We aim to keep our staff, families, and community well-informed about the factors shaping our budget, how district decisions support our schools, and the ways you can share your input. As we move ahead, we remain united in our focus on students and in our commitment to open, honest, and transparent communication.
Starting in January 2026, the School Town of Munster will face budget constraints driven by Senate Enrolled Act 1 (SEA 1). By sharply reducing the taxable value of homes, SEA 1 will remove millions of dollars from local school funding, directly affecting districts like STM. In response, STM has already begun proactively planning for the effects of this funding change and developing strategies for the future.
Indiana School Budgets 101
School district finances are organized into several separate funds—often referred to as “buckets.” As required by law, school finance is managed in specific “buckets" that are intended to fund specific purposes. Below you’ll find an overview of each fund and what each fund supports.
Eighty-six percent of our Education, Operations, and Referendum Fund budgets are dedicated to salaries and benefits. As a people-centered organization, most of our resources go directly toward the educators and staff who work with our students every day.
Education Fund covers all expenses related to classroom instruction. This includes teacher salaries, classroom supplies, instructional support positions, counselors, and principal office operations. The state defines what qualifies as an instructional expense.
State Tuition Support (Basic Grant)
The primary source of revenue for the Education Fund is State Tuition Support. This funding is determined by student enrollment, which the state counts twice a year (fall and spring). The School Town of Munster ranks in the bottom 10% of all Indiana school districts for per-pupil funding, receiving some of the lowest tuition support in the state. While this is our main source of income, it has not kept pace with inflation or rising costs, creating ongoing financial strain for our district.
The Operations Fund pays for everything required to keep our schools running each day: transportation and school buses, building maintenance and repairs, utilities, certain technology expenses, and many non-academic support positions and departments.
Beginning in 2026, all Indiana school districts—including the School Town of Munster—will experience significant losses in the Operations Fund due to statewide funding changes as a result of Indiana's Senate Enrolled Act 1 (SEA 1). SEA 1 will sharply reduce the taxable amount on homes, meaning school districts (including STM) will lose millions in local funding starting in 2026.
The Operations Fund is supported by local property taxes (also called a tax levy). These taxes are collected from homes, businesses, and land within the community. State law sets strict limits on how much can be collected.
Indiana’s property tax caps limit what property owners pay to:
1% of a home’s gross assessed value for a primary residence
2% for rental properties and farmland
3% for businesses
If a tax bill exceeds these limits, the property owner only pays up to the cap.
The School Town of Munster would like to express our appreciation to the community for supporting the Referendum. The Munster community passed an operating referendum for the School Town of Munster in May 2023.
Referendum dollars have become essential for Munster to continue providing the level of education the community expects. Referendum funding allows the district to:
Maintain strong academic programming
Keep class sizes low
Recruit and retain high-quality educators during a statewide teacher shortage
Address the growing mental health needs of students
Sustain exceptional career pathways, fine arts, and extracurricular opportunities
Special program course offerings, such as Art, Music and PE at the elementary level
Referendum funding is essential for sustaining the positions and programs that support our students every day. Currently, referendum dollars fund teachers, classroom aides, clerical staff, custodians, maintenance teams, nurses, substitute teachers, cybersecurity and IT personnel, as well as our property, casualty, and liability insurance.
By law, these funds cannot be used for school buildings, athletic venues, new construction or other capital projects.
What is a referendum?
A referendum is an optional school funding source that can only be implemented if it is approved by voters in the community. Due to changes in state funding formulas and the impact of property tax caps, many public schools now rely more heavily on referendum funds to sustain essential student services. The Indiana legislature created the referendum model to give local communities the ability to make ongoing decisions about how to financially support their schools.
Why does the School Town of Munster need a referendum?
Indiana’s property tax cap legislation significantly reduced local revenue for schools, and the state’s funding formula has not kept pace with rising costs and inflation. As a result, it has become increasingly difficult for districts across Indiana to sustain programming year over year. Districts that achieve strong academic outcomes—like the School Town of Munster—receive even less per-student funding under the formula.
In 2009, when the state shifted school funding away from local property taxes to a state-controlled, economy-dependent formula, Munster immediately fell into the bottom 10% of all Indiana districts for per-pupil funding. Over time, this gap has only grown. As of May 2023, Munster is the lowest-funded school district in Lake County and ranks 364th out of 372 districts statewide.
What is the referendum rate?
The current operating referendum rate approved by our residents is .04196 cents per one hundred dollars of assessed value.
Will the School Town of Munster have another referendum in the future?
The Indiana legislature introduced the referendum funding model so communities can make ongoing school finance decisions at the local level. This means the School Town of Munster must now rely on referendum funds to continue delivering exceptional academic programming; attract and retain outstanding educators during a statewide teacher shortage; support the custodial, maintenance, nursing, and student services teams that keep our schools running; maintain state-of-the-art cybersecurity protections; and provide the robust career pathways and extracurricular opportunities that help our students thrive.
The Debt Service fund covers large-scale projects such as constructing new schools or completing major renovations—similar to how a mortgage works for a homeowner.
By law, Debt Service dollars cannot be used for operating expenses such as teacher salaries, classroom supplies, technology, or student programs. Funding used for recent School Town of Munster capital projects was legally restricted to those specific improvements.
The fund is used for major, long-lasting investments such as:
Building new schools
Large-scale renovations or additions
Safety and structural upgrades
HVAC, roofing, and major infrastructure improvements
Some community members feel uneasy when they hear the word “debt,” but this type of borrowing is designed for significant, long-term investments. Indiana schools must continually reinvest in their facilities to remain safe, up to code, and supportive of modern learning.
If you have any questions or concerns, please feel free to reach out and we will have the appropriate member of our team contact you.
