Hamilton Southeastern Schools counted 19,885 students on Sept. 1, the first time the district’s enrollment has fallen below 20,000 in 10 years.

Chief Financial Officer Tim Brown delivered the unofficial number to the school board’s Finance and Facilities Committee as he walked members through the district’s 2027 budget. The count will not be official until Oct. 1, when the state codifies fall enrollment.

“There’ll still be movement between now and then, but this is our best estimate today,” Brown said.

The figure is down about 372 students from the average of the district’s two count dates last year, and it marks a seventh consecutive year of declining enrollment at HSE.

It also costs the district money. Indiana’s tuition support formula pays schools per student, and while HSE’s per-student rate rises about 1.46 percent in 2027, the loss of students more than wipes that out — a net decline of roughly $582,000 compared with what the district received last year. About 29 of the 19,885 are virtual-only students, funded at 85 percent of the rate for an in-person student.

“When you have declining enrollment, even with an increase, it is a net loss,” Brown said.

Transfers are propping up the number

Brown urged the committee not to read the decline as a verdict on the schools. HSE graduates roughly 1,800 seniors a year and brings in about 1,100 kindergartners — a built-in loss of 600 to 700 students before anything else happens. Declining birth rates are part of it, he said, and so is a settled, successful community.

“It’s quite the opposite,” Brown said of the idea that shrinking enrollment signals trouble. “We’re having a vibrant, successful community. So successful that when your kids leave the house, you don’t leave your residency.”

Every district in Hamilton County except Westfield is seeing the same pattern, he said.

What is cushioning the fall is out-of-district transfer students. HSE took in 133 new transfers this school year, and Brown estimated the district would be down roughly 600 students instead of 372 without transfers overall. At about $7,200 per student in tuition support, that works out to roughly $1 million in the education fund. A majority of this year’s incoming transfers are kindergartners — “a home run,” Brown said, because those students may stay for all 13 years.

The district’s own budget projection had assumed 19,850 students, so the September count came in slightly above forecast.

Other 2027 pressures

Enrollment is one of several challenges Brown listed for 2027:

• Health benefit trust. HSE is self-funded, and high claims made for “a pretty rough year.” Premium increases will be substantial, and the district’s share comes out of whichever fund an employee is paid from. Apex Benefits is the district’s broker; Anthem remains the third-party administrator. Brown said the district is working on “creative solutions.”
• Teacher retirement. The mandatory state contribution rises from 10.1 percent to 11.1 percent of certified salaries in 2027, about a $1 million hit with no local control. Of that, 8.1 percent is required of the district statewide; HSE, like many districts, also pays the 3 percent employee share.
• Mental health grant. The state grant funding counselors, social workers and school psychologists ends after 2027. The district budgeted about $500,000 in 2027 to begin covering the gap, with the full cost falling on local funds in 2028. Brown noted the grant was roughly $5 million over its lifetime, not per year.
• Referendum. The operating referendum fund stays flat at best in 2027 if voters do not renew it in November.

Brown also pointed to better news. More than $7 million in savings identified by the district’s budget task force has helped balance the 2026 budget and will let HSE reduce spending in 2027. The district also expects to raise about 6 percent in the operations fund levy, up from the 4 percent cap of recent years, partly offsetting losses from the $300 homestead credit created by Senate Enrolled Act 1.

Through July, education fund spending was running below revenue, and the district’s available cash balance was up about $2.3 million on the year — a reversal from projections seven or eight months ago that HSE would burn through cash.

“Cautiously optimistic is absolutely where I still stand,” Brown said.

A budget work session is set for Sept. 23. The public hearing on the 2027 budget is Oct. 14, with adoption scheduled for Oct. 28.