IPS needs an operating referendum in 2026. Full stop. 

Perhaps you already knew that. It’s not some heavily-guarded state secret. And 2026 is still some ways off. So it can feel not-so-imminent. 

But ever since the May IPS board meeting happened, I keep thinking about a couple of slides, that, buried amid an insanely dense powerpoint, showed a glimpse of IPS’ possible financial future. So I want to dig into those. But first, a brief history of recent referendums in IPS to set the stage.

A History of Referendums in IPS Dating Back to 2018

Dial the clock back to 2018. Well, technically 2017. That’s when the IPS board approved an ask for a pair of capital and operating referendums totaling some $936 million. Yes, perhaps your brain erased everything before the pandemic. But IPS really did pursue a nearly $1 billion ask in the not-so-distant past. 

To the surprise of nobody, the referendum faced significant pushback, including from the State Board of Education and the Indy Chamber, among other groups. That led IPS to trim their total request to $725 million. With a, “You must still be joking” expression, the Indy Chamber offered to work with iPS to identify possible cost-cutting measures to bring the ask down to a more reasonable level.

From there, no movement until July of that year, during which IPS finally lowered the amount. Multiple times, in fact, in quick succession. At the same time, the Indy Chamber released their cost-cutting recommendations they estimated would save IPS $477 million and indicated their willingness to support a referendum in the ballpark of $100 million.

Following more negotiations, IPS and the Indy Chamber agreed to seek a $272 million referendum ($220 million for operating and $52 million for capital). Voters approved both in November 2018, with the operating referendum set to expire in 2026 (more on that later).

Then, exactly halfway through the existing referendum in 2022, IPS decided to seek new operating and capital referendums to replace the current ones. They asked for $810 million for the pair to support their Rebuilding Stronger initiative. That received considerable opposition from charter and innovation school leaders, who indicated an unwillingness to support a referendum unless it was shared fairly among all public schools, not just IPS direct-run schools.

Eventually, in December of 2022, the IPS board approved the pursuit of a $410 million capital referendum while simultaneously seeking to garner support for the operating component. That hit another major snag when the Indy Chamber announced their opposition in January 2023. On the operating referendum, IPS went quietly into that dark night, as the saying goes. They did not attempt to put the measure on the 2023 ballot given considerable public opposition.

But that capital referendum, though? It did pass, garnering 59% of the vote. And, despite not having the operating referendum they said they needed to ultimately pull off their intentions for Rebuilding Stronger, IPS pushed forward with the initiative anyway.

What about those cost-cutting measures the Indy Chamber recommended? IPS did implement many of them, though they stopped about $67 million short of the Chamber’s full recommendations.

Now, recall the operating referendum that does exist. That expires in 2026. Which brings us to why IPS needs to pursue a new referendum in 2026.

Why IPS Needs a 2026 Referendum

At last, it’s time for those slides I mentioned from the IPS board presentation in May. Here’s the first one (Slide 25 at this link). 

Based on those trend lines, IPS is projected to exhaust its cash flow by the end of 2026 in the absence of another referendum. As you can see to the left of the chart, operating cash flow has depended on federal stimulus funds (ESSER) and the operating referendum passed back in 2018. ESSER expired in fall 2024. The current operating referendum expires at the end of 2026. 

Now, I imagine a lot of folks are jumping to a particular conclusion. Or, being charitable, raising an important question. Did SEA 1 (which changed how property taxes are collected and distributed) impact IPS’ projected operating revenue? 

It of course will impact IPS’ future. But notice the blue and green lines in that slide. Those projections were from well before SEA 1 was even a glimmer in Mike Braun’s eye. Had SEA 1 never come to fruition, IPS would still be facing financial distress. Just perhaps slightly later than they are now. So this is not a situation you can lay at the feet of SEA 1 alone. 

Now for the second slide that caught my attention (Slide 83 at this link).

Let’s compare 2019 (when the existing operating referendum kicked in) to 2024. Look at the dark blue sections. That’s how much annual property tax revenue IPS is bringing in. From 2019 to 2024, it increased year over year, with an increase of around $21 million all told. On top of that, the referendum brings in $15 million that first year, rising every year to reach its peak at $41 million in 2024. Meanwhile, IPS’ debt service load goes from $35 million to $56 million, with almost all of that rise occurring before Rebuilding Stronger’s capital projects came into play.

Absent a referendum, the rate of the rise in property tax revenue is far outpaced by the rate of the rise in debt service payments. This does not paint a sustainable picture, regardless of SEA 1’s impact.

What Will IPS’ Next Referendum Look Like? And Will It Find Support?

On the first question, I have no idea. Truly. Will it be a billion dollars? I doubt it. Though I’d imagine it’s at least as big (plus extra to cover inflation) as the one that passed in 2018. Though this time, surely, just focused on operating funds and not capital.

Will it find support? For me, that largely depends on the size of the ask and what voters are being asked to stomach. That pre-pandemic land of 2018 had no home for a billion dollar ask. But it did find a home for a moderated, quarter billion ask. Even that might be tough sledding today.

However, one thing that ought to play into IPS’ favor is the fact that referendum sharing with charter schools is now baked into law. They’ll likely have widespread support from most of the charter school community as their boats will float higher from the passage of a referendum. That would be fundamentally different from 2022-23 when IPS faced a major advocacy campaign from the charter school community to push for equitable referendum sharing.

In all of this, remember that IPS has not officially announced their intention to pursue a referendum in 2026. But for me, it’s a matter of when they announce. Not if.