Lebanon Community School Corp previews 2026 budget, flags revenue shifts from Senate Bill 1

Staff member (school finance staff) presented an overview of Lebanon Community School Corporation's proposed 2026 budget and warned that recent state law changes will shift how property-tax revenue affects school funds.

The presentation outlined six budget funds — education, operations, debt service, operating referendum, referendum debt service and a rainy day fund — and said the district will ask the board later in the meeting to adopt a resolution permitting monthly transfers from the education fund to the operations fund during calendar year 2026. The staff member said that, if exercised in full, the monthly authorization would total just under $5,000,000 over 12 months but stressed the board would not be required to transfer the full amount.

The transfer mechanism exists because items moved from the former general fund into the operations fund in 2019 (utilities, human resources, superintendent salary and similar costs) are not supported by property-tax levies that principally fund operations. The staff member said the Department of Education advises keeping education-to-operations transfers at or below 15% of education-support revenue to avoid additional reporting requirements.

The presentation focused on how Senate Enrolled Act 1 (commonly discussed as Senate Bill 1) will change the district's revenue picture. The staff member said the law phases in larger homestead deductions and adds a $300 homestead credit billed as a late-session amendment; that credit reduces the total property-tax revenue available to taxing units. Unlike earlier circuit-breaker language that shielded debt service from some revenue losses, the speaker said the $300 homestead credit does not explicitly protect the debt service fund, so the resulting revenue loss will be allocated across operations and debt service according to each fund's rate share.

Because Lebanon's assessed valuation (AV) mix is unusually heavy in commercial and industrial value, the presenter said the district is in a better position than many Indiana districts to withstand the law's downward pressure on residential AV. The staff member said Lebanon consistently shows higher AV growth than the statewide average and that the district's nonexempt AV composition will shift more of the tax burden toward large industrial and commercial parcels under the new law.

Still, the presentation flagged specific risks: the staff member said the district could face a significant net homestead-credit loss that would reduce cash in the debt service fund and that the board may need to increase the rainy-day appropriation from the usual $1,000,000 to $2,000,000 to protect future debt payments. The staff member noted that if debt-service cash were exhausted, the district could make payments from operations or rainy-day funds, but that using rainy-day dollars would require a board resolution and additional appropriation steps.

The staff member reviewed other budget assumptions and near-term actions. Enrollment, a major revenue driver for the education fund, remains near the demographer's projection: Dr. McKibben (demographer/consultant) predicted 3,698 students for the October count; the presenter said the district had 3,691 students as of the previous day. The budget documents list roughly 1,935 account lines across the six funds. The presenter warned of ongoing uncertainties including unsettled teacher contracts (potentially spanning two contract periods inside the 2026 budget year), the elimination or reduction of some grants (the teacher-appreciation grant was removed in the spring session and the Teacher Appreciation Grant will be paid later and cover fewer staff), expected property-and-casualty insurance increases (roughly 20% year-over-year as a trend), and possible utility and vendor-price increases.

Planned steps and timeline shared in the meeting: the staff member said the district will advertise Form 3 (the proposed appropriations and levies) within the 10-day window before the September board meeting, hold the statutorily required budget hearing at the September meeting, present the budget for board approval at the October meeting and submit the approved budget to the Indiana Department of Local Government Finance (DLGF) within five days of the October approval. The presenter also said the district will post its bus replacement and capital-assets plans between the August and September meetings.

On financing, the presenter said the district is currently servicing multiple debt issuances and will have four debt issuances to service in 2026. He said the district planned an issuance to provide cash flow for projects and that the bond order period would open the following morning from 9:30 to 11 a.m. for investor orders.

The presenter described the operating referendum fund strategy: the board will advertise a levy that is $400,000 less than the current year's levy rather than restoring the full 15-cent rate approved earlier, because rising AV makes a lower percentage still produce sufficient referendum revenue. With a projected $4,900,000 levy in the referendum fund, the presenter said the district still expects to grow cash in that fund (roughly $1,500,000 projected this year), and that without the referendum the district would face a structural deficit of about $3.5 million in calendar year 2025.

The staff member closed by reminding the board that appropriations set on Form 3 establish maximum authorized spending and that any additional spending beyond those appropriations would require an additional appropriation hearing later in the year. He listed potential one-time expenses budgeted from operations (maintenance replacements, annual debt payments, a transition to new transportation routing software) and said the district provides monthly updates to a 10-year cash-flow projection at each board meeting.

Next steps: the board will consider the transfer-resolution language later in the meeting, the district will advertise its budget and hold the public hearing in September, and final budget approval and submission to the DLGF are expected in October. The presenter said some policy clarifications stemming from the state's bill remain under discussion at the state level and could change next spring.