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Stifel adviser: Senate Bill 1, new homestead credit and circuit-breaker losses will cut Mitchell Community Schools revenue
Summary
At a Mitchell Community Schools work session, Stifel representative Chad Blacklock warned that Senate Bill 1, a new homestead tax credit and existing property-tax caps will reduce local revenue by an estimated $537,000 beginning in 2026, and urged the board to consider referenda, transfers or expense reductions to protect instructional programs.
Chad Blacklock, a Stifel Incorporated representative who presented to the Mitchell Community Schools board in a work session, told trustees that state policy changes and tax credits will meaningfully reduce the district’s local revenue.
"The projected supplemental homestead credit loss [is] $214,000," Blacklock said, and when combined with circuit-breaker impacts the district faces about a $537,000 reduction in property-tax revenue starting in 2026. He also explained that Senate Bill 1 (SEA 1) increases state deductions and will lower districts’ net taxable assessed value over the next six years.
Why it matters: Mitchell relies on two separate property-tax–supported funds — operations and debt service — and most instructional costs come from the education (state-funded) fund. Blacklock emphasized that state per-pupil revenue and local property-tax levies work differently; loss of taxable value or new credits directly reduce the dollars available for salaries, curriculum and other instructional costs.
Blacklock laid out several specific mechanics. He said state per-pupil funding is set by the legislature biennially and noted that any district whose debt-service tax rate exceeds $0.70 must put new debt on the ballot. "Your 2026 debt service cap rate was 25.99," he told the board, indicating Mitchell is well below the referendum threshold now but could face limits on future borrowing if rates change.
The consultant recommended the board plan now for potential revenue shortfalls. He said many districts respond by running operating referendums to raise a voter-approved tax rate or by identifying recurring expense reductions. Blacklock noted operating referendums historically have about a 55% success rate; SB1’s restriction of referendums to fall even-year ballots may increase competition and complexity for districts that choose that option.
On next steps, Blacklock offered to share his presentation slides with the board and said he is available for additional briefings on referendum strategy and the mechanics of transfers between funds. He also suggested the board consider lowering transfers from the education fund to operations where feasible, while preserving sufficient operations cash to avoid destabilizing that fund.
The board did not vote on any action at the session; members asked follow-up questions and discussed outreach and longer-range planning. Blacklock closed by advising multi-year planning for any successful referendum campaign and repeated his offer to return for more detailed briefings.
