Elkhart Community Schools: declining enrollment and new state tax law drive multimillion-dollar budget gap; superintendent seeks authority to study reductions

On Sept. 23 at a public work session, Elkhart Community Schools budget staff and Superintendent Dr. Hough laid out a budget picture that they said requires immediate action: declining enrollment, the state’s recent SEA 1 property‑tax changes and rising salary and benefit costs together will create annual deficits in the millions unless the district reduces expenses or finds offsetting revenue.

The district’s budget presenter, identified in the meeting as Miss Ross of the business/budget team, told the school board the district’s enrollment has fallen from about 12,100 students in 2019 to roughly 10,100 in September 2025 and that the loss from October 2024 to September 2025 alone is “over 400 and some odd students, which would equate to about a $3,500,000 tuition support loss.” Ross said the advertised 2026 education fund budget reflects those revenue pressures and warned the Department of Local Government Finance (DLGF) will review and modify tax rates after the district’s advertised figures are submitted.

Why it matters: Elkhart’s tuition support from the state is calculated on average daily membership (ADM). The board was told a roughly 2,000‑student decline since 2019 has reduced tuition support by more than $14 million in aggregate; because payroll and benefit commitments are largely fixed or negotiated, the district faces a large structural deficit unless staffing and other expenses are further adjusted.

Ross outlined revenue and expense drivers: the education fund is primarily state tuition support (basic grant, academic performance, special education, CTE and other components) and is sensitive to ADM counts on Oct. 1 and Feb. 1. The operations fund, she said, is driven largely by local property tax revenue and is further constrained by tax caps and existing pension debt neutrality charges that reduce available levy. Ross noted the pension debt neutrality payment will end after 2027, which may free some capacity in future levies, but she cautioned that SEA 1 is likely to offset much of that benefit.

Superintendent Dr. Hough opened a broader “state of the district” presentation the same evening, stressing that the district was organized to serve about 17,000 students but now enrolls roughly 10,100. “We have to make these decisions pretty quickly, thoughtfully, but most importantly in thinking about what is in the best interest of our children,” Dr. Hough told the board, and he said he will bring a formal resolution in the coming weeks asking the board to authorize a district‑level study of options to “right‑size” the district’s footprint and staffing.

Board members and staff discussed specific budget levers the administration has already used or is pursuing: reductions to administrative positions and contracted professional services, renegotiation or termination of some curriculum contracts, tighter comp‑time controls and timekeeping, a revised food services management contract (Chartwells), and regular review of contracts for value. Ross said staff reductions have begun but that payroll and benefit totals have not declined as quickly as the decrease in FTEs would suggest, citing factors such as movement of positions into bargaining units and the need to hire to scale.

The presentation also highlighted capital‑planning and transportation pressures: the advertised operations fund included a $2.2 million allocation for bus replacement and a three‑year capital projects plan of about $18 million; the district noted current bus market prices are much higher than in previous years (one district official at the meeting cited new regular buses “about a half a million” and specialty wheelchair buses up to $750,000). Ross said the board will receive more detailed line‑item information when the district uploads materials to the DLGF gateway.

On state policy, presenters repeatedly referenced SEA 1 (the recent state legislative change affecting property tax deductions and exemptions). Ross and Dr. Hough said SEA 1 will reduce revenue to public schools by expanding homeowner and other property deductions, phasing in business personal property exemptions and potential revenue sharing with charter schools; the administration estimated SEA 1 could reduce operations fund revenue by $1 million to $2 million per year for Elkhart, though they emphasized final numbers are still being computed by policy analysts and county assessors.

Near‑term steps cited by administration included: completing DLGF forms and advertising the proposed 2026 budget, presenting a public hearing at least 10 days before adoption, uploading the adopted budget to the DLGF gateway, and returning to the board with more granular cost‑reduction numbers. In response to a board question, Ross said staff and cabinet members were “in the process of putting numbers to these cost reduction measures” and hoped to present concrete savings estimates within a week and to the next board meeting.

The superintendent described a forthcoming resolution that will request board authorization to study rightsizing options — a process he said would be accelerated and would include community engagement, data analysis and proposals for board approval. Dr. Hough said the study will examine facility utilization, staffing ratios, and fiscal impacts and will be presented to the board for authorization before staff proceeds.

Ending: Board members thanked staff for the presentation and emphasized the need for transparency with the community as the district pursues difficult decisions. The work session concluded with the administration and the board agreeing to return at upcoming public meetings with more detailed savings estimates and, if authorized, a scope for the proposed rightsizing study.