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.
The Indiana legislature is calling on school districts to spend at least 45% of their state funding distributions on teacher salaries. Some districts will find it easier to meet the goal than others. One reason: referendums that let districts supplement state funding with local property taxes.
According to a December 2020 report from Gov. Eric Holcomb’s Next Level Teacher Compensation Commission, teacher salary costs as a share of state funding vary widely. In 2020, they ranged from about 30% in some districts to over 60% in others.
The report found that 109 of Indiana’s nearly 300 school districts paid less than 45% of their state funding for teacher salaries in 2020. (The figures are in Appendix 15). Those districts will have to increase teacher salaries – in some cases, significantly – or cut other spending to meet the legislature’s target. Collectively, they fell $52.4 million short of paying enough for teacher salaries in 2020.
Unemployment is at record levels in Indiana, with hundreds of thousands of Hoosiers out of work. A recession is coming, likely to be deeper than the last one. It seems like a bad time to call for a tax increase.
But voters in 12 school districts approved referendums Tuesday to raise money for school operating expenses and building projects. Yes, they said, raise our property taxes. Because we want to support our students.
Four of the districts passed both operating and building referendums. In all, 16 of the 18 referendums that were on the ballot won approval.
It’s an article of faith in Indiana that school districts serving large populations of poor students spend more money than affluent districts. At one level, it’s true. When it comes to state funding, high-poverty districts get and spend a little more, per pupil, than low-poverty districts.
But when you consider total spending – including funds from state, federal and local sources – a different picture emerges, according to the Census Bureau’s Annual Survey of School System Finances.
Voters in 10 Indiana school districts will go to the polls Tuesday to decide whether to raise their own property taxes to help fund local public schools. It’s another sign that Indiana has become a referendum state, with districts turning to local taxpayers to do the job that legislators haven’t done.
But only some of them: 60% of Indiana school districts have never attempted a referendum.
That’s approximately 180 districts that haven’t turned to the voters for funding in the 10 years that Indiana has had school funding referendums. Maybe they haven’t needed the money; or maybe superintendents and school boards didn’t think the local voters were ready.
I’ve written a lot about winners and losers in Indiana school funding, usually focusing on budget decisions made by the state legislature. But there’s another important divide when it comes to funding schools: between districts that pass local property-tax referendums and those that don’t.
And judging by this month’s elections, the number of referendum winners may be nearing its limit. Only six of the 10 school referendums that were on the May 7 ballot were approved. That’s a far lower rate than the 88% that passed between 2016 and 2018, according to data from Purdue University.
Under Indiana’s system of funding schools, money to pay teachers, staff and administrators and to fund most day-to-day operations comes from the state, appropriated by the legislature in the two-year state budget. Money for buildings and transportation comes from local property taxes.
But if schools need more operating money than the state provides, they can turn to local voters in a referendum. Continue reading →
This blog specializes in bad news. But here’s some good news for public education from this month’s elections: Nine of the 10 Indiana school districts that asked voters for permission to raise local property taxes to support education were successful.
Prior to this year, fewer than half the referendums that took place since Indiana’s current school-funding laws went into effect in 2008 won public approval. With the May 2014 results, schools have finally topped the .500 mark: 52 of 102 have succeeded.
School-funding referendums in Indiana come in two varieties: They can raise taxes to build schools; or they can augment state funding for a district’s general fund, which pays teacher and staff salaries and other operating expenses. Over the years, the mix has been about half-and-half between construction and general-fund referendums. But this year, eight of 10 were to boost general-fund spending. All those proposals passed. Some were close, though; three passed with 51 percent or less of the vote.
In at least two – White River Valley in Greene County and Eminence in Morgan County – local officials said losing would force the district to close and consolidate with a nearby school district. Voters didn’t want that to happen. The Eminence measure passed with 87 percent of the vote; WRV with 54 percent. Continue reading →
Cynthia Brown, vice president for education policy of the Center for American Progress, argues in a recent Education Week commentary that we should stop using local property taxes to fund schools and shift fiscal responsibility for K-12 education to the states.
Indiana’s experience suggests advocates for equitable school funding should be careful what they wish for. Relying on state revenues to fund schools may result in a simpler, fairer system. But it may also mean that schools are less likely to get the money they need.
Brown builds from the work of the U.S. Department of Education’s Commission on Equity and Excellence, of which she was a member. Its report, issued in February, concluded that efforts to improve the schools should start with equity, including equity in funding.
“States should adopt a state-based system of school financing,” she writes, “one in which states provide all nonfederal resources for education, and districts no longer have the power to raise funds from local property taxes.”
Indiana switched to state-based K-12 funding 2009 as part of a larger “property tax reform” initiative. Generally speaking, the state now pays school general fund expenses, including instruction and most salaries. Local property taxes are used to pay for buildings and transportation. (Voters can choose in a referendum to raise their own property taxes to supplement state dollars for the local school district’s general fund).
No sooner had the switch taken place than the economy hit the skids, state tax revenues nose-dived and then-Gov. Mitch Daniels cut school funding by $300 million to keep the state in the black. Schools are still suffering from that cut, Continue reading →
Voters in the Monroe County Community School Corp. district sent a strong message of support for public education in Tuesday’s election. They voted 61 percent to 39 percent to raise property taxes in order to provide stable school funding for the next six years.
This is remarkable, given the anti-tax and anti-government storm that was blowing through Indiana.
Similar school-funding referenda were voted down in nine of the 13 Indiana districts that tried them, according to the Center for Evaluation and Education Policy at Indiana University. And a statewide ballot initiative to enshrine restrictive property-tax caps in the state constitution passed by more than a 2-to-1 margin.
It would be easy to conclude Bloomington and Monroe County make up an island of enlightened support for education in a red sea of taxophobia. But remember that, in 1999, MCCSC voters overwhelmingly rejected a school-funding referendum.
One difference this time was an aggressive and organized campaign to make the case for the tax increase, enlist supporters and get them to the polls. MCCSC Superintendent J.T. Coopman spoke about the referendum to every group that would listen. Volunteers canvassed neighborhoods, put out yard signs and made get-out-the-vote phone calls, just like in any political campaign.
They effectively delivered the message that the referendum was about “needs,” not “wants.” Continue reading →
Here’s something to keep in mind with the approach of a November tax referendum to support the Monroe County Community School Corp.: Even if we pass the referendum, the MCCSC property-tax rate will still be well below the state average for schools.
Rates for 2010 for most local taxing units in Indiana are available in a report from the Department of Local Government Finance. It says that the average property-tax rate for Indiana school districts is $1.02 per $100 assessed property value. The MCCSC rate is 57 cents per $100 assessed value.
The referendum would give the school board the authority to increase the rate by as much as 14 cents. If nothing else changed, that would make the MCCSC property-tax rate 71 cents per $100 assessed value – still 30 percent lower than the state average.
It’s important to remember, of course, that school taxes aren’t the only property taxes we pay. There are additional property-tax rates for city, county and township government, public libraries, solid waste districts, etc.
It’s also noteworthy that, since the 2008 Indiana “property tax reform” legislation took effect, our property taxes don’t support the school general fund, Continue reading →