When I go to the polls this November, I will vote in a school funding referendum that – according to the language that appears on the ballot – will increase my property taxes for schools by 35%.
That would be a hefty increase if it were accurate, but it’s not. Not by a long shot.
The actual increase – the difference between the property tax rate that I now pay to the Monroe County Community School Corp. and the rate I will pay next year if the referendum passes – is about 15%.
But a 35% increase is what MCCSC officials have to advertise under legislation approved in 2021, and an interpretation of that law by the Department of Local Government Finance. Voters are getting misleading information, and school funding referendums could be harder to pass as a result.
First, a little background. Since 2009, the Indiana state government has been responsible for funding public school operating costs – teacher and staff salaries, etc. – while local property taxes pay for buildings and transportation. But the state has never funded schools adequately. Indiana trailed neighboring states in K-12 school spending. It was near the bottom for teacher pay.
To make up for the stinginess, Indiana has given schools an option: They can sponsor “operating referendums,” asking voters to raise property taxes to provide additional funding. (Districts also need voter approval for large, debt-financed building projects; and they can use referendums to raise money for public safety).
It’s a lousy system because it makes for less equitable school funding. Wealthy districts can pass referendums and raise extra money more easily than property-poor districts. The vast majority of Indiana’s nearly 300 school districts never even try. But it’s the system we’ve got.
Voters in the Monroe County Community School Corp. approved a school operating referendum in 2010 and renewed it in 2016. The 2016 referendum expires at the end of this year. Unless the new referendum is approved, funding will be reduced. Jobs and programs could be cut; class sizes will grow.
The current property tax rate to fund the referendum is 9 cents per $100 assessed property value. We pay that rate in addition to the “base” MCCSC rate, which pays for buildings and transportation.
The base rate is currently 54.3 cents per $100 assessed value. Thus, the overall tax rate for the district, including the referendum rate, is 63.3 cents. It’s among the lowest in the state.
In June, the school board approved a plan to ask voters to approve a referendum rate of up to 18.5 cents for taxes that will be paid in 2023 and the following five years. Add that to the base rate (assuming it stays the same), and the total MCCSC tax rate would be 72.8 cents.
That’s an increase from this year’s rate of 9.5 cents – or 15%. School district officials say it will add about $125 to the annual tax bill of the typical homeowner.
Why does the state say the MCCSC rate will increase by 35%? The rationale, DLGF spokesperson Jenny Banks told me, is that the current referendum will expire before the new rate, if it’s adopted, takes effect. So, the state divides the entire proposed referendum rate (18.5 cents) by the 2022 base rate, not including the current referendum rate (54.3 cents). The result is about 35%.
“It’s a little misleading,” said Adam Terwilliger, the MCCSC finance and logistics director, said last week in a talk to the Bloomington Press Club.
“It’s a lot misleading,” said Jeff Hauswald, the district’s superintendent.
If state officials intended to make it harder to pass referendums, they’ve had mixed results. In 2021, only one of three operating referendums was approved, a lower-than-usual rate. Voters in one district rejected a plan to cut their taxes. But in May 2022, all six operating referendums were approved.
We’ll see what happens this fall, when Monroe County and six other districts, ranging from the Fort Wayne and Indianapolis suburbs to tiny Medora, ask their voters for help.