Legislative Updates

Recent legislation, including Indiana Senate Enrolled Act-1, has introduced changes that affect how property taxes are calculated and how school districts receive funding. The following provides a general overview of what has changed and how those changes impact school finances.

For school districts, SEA-1 has two primary effects.

While Gross Assessed Value (GAV) is expected to continue increasing, expanded deductions will reduce Net Assessed Value (NAV). Over the past 10 years, HSE’s NAV has grown by an average of 6.5% annually. Over the next five years, NAV is projected to decrease by an average of -3.2% per year.

Historically, property tax funds, including Operations, Referendum, and Debt Service, have generated increased revenue over time, even when tax rates remained the same. Under the new structure, the same tax rate is expected to generate less revenue for the district.

rate x (NAV/100) = levy

When net assessed value (NAV) decreases, the tax rate must increase to generate the same total levy as the prior year.

In addition, a new homestead credit has been introduced for residential properties. This credit is equal to the lesser of 10% of a taxpayer’s liability or $300 and is applied after circuit breaker credits. For HSE, this change is estimated to reduce revenue by more than $4.5 million.