Recent observations [A.~Pustogow et al. Nature 574, 72 (2019)] of a drop of the $^{17}$O nuclear magnetic resonance (NMR) Knight shift in the superconducting state of Sr$_2$RuO$_4$ challenged the popular picture of a chiral odd-parity paired state in this compound. Here we use polarized neutron scattering to show that there is a $34 pm 6$ % drop in the magnetic susceptibility at the ruthenium site below the superconducting transition temperature. Measurements are made at lower fields $H sim tfrac{1}{3} H_{c2}$ than a previous study allowing the suppression to be observed. Our results are consistent with the recent NMR observations and rule out the chiral odd-parity $mathbf{d}=hat{mathbf{z}}(k_xpm ik_y)$ state. The observed susceptibility is consistent with several recent proposals including even-parity $B_{1g}$ and odd-parity helical states.
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