Association, agrees that schools collectively are receiving more money. But he says that total does not capture pressure on operating budgets. Property-tax changes have reduced the statewide operations fund in 2026, he said, while debt-service funding grew by only about $100 million.

That operations fund pays for transportation, insurance and utilities, which together account for 76% of its spending, according to Spradlin. Costs have climbed sharply: a school bus that averaged $90,000 before the COVID-19 pandemic now costs about $160,000. Spradlin said 196 districts received less operations funding than they did last year.

Districts have been shifting money from education budgets to cover operating shortfalls, Spradlin said, leaving less available for teacher pay and benefits. He also said public-school tuition support rose just 2% this year, with some districts receiving no increase as enrollment declined. Indiana ranks 38th in per-pupil spending, he said, at about $13,000 compared with a national average above $16,000.

Those constraints have contributed to cuts in transportation and staffing. They also help explain why districts are asking voters for additional local revenue. State law now limits when school districts can put such questions on the ballot to general-election years, concentrating the requests this fall.

In Noblesville, the school district is asking voters to extend an expiring referendum. State Sen. Scott Baldwin, a Republican from Noblesville who supported SEA 1, praised the district for cutting $4 million and lowering its share of the property-tax rate. He has also criticized the ballot language and said lawmakers should revise it.

Baldwin said the referendum supplies 20% of the district’s operating funding and cannot pay for school construction or athletic facilities. His comments underscore the competing concerns voters must weigh: tax relief and local budgets on one side, and the resources districts say they need to keep buses running, retain staff and maintain services on the other.

The central question is not simply whether Indiana is spending more on schools in the aggregate. It is whether the money reaching each district is keeping pace with local costs—and whether voters should make up the difference through a referendum.