School debt attracts Indiana lawmakers’ attention as property tax relief options pondered

Indiana lawmakers are considering restrictions on the use of general obligation (GO) bonds by school districts, potentially requiring a two-year wait between bond issuances. GO bonds, a primary financial tool for schools to fund capital projects such as roof repairs, technology upgrades, and facility improvements, are typically repaid within five years. School officials, including Scott Bowling of the Indiana Association of School Business Officials, warn that these restrictions could hinder districts’ ability to address growing enrollment and infrastructure needs. Brandon Basham, chief financial officer for Northwest Allen County Schools, highlighted concerns that limiting access to GO bonds would delay critical projects and drive up costs due to inflation. East Allen County Schools echoed similar concerns, emphasizing that overcrowded facilities and overdue renovations could worsen without the ability to issue bonds as needed, reported the Journal Gazette.

School operations funds, primarily funded by local property taxes, are already strained due to rising costs and tax caps, making GO bonds an essential tool for covering capital expenses. Research by Policy Analytics found that costs for materials like steel and concrete have risen by 60% to 100% in recent years, adding to the financial pressure. Without GO bonds, districts might be forced to divert funds from education budgets, which could affect teacher salaries or lead to frequent and larger referendums. Southwest Allen County Schools, for instance, plans to borrow $85 million through an alternative financing mechanism similar to a home mortgage to fund a $32 million career and technical education facility and other projects. While lawmakers argue that proposed restrictions aim to improve transparency and inform taxpayers about district borrowing, school leaders warn that these limitations could destabilize tax rates and make long-term financial planning more difficult.4o