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Consultant warns SCA 1/SEA 1 will tighten revenues; projects $381,000 2026 hit while district sits on strong reserves
Summary
A Baker Kelly consultant told the board that changes from SCA 1/SEA 1 will reduce net assessed values and tax revenue, estimating a $381,000 revenue decrease in 2026, but said the district currently has unusually strong cash reserves (~82%), giving time to plan.
Brock, the financial presenter from Baker Kelly, reviewed how Indianas funding mechanics work and walked the board through the likely local effects of SCA 1/SEA 1 on assessed values, tax credits and long-range revenues.
"We will see a $381,000 decrease in revenue as a result of SEA 1 in 2026," Brock said while modeling scenarios. He explained the state is phasing away a flat homestead deduction and shifting to percentage-based calculations over several years, and he pointed to supplemental homestead credits and other changes that together shrink net assessed value.
Brock showed sensitivity analyses that combine projected enrollment declines, modest per-student funding growth assumptions and possible salary/benefit inflation. He told the board those assumptions indicated the education fund cash balance could be stressed years out: with current assumptions, the model projects long-term pressure but emphasized the districts combined cash reserves were strong today. "If you combine the education fund, operation fund, and rainy day," he said, "you're sitting on about a 82% cash reserve," and that strong position buys time to take measured steps rather than immediate cuts.
Board members asked clarifying questions about forecasting assumptions, large-taxpayer concentration (NIPSCO) and how the sunset of local income tax (LIT) in 2029 could change projections. Brock outlined next steps including an operational-analysis engagement to identify potential efficiency gains.
