Hamilton Southeastern Schools officials presented a proposed 2027 spending plan Wednesday night that is approximately $15 million below the district’s 2026 budget, as declining enrollment and rising employee benefit costs continue to put pressure on school finances.
Tim Brown, the district’s assistant superintendent of finance, outlined a predicted budget of $323.9 million. The advertised budget is approximately $325.9 million, providing a cushion for adjustments before the final budget order.
Brown explained that districts typically advertise higher amounts because state officials reviewing budgets can lower those figures but cannot raise them.
The proposal reflects spending reductions identified through HSE’s Budget Task Force, changes in revenue, declining debt payments and a proposed replacement operating referendum, according to a district news release issued after the meeting.
“We’ve spent a lot of time over the past year looking at where we can reduce costs and operate more efficiently,” Superintendent Matt Kegley said in the release. “That work is making a difference. We know there are still financial challenges ahead, but we’re bringing forward a budget that is about $15 million lower than last year while keeping our focus on students and the classroom.”
The district said the Budget Task Force identified nearly $8 million in projected savings that helped balance the 2026 budget and allowed HSE to reduce planned spending in several areas for 2027.
Compared with 2026, the proposed spending plan includes:
- A $7.4 million reduction in the Education Fund, which pays for teachers, instructional staff, supplies and other classroom expenses.
- An approximately $8 million reduction in the Debt Service Fund, primarily because some debt obligations are ending.
- A $1.1 million reduction in the Operations Fund, which supports transportation, maintenance and central office operations. The district attributed that reduction to savings and shifting more expenses to general obligation bonds.
- A $1.3 million increase in the Referendum Fund, including additional money budgeted for behavioral health and traffic control.
The referendum levy included in the budget depends on voters approving the replacement operating referendum on the Nov. 3 ballot.
Despite the lower overall spending proposal, the district projects a maximum tax rate of $1.1912 for 2027, compared with $1.1476 in 2026. Brown cited declining net assessed valuation and said the proposal maintains the same Debt Service Fund tax rate while reducing the Debt Service Exempt rate. Property values are increasing in the district, but increases in deductions under state law result in lower net valuations for tax purposes.
Enrollment is another challenge. Preliminary figures show HSE has 394 fewer students than last school year. Brown attributed the decline to demographic changes, including residents remaining in their homes after their children have left HSE schools.
Brown said lower enrollment means approximately $500,000 less in state funding for the current school year. He also said HSE ranks 378th among 384 Indiana school districts in per-student state support, pointing to the state funding formula’s complexity factor as a reason suburban districts receive less.
Brown praised staff members and other district officials for their work to reduce spending. He also indicated he anticipates teacher pay raises as HSE prepares for contract bargaining with the local teachers’ union.
Teachers received no raises in the previous school year, and higher health insurance premiums reduced take-home pay for many teachers.
Health care costs remain a concern. Brown warned of further increases and said he is prepared to examine ways to address them. The district also faces higher mandatory teacher retirement contributions.
HSE operates a self-funded health care plan administered by Anthem. If the district receives acceptable bids and sells its property at 136th Street and Prairie Baptist Road, proceeds would be used to partially pay down an $8 million debt to its health benefit trust.
The board is scheduled to vote on the budget Oct. 28.
In other business Wednesday, the board approved Tyler Roberts as interim principal and Suzanne Olson as interim assistant principal at HSE Intermediate & Junior High.