Indianapolis Public Schools has already announced roughly $24 million in budget cuts for 2026. Here is the part that surprises people: even if voters approve the new operating referendum this November, the district still has to cut about $20 million more. The ballot question is not a rescue — it is a partial backfill.
For Indianapolis property owners, this is worth understanding beyond the education headlines, because the same math that is shrinking IPS budgets is what shows up on your tax bill. School cuts and referendum asks are two outputs of one system: Indiana's property tax caps, layered with SB 1 (SEA 1) relief and a new charter revenue-sharing mandate. When the caps bind, districts lose revenue; when districts lose revenue, they either cut or come back to the ballot — usually both.
The Numbers, Verified
Per WFYI's June 22, 2026 reporting on the Indianapolis Public Education Corporation (IPEC) vote:
On June 22, IPEC — the new body that coordinates the referendum across IPS and Indianapolis charter schools — unanimously approved a four-year referendum at 37.2 cents per $100 of assessed value for the November 2026 ballot. If approved, it would raise roughly $87.8 million per year starting in 2027, split about evenly: ~$43.9 million to IPS and ~$43.9 million to roughly 60 charter schools.
That split is the key to the "passes-but-still-cuts" arithmetic. IPS is asking a district-wide tax base to fund a pot it now shares roughly 50/50 with charters. Acting IPEC executive director Michael O'Connor was blunt about the result: "It will require very difficult cuts to be made."
We covered how homeowners can estimate their own cost under the 37.2-cent rate in our November ballot cost breakdown. This post is about the other side of the ledger — why the district is cutting no matter what you vote.
Three Forces Driving the Gap
1. The 2018 referendum expires at the end of 2026
The operating referendum voters approved in 2018 sunsets this year, leaving a hole of roughly $40 million. Under the old structure, that money flowed overwhelmingly to IPS: about $2,300 per IPS student, versus roughly $500 per in-district charter student — and nothing for independent charters.
2. The new money must be shared
State law now requires charter schools to share in local property tax revenue — a first for Indiana. The mechanics of that split, and IPEC's role in administering it, are covered in our IPEC charter-sharing explainer. The practical effect for IPS: replacing a $40 million referendum that it mostly kept requires an $87.8 million referendum that it half keeps. Even at 37.2 cents — nearly double the current 19-cent rate — IPS's share lands around $43.9 million, and the district still projects $20 million in further cuts.
3. Tax caps take a bite out of everything
Property taxes make up roughly one-third of IPS revenue, and Indiana's constitutional circuit breaker caps most homeowners at 1% of gross assessed value. In high-rate Marion County taxing districts, an enormous share of parcels hit that cap, and every dollar above it is simply written off the bill — a credit to you, a loss to the school district. Marion County's cap losses are the largest in the state, and SB 1's homestead relief compounds them. The full mechanics are in our Marion County cap-loss deep dive; the same squeeze is hitting the city budget too, as we covered in how SEA 1 squeezes Indianapolis through 2028.
Why Cuts and Referendums Are the Same Math
Here is the loop, from a property owner's perspective:
| Step | What happens | Who feels it |
|---|---|---|
| Caps bind | Gross tax exceeds 1%/2%/3% of AV; the excess is wiped off bills | Taxpayer saves; taxing units lose |
| Districts lose revenue | Cap losses plus SB 1 relief shrink collectible levy | Schools, city, county, library |
| Districts cut | IPS: $24M in 2026, ~$20M more coming | Students, staff, programs |
| Districts go to the ballot | Referendum levies sit outside the caps | Taxpayers — the cap no longer protects you from this slice |
The last row is the one that matters for your bill. Referendum rates approved by voters are exempt from the circuit breaker caps. That is precisely why districts use them — it is the only levy the cap math cannot erode — and precisely why a "capped" tax bill in an IPS-boundary parcel can still climb when a referendum passes. The cap giveth on the base levy and the ballot taketh away.
Warning
If your homestead is already at the 1% cap, a new referendum rate is additive. It does not get absorbed into the capped amount — it stacks on top. When you model the November question, model it as a straight rate increase on your net assessed value.
The Facilities Question: Too Many Seats
The referendum also does not resolve the district's building problem — it coexists with it. Per WFYI's reporting, O'Connor described a district with "too many seats for too few students," with some IPS buildings operating at roughly 42% capacity. IPS plans school closures, consolidations, and mergers over the next two to four years to bring its footprint in line with enrollment.
Back in May, before IPEC settled on 37.2 cents, Superintendent Aleesia Johnson told the board that lower referendum amounts could force school closures, the end of Innovation Network agreements, and cuts to programs, transportation, or staff — the options presented then ranged from no referendum at all up to 55 cents per $100 of AV, per Chalkbeat's May 29 reporting. The board landed in the middle, which is why consolidation stays on the table either way.
For property owners, facility consolidation cuts both directions. Closed school buildings can eventually return to the tax rolls or be repurposed, and neighborhood-level effects on property values around closed schools are real but parcel-specific. This is a multi-year story to watch, not a 2026 bill line item.
What IPS-District Owners Should Expect
Note
Timeline: the 2018 referendum tax expires with the end of 2026. The new question is on the November 2026 ballot. If it passes, the 37.2-cent rate first appears on bills payable in 2027 — the same year SB 1's larger homestead deduction percentages continue phasing in.
- If the referendum passes: a new 37.2-cent rate (nearly double the expiring 19 cents) applies outside the caps starting in 2027, while IPS still executes ~$20 million in cuts and begins consolidation planning.
- If it fails: your bill avoids the referendum rate, but the district's gap grows well past $44 million, and the cut list Johnson outlined in May becomes the operative plan.
- Either way: the underlying cap-loss squeeze continues, which means this is unlikely to be the last ballot question Marion County school taxpayers see.
Check Your Own Exposure Before November
The single most useful number for evaluating this referendum is your net assessed value — it drives both your cap position and what 37.2 cents would cost you. Start with our Indiana property explorer or go straight to Marion County to pull your parcel.
Our property lookup tool shows your assessed value, deductions, and how you compare to similar properties nearby. And remember: the one lever you fully control in this equation is your assessment itself. If your AV is overstated, you are overpaying on every rate — capped, uncapped, and referendum alike. Our tax appeal service builds the comparable-sales evidence and files for you.